Don’t believe everything you think. – Thomas Kida

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It happens over and again. Conventional wisdom that is heavy on convention and light on wisdom. One of the latest conventions to bite the dust is the crime rate. The learned class has assumed that difficult economic times lead to higher crime rates. So when the FBI announced that violent crime in the U.S. had reached a 40-year low in 2010, many criminologists were dumbfounded. Noted scholar James Q. Wilson reports in The Wall Street Journal, that as the national unemployment rate doubled from around 5% to nearly 10%, the property-crime rate fell. For 2009, the FBI reported an 8% drop in the nationwide robbery rate and a 17% reduction in the auto-theft rate from the previous year. While a number of factors are behind this fall – the fact is that most recently, higher unemployment is inversely related to crime.

We have seen this movie before in business. Grow large or perish, new technology will lead to stronger customer relationships, home values will continue to rise and – low interest rates are here to stay. As Mark Twain said, “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” Obviously having a flawed map of the territory – whether it be strategic trends, customer behavior, market opportunities, competitive risks, product offerings, or the like – is risky. Discovering where conventional wisdom – followed by you and your competitors – is off provides a huge opportunity. Growth companies and whole new industries spring up to fill the gaps that conventional wisdom has failed to discern.

While big breakthroughs like Michael Dell selling computers via direct mail and Starbucks exploiting an un-discerned desire for great coffee served in a great place are legend, there are innumerable smaller examples from everyday business. It may be simply discovering a highly valuable segment of customers in a local market that others have missed or a customer service best practice that works really well. Often we think of innovation with a capital “I” and ignore scads of lower-case “i” innovations that are meaningful. One of my favorites in the days prior to smart phones was a children’s dentist located in a large mall. He gave moms beepers so they could shop while their children completed their dental appointments.

One of the roles of a market leader is to continually seek these large and small opportunities that conventional wisdom has hidden. All of this raises the question for C-level executives down to front-line managers: What is your process for debunking conventional wisdom and finding innovation that pays off? I would suggest there are three simple steps that can greatly enhance the search for large or small breakthroughs:

First, managers and leaders at every level must seek value-adding innovation as a key part of their job and central to on-going success. We have all seen managers who lose 10 to 20 percent of their edge each year simply because while the marketplace and competitors evolve and move forward, they stay the same. Over several years the cumulative effect is a killer. Just ask the U.S. Postal Service as it teeters on insolvency. Consultants estimate that this former monopoly now has 15% of the American express and ground-shipping market while Fedex has 32% and UPS has 53%. Tough economic times and harsh credit environments often cause people and teams to hunker down, stifling innovation. It takes conscious leadership in this environment to focus your team on looking for better, cheaper, faster more relationship-centric ways of doing business. If you don’t have innovation as one of your top five priorities as a leader, it is unlikely you or those on your team will take the risk to peer out of the foxhole to seek these opportunities.

Second, making innovation a part of your leadership priorities must be coupled with a process for setting goals, discussing and tracking new best practices. Many organizations got where they are by consciously or even reflexively looking for ways to de-bunk the myths and find better ways. Yet as they grew bigger and older many become focused on control, reporting on short-term performance and avoiding mistakes. Over time it quietly but substantively changed their culture and the fabric of their organization. Recapturing this lost competence requires a process where key management meetings, one-on-one discussions and in management by walking around all focus on the new learnings that could be applied elsewhere. Ask yourself: how much of current management time and attention would team members estimate is focused on new innovations and best practices? The follow-up question: how should this change? It can be transforming to set a team-goal: identify one to two true business innovations per quarter.

The third requirement is to recognize and reward innovation that produces meaningful differentiation and success. Organizations do what gets recognized and rewarded. Tough times often reinforce keeping your head down, avoiding mistakes and risks. As the marketplace comes back to life, there are new opportunities and challenges like the new banking regulations and mobile banking. The most successful organizations will use this new phase as an opportunity to find the new practices and products that breakthrough. However the most fertile breakthroughs will likely be the ones that receive little attention – the ones where everyone is marching in lock-step, in the wrong direction. Making the search for these hidden nuggets a part of your job and your priority, supported by a process will be much more successful if your teams sees it rewarded and recognized.

Here is the net. If you can innovate a breakthrough for your business, that is great. But what is more realistic is to find two or three small but substantive innovations for targeting new segments, selling specific customers, delivering differentiated products or service, or building high value relationships. The goal is to lead innovation that is more like Fedex and less like the Postal Service.

(Column appeared originally in ABA Bank Marketing magazine – July 2011)

By ROBERT E. HALL

Not to be reproduced without written permission. All rights reserved. © Copyright Robert E. Hall 2011