What would you do if you were given the chance to redefine the work you do?
Dave MacAdam, senior manager of innovation strategies for Novelis, decided to make sure his company’s business model was never disrupted, and that the company did a little disrupting of its own. When you think of Novelis, you might think of aluminum. After a conversation with Mr. MacAdam, you won’t think of it the same way again. He talked to Jabian about the real definition of disruption innovation, why most companies fail to properly innovate, and why remaining true to yourself will always be the best decision you can make.
You’ve helped define your current role by focusing on innovation. How has that changed at Novelis?
Innovation happens organically, so there’s obviously innovation throughout our research and technology organization. What we haven’t had in the past was someone to challenge us to be more aggressive systematically. I try to look at the business on a holistic basis so we can see where our investments are going, where we’re investing critical assets, and how aligned we are with our regions. My role is to look out to the longer-term horizon and say, “Where do we want to be in five years, 10 years, etc.”
Inside the organization, it has challenged our perspectives about priorities. We all have short-term goals and responsibilities, but this allows us to identify potential deficiencies in long-term strategic objectives. If we just focus on quarter-to-quarter goals, we’ll eventually get swept up in the commoditization of our business, without having the vision to develop and introduce the next set of products and services that can disrupt our industry and capture market share.
How do you define disruptive innovation at Novelis?
For me, disruptive innovation is disregarding the status quo, examining things from a fundamentally different perspective, with an eye toward doing something elementally different. For us, it’s looking at markets that are copper and asking, “Why isn’t that aluminum?”
One of the takeaways from our disruptive innovation framework is the reorientation in thinking from “This is too risky” to “What if someone else got it to work?” If our competitor succeeds, what will our response be? It helps our senior management reorient its thinking from a risk of success to a risk of being disrupted.
Are there other types of innovation that are most often overlooked?
I think there is an attraction for product innovation because it’s the sexiest. The reality is, when you look at it from a project-to-project basis, it’s the process innovation that actually ends up driving the most incremental revenue, more so than product innovation, because in most cases, process innovation is more global in scope.
I also think most companies overlook business model innovation. I feel Novelis has addressed this very well. At the time it was conceived, our business model was unique for the industry. We have a pass-through model, meaning we don’t up-charge the cost of metal. We only charge for the conversion, casting, shipping, etc. This insulates us from the cost volatilities in the commodity metals market.
But when we spun off from Alcan, we were a metal-supply company with no access to primary metal. That’s why our business model changed to embrace recycling. We’re now commonly known as the world’s largest aboveground mining company.
We mine the aluminum out of construction sites, automobile wreck yards, you name it. There are very few sources of aluminum we aren’t working to recycle and put in our system. And that gives us quite a few competitive advantages.
For me, disruptive innovation is disregarding the status quo, examining things from a fundamentally different perspective, with an eye toward doing something elementally different.
Do you have to be in a market to disrupt it?
On the contrary. The father of disruptive innovation, Clayton Christensen, essentially defined it as being a newcomer usurping and eventually surpassing the incumbent. His examples were existing companies that see an upstart threat, dismiss it for being irrelevant, and are eventually eclipsed when the upstart disrupts their market.
Look at Polaroid. It pioneered the digital camera in the 1970s. It had the keys to the kingdom, but all it saw was a future in film. It sold the technology to some Japanese companies believing it was worthless, and now look at it. That’s another case where, like these Japanese companies, you don’t have to have market share to disrupt the market.
Can an incumbent disrupt a market?
That is essentially my job. We have two choices: We can disrupt or be disrupted. A lot of what we do at Novelis is to look at projects that are a step beyond the norm, past line extensions, and the status quo. These are projects that might be a complete departure from anything we’ve thought about before. Larger companies like ours have a lot of institutional antibodies that are afraid of risk or rocking the boat. People don’t like change when things are working.
Who needs to drive that change?
We try to drive it from both ends of the spectrum. The bigger disruptive innovation bets are large projects. They need more protection. They might require additional resources and can be funded aggressively to allow them to succeed. That requires the highest level of management support.
On the other side, you have the exploratory research. These are more proof-of-concept ideas, where the idea is to showcase a win or fail fast. The goal is to graduate to a full-scale R&D project. Here, you need a different support system that is basically a non-micromanaged approach. The team needs to be able to work at arm’s length from management and have its confidence in what’s being done. Otherwise, it can wreak havoc on the innovation process.
What’s the best advice you’ve been given?
For me, it was personal. When I left my old job working in semiconductors, I had just earned my MBA and I wanted to get on a more strategic side of the business. My boss sat me down and said, “No matter what, stay in a role where you can be creative.” He knew if I was just managing processes or completely execution-oriented, I would be miserable. And it’s turned out to be great advice. You can find creativity in most roles if you look hard enough.