In giving the commencement address at the University of Southern California’s graduation ceremony a few years back, Elon Musk told the fresh, new graduates to focus on signal over noise. He implored them to focus only on those things that would improve the businesses they soon would be working for. If it doesn’t help move your business to the front of the line, it’s not important.
He knows what he’s talking about. This line of thinking is evident in how Musk runs Tesla, one of the world’s most dynamic companies. The company de-emphasizes advertising in favor of good, old-fashioned research-and-development that makes their vehicles stand out from the much more established car companies through such things as solar panels on its vehicles’ roofs that power the car’s battery.
It’s this innovation, which has taken advantage of a shifting consumer sentiment toward green-friendly products and businesses, that has helped make Tesla’s line of cars some of the most sought-after vehicles on the planet and, by extension, aided Tesla in more than doubling its first-quarter 2017 revenue to $2.7 billion.
Musk credits this culture of innovation in playing a very large role in the high-growth environment in which Tesla finds itself. “Starting and growing a business is as much about the innovation, drive, and determination of the people behind it as the product they sell ,” Musk has been quoted as saying.
Musk’s company is certainly not alone in leveraging innovation to help yield growth. If you take a step back from Tesla and look at other similarly successful companies, you’ll see a common theme begin to emerge: an investment in innovation is what is helping these companies differentiate their products and services from the competition.
Take, for example, perennial blue-chip company IBM. The company has shown that a business need not have the sexiness of a Tesla with a visionary such as Elon Musk at the helm to weaponize innovation to create a high-growth environment.
This innovation we keep speaking of doesn’t just exist in the technology industry though. I interviewed a couple of CEOs of mid-sized tech startups that have raised millions. One of them, Alain Meier of Cognito, commented that he actively encourages his engineers to work on open source projects. “Contributing to open source allows them to work with engineers all around the world, exposing them to thousands of different ideas–open source is the ultimate melting pot for creativity,” he said.
Another, Enzo Villani of Equities.com, emphasized that it’s important for everyone to have an open mindset: “When executives allow innovation to flourish across the enterprise, the results can sometimes be amazing. All companies need to innovate, no matter their size.”
In 2016, IBM lead the list of companies receiving U.S. patents for the 23rd consecutive year. And it didn’t just eke out that distinction: It led number two on that list, Samsung, by 50 percent.
In its long history, IBM has marched through a number of different eras. From punch cards, to digital computers, to the birth and development of the Internet, IBM has continued to stay relevant and has adapted as the technology sector has evolved.
How has IBM managed to go through so many of these technological epochs? It hasn’t been one single stroke of genius; rather, it’s been a long-term focus on innovation that has cut across its corporate ecosystem.
This transparency (externally as well as internally) allows the company’s officials to have a heightened visibility into the next trend that is coming down the pike, such as the rise of cloud computing or its development of the IBM Watson artificial intelligence technology.
This ability to stay highly flexible has paid dividends for the company. The creation of Watson, for instance, has created additional revenue-generating opportunities for IBM, such as through its inclusion in Siemens’s industry analytics platform MindSphere.
As Tesla and IBM have both shown, business success (and, yes, even business survival) hinges upon a company’s ability to anticipate and pivot toward emerging trends, and produce innovative products that best meet the rapidly changing realities of the corporate environment.
Musk himself has alluded to the fact that companies such as IBM and Tesla need to continuously be thinking about how to make their processes, products and services better in order to keep their businesses relevant.
“I think that’s the single best piece of advice,” he once said. “Constantly think about how you could be doing things better, and questioning yourself.”
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.