The Innovation Challenge – business
imperative of fad?
Why is innovation such a hot issue for companies? There is a notion
that companies which achieve innovation excellence combined with
operational excellence gain a valuation premium – this is
being supported by a growing body of research. So the obvious question
is how do companies attain innovation excellence?
There are many challenges and issues that face companies who want
to become innovative – several of the main ones are:
* What is innovation?
What is Innovation?
* Is innovation about product and technology innovation or is it
* How do I make innovation part of the corporate fabric (sustainable)
versus another fad?
* What role do external partners play in driving innovation?
Many definitions are in existence – according to Peter Drucker,
innovation is change that creates a new dimension of performance.
What we do hear from executives is that innovation must be focused
on ultimately delivering competitive advantage and creating increased
It is becoming accepted that innovation is about generating something
that will either result in step change developments or continuous
Is it only about product and technology innovation or is it much
Earlier discussion, papers and examples focused heavily on product
innovation, in particular, the development of new consumer products
e.g. the iPod or the Razr phone, and new technologies. In fact innovation,
to deliver maximum value, should be focused on the core business
areas of the company. Therefore technology becomes a key enabler,
however, at times, a breakthrough technology can become a driver
for business change, but the default should be to focus on the business.
A good schema for this purpose is:
* Business model
Various models have been developed to enable the systematic tracking
of innovation initiatives – one recently developed is the
Innovation Radar developed by the Kellogg Innovation Network
How do I make innovation part of the corporate fabric(sustainable)
versus another fad?
it is easy to talk about innovation and create impressive marketing
statements, but if a company is serious about making innovation
a key part of the corporate DNA that can be sustained through changing
business cycles, then the leadership must be committed to making
the appropriate cultural changes. This is where many companies become
stuck, due to their unwillingness to make the necessary core changes.
Firstly, it is about leadership – innovation must be communicated,
by the CEO, as a key strategy and the CEO must become the key champion.
A recent IBM study found that for innovation to work it must be
orchestrated from the top. (Global CEO Study – Expanding the
Innovation Horizon – March 2006)
This is then backed up by the mechanisms that give people the time
and space, recognition and motivation that will drive the right
behavior. Some of the change areas that need to be considered are:
* Inclusion on job specifications
* Reward and recognition systems including bonuses, awards and reviews
* Symbols – e.g. work spaces and branding
* Corporate language
Another good practice to ensure sustainability, is to develop an
over arching Working Model/Framework that captures not only all
the aspects of innovation but the key change mechanisms that together
will drive many of the processes and change initiatives.
What role do external partners play in driving innovation?
Everyone recognizes that external collaboration is a key element
in successful innovation. However the ambition is proving to be
hard to execute, many companies from GE to Safeway are finding that
it is a serious challenge to bring in the skills and the culture
to deliver effective collaboration. By embracing collaboration and
pushing its limits, we exponentially increase the amount of resource
and brain power that is focused on finding that innovative idea.
For ideas to be fully accepted a company must develop a culture
that accepts ideas from any source and moves away from the 'not
invented here syndrome"
Extensive collaboration also allows you to sense and source capabilities/ideas
from a wide range of sources within and external to your industry's
ecosystem. This may involve collaboration with a wide variety of
organizations; such as:
* University Research Centers
* Venture Capital firms
* Companies in adjacent industries
* Organization networks
Two emerging trends in this area, are the creation of Innovation
Groups, that are specifically responsible for external collaboration,
amongst other things, (e.g. P&G has created the role of Technology
Entrepreneurs) and Corporate Venture funds. Unlike the Funds created
in the dot com era, these funds are predominantly designed to interface
with the investment community to identify compelling start ups
and to co-invest. The primary motivation is early detection of
these emerging technologies rather then a investment profit motive.
In conclusion, innovation excellence is clearly a business imperative.
However, many critical success factors exist that determine whether
a company can develop a sustainable innovation based organizational
culture and achieve innovation excellence; these include:
* Development of an overall Innovation working model/framework
* Strong and consistent leadership
* Pushing external collaboration boundaries
* Effective organizational and cultural change
If you would like to learn more about how you can Developing a
Sustainable Innovation based Organization,
please email: email@example.com