Management knows it and so does Wall Street: The year-to-year viability of a company depends on its ability to innovate. Yet many companies have not yet learned to manage innovation strategically.
Since the management around the world adopted the word 'innovation', there have been a number of definitions that were put forward to define this thing that gives a one man company the power to take on a multi-billion dollar company. The underdog that has led to the fall many giants and rise of new ones. Most companies sabotage their own innovation processes without meaning to. So you have to know how to do it and manage it well.
You can set your watch to it. About every six months an article appears arguing that innovation is an overused term, with corporate fatigue auguring a "back to basics" approach focused on less sexy but important tasks of execution, strategy, and so on.
No doubt the term innovation is bankrupt at some companies, particularly those that throw the word around without defining it clearly. Here is a simple, five-word definition: "Something different that has impact." This intentionally broad definition helps to disarm three common misconceptions.
The first misconception is that innovation and creativity are the same things.
Companies that fall into this trap think that the best way to solve the innovation problem is to bring in a wide range of right-brained thinkers, put them in a room, and ask them think of awesome ideas. There is no doubt that awesome ideas serve as an important input that can lead to impact, but if companies stop at idea-generation, they are destined to suffer disappointing results. Do note, "Innovation is a process that combines discovering an opportunity, blueprinting an idea to seize that opportunity, and implementing that idea to achieve results. Remember — no impact, no innovation."
The second misconception is that only a select group of people should drive a company's innovation activities.
People often think that innovation lives in labs, and it is done by white-lab-coated scientists. But everyone in an organization should think about doing something different that has impact. Not all innovations come in the same flavor, of course. It is helpful to think about different "levers" for innovation, which can range from new internal processes to integrated business models.
The third misconception is that innovation is all about "big bangs."
Companies hold up Apple as an aspirational (albeit impossible to be replicated) standard, and say they need to create multi-billion dollar platforms like the iPod, iPhone, and iPad. Pushing for big bangs often leads to overly risky ideas that have little hope of getting approved at most companies. Remember, the scoreboard is measured not in the size of the vision, the beauty of the financial forecasts, or the degree of difficulty, but in impact.
Many see innovation as sexy and mysterious. It can seem to leaders to be a helpful bromide to a struggling organization. Innovation certainly is energizing, and, when managed properly, can have world-changing impact. But innovation is a discipline to be mastered and managed. It is hard work. Getting good at it requires significant proper innovation management and practice. Telling an organization that "it's innovation time" without investing time, people, and, yes, some money into follow-up generates cynicism quickly.
Basic Innovation Types
Disruptive Innovation Types
What do we do
So there you go management knows it and so does Wall Street: The year-to-year viability of a company depends on its ability to innovate. Yet many companies have not yet learned to manage innovation strategically. The companies we've found to have the strongest innovation track records do things differently: Rather than hoping that their future will emerge from a collection of ad hoc, stand-alone efforts that compete with one another for time, money, attention, and prestige, they manage for "total innovation."
We have developed tools and matrices to help organizations manage their innovation portfolio. The power of these tools lies in the two exercises it facilitates:
- First, they give managers a framework for surveying all the initiatives the business has under way: How many are being pursued in each realm, and how much investment is going to each type of innovation?
- Second, they gives managers a way to discuss the right overall ambition for the company's innovation portfolio.
For one company — say, a consumer goods producer — succeeding as a great innovator might mean investing in initiatives such as small extensions to existing product lines. A high-tech company might move toward taking bigger risks on more-audacious innovations for the chance of bigger payoffs. Although this may sound obvious, few organizations think about the best level of innovation to target, and fewer still manage to achieve it. We help our clients build an innovation culture.
Does your organization know how to manage innovation? Do you have an innovation portfolio?