An Innovative Introduction
Organisations are constantly bombarded by messages about the need to be more ‘innovative’, to increase the rate of ‘innovation’ and to create a climate that supports ‘an innovative culture’. Given this stream of messages you would be mistaken for thinking that there was a definitive statement of what innovation was and how it applies to your business.
In a recent survey undertaken for a major UK public body into the understanding of innovation and how to be innovative, we spoke to 100 companies and obtained 76 different definitions of innovation and how it was applied to industry – clearly indicating that ‘Innovation’ is a widely used, but little understood, term.
Defining Innovation
The problem with defining Innovation is that it is an organisational philosophy, much like the philosophies of ‘Lean’ or ‘Six Sigma’, rather than a single tool or technique, and therefore is open to numerous interpretations and definitions, and most people associate simply with the development of new technologies. My opinion, based on much research and ‘thought time’, is that organisational innovation is broader than the focus on technology and can broadly be summed up as being about three ‘P’s:
* People – creating an environment and systems that motivate people
* Products – developing new products (or services) quickly and effectively
* Process – improving your operational systems (the ones that deliver value)
Whilst many people define innovation as the ‘commercialisation of ideas’, the broader definition of innovation involving the 3P’s, leads me to put forward a more definitive statement about innovation:
‘Innovation is about implementing effective ideas that help a business to achieve either organisational or market needs – and the faster they are implemented the better.’
In this definition, innovation is about organisations recognising relevant market needs, creating appropriate ideas that are able to capture this potential value and then to bring these ideas to life through effective management, organisation and processes.
More important than all of this is the needs of management to create the right ‘climate’ for innovation to succeed, without which none of the above will be possible.
Innovation: The Strands
Innovation is a broad philosophy that affects all parts of an organisation. For ease of explanation, we talk about three strands to organisational innovation, these being – Product, Process & People.
Product Innovation
There is a great tendency to define this as purely developing new products, but we need to consider a wider brief, including:
* Re-engineering existing products and services to reduce costs or to improve functionality, for example, TV technology is constantly being reengineered to reduce costs for basic products or to increase functionality to keep revenues up.
* Enhancing brands to create additional client value, a recent example being the work undertaken to change the brand value of Skoda as a way of increasing revenue.
* Taking existing products to new markets, such as selling recycled 486 PCs to Africa where they would have virtually no value in their traditional market.
* Using inherent technological or managerial capabilities to develop new products and services in existing or new markets.
For most people, this is the extent of an organisation’s innovation capacity and they ignore the two other possible aspects of organisational innovation described below.
Process Transformation
In the last twenty years there has been a growing interest in business improvement techniques that focus on improving organisational processes.
These techniques have come with a variety of titles, including:
* Business Process Reengineering
* Kaizen/Continuous Improvement
* Just In Time
* Lean Enterprise
* Agile
These techniques help an organisation to recognise where they could realise some significant improvements which will deliver more value to their clients – in other words to help them to deliver ‘innovation’ through the transformation of processes.
Inspired People
Inspiring people as a form of innovation is related too, but should not be confused with, the need of organisational managers to create the right climate for innovation to succeed.
‘Inspired People’ is concerned with effective organisational systems to enable individuals and teams to operate effectively, from performance measures to team briefs.
Zero Sum Innovation
With large numbers of organisations desperate to innovate, there is a definite possibility that the result will be a zero sum game for many. By this we mean that one organisation innovates and takes market share from another organisation, hence the net result is a zero sum (overall no gain to society). Where this occurs across national boundaries (ie a US based company takes market share from a French company) the result is still zero sum but the trade balance improves for the US.
However, in most cases, the zero sum game will all occur within national boundaries, which, apart from the gain to that region or state’s economy, the net result to the national economy is near to zero sum.
Innovation: The Lego Kit
For organisations to realise the benefits of innovation, there is no definitive ‘tool’ they can be given. Instead, they can be provided with a Lego Kit which, when effectively assembled, will create the basis for innovation in their organisation:
The Lego Kit consists of four parts:
* The right organisational climate – which is heavily influenced by management style and skills.
* Information channels which allow them to identify market needs and opportunities.
* Internal processes to enable them to create effective ideas that will capture the value of market needs and opportunities.
* Skills and processes to enable them to transform these ideas into organisational changes, new products and processes as appropriate.
This creates a simple equation for organisational innovation:
Climate + Information + Appropriate Ideas + Implementation = Successful Innovation
The absence of any of the above components of the Lego Kit will result in less effective or no innovation.
Where is the Need?
Some of the factors influencing innovation are vast, such as national culture and the impact of the educational system on creating entrepreneurs and innovators, and thus can only be influenced by central government.
Other factors that influence innovation are influenced locally and include:
* Access to information and the tools to gather market intelligence by organisations
* Climatic Mapping of organisations to enable them to identify where their ‘innovation wipe out zones’ are
* Skills for idea creation and capture
* Access to finance to enable companies to invest in great ideas
Lastly, factors that are completely in the gift of the individual come into play, such as the will and energy to innovate – something that organisations and individuals either have or don’t.