By Sharon O’Toole
What innovation is – And what it isn’t
What a company or an industry does must make a difference for people. Whether you are making smartphones, designing complex systems, providing food, shelter, transportation, entertainment, information, luxuries, or various services, the bottom-line is that you are providing value to your customers.
New innovative ideas or adaptations, large or small, all have one thing in common. While they must provide customer value, they also must actually work and be useful. They must be something that can be replicated. And they must be economically feasible.
But innovation is not just about bells and whistles. It is not just an extension of something that already exists. It is about conceiving of and creating something new or unusual, providing something better or unique to your customers. It must be targeted. It must have a realized value. Innovation is a mystery at times and it is complicated. It can involve a totally new approach or just a small tweak to an existing product or process.
The goal of innovation, while customer focused, is not just altruistic. From the company standpoint, the goal is to gain a competitive advantage over your competition. All innovations have one of these fundamental goals:
And by doing these things, to retain current customers and gain new ones. It is not enough just to make a verbal commitment to change, to declare it a priority. You must support it and develop the environment that will not only solve today’s problems but be positioned to handle problems of the future, as yet unseen. An organization that does not consistently strive to and makes progress in adapting to the changing nature of markets will not maintain its current place in its market. It will wither and eventually die.
The Innovative Culture
Innovation is the fundamental source of growth and sustainability in an organization. It takes a concerted effort to establish and maintain an innovative culture. It seems like a simple enough idea, but developing such a culture requires a clear strategy. A truly innovative company is one that has developed a strategy that is relevant to the business but unique in its market.
Organizational leaders might want to innovate. They might want leadership in their industry or market, or even to move into new industries. But they may not know how to develop the strategies and create the pathways that will get them there. Sometimes, in this quest for position in the market, employees are simply given broad permission to generate new ideas and maybe to test them. This blanket permission approach is likely to end up producing a number of ideas, but ideas that are unrelated to a viable strategy. While an organization might indeed test a variety of ideas, make several small investments to discover will what work, the investment choices need to be part of a cohesive overall strategy.
Innovation requires an environment of trust, an environment conducive to the generation of new ideas is one in which employees are comfortable, in which they feel free to express ideas and find pathways for achieving their goals. There is always an inherent risk in new ideas. New ideas may sound implausible or and even just kind of crazy. But if people think their ideas will be ridiculed, they won’t share them. If they feel micro-managed, feel like every move is being watched, individual thinking and creativity will be suppressed.
Not every idea that is generated gets tested. And not every idea that gets tested works. In fact, failure is actually a key part of the innovation process. It is a failure that allows learning to take place. Learning is an iterative process. From that process come, new models, breakthrough ideas and just plain serendipitous advances. Many innovations are the direct result of learning acquired through earlier failure.
Because of this, some tolerance for failure is necessary. While an organization might indeed test a variety of ideas, make several small investments to discover will what work, the investment choices need to be part of a cohesive overall strategy. While necessary, failures should result from small risk experiments, small investments of cost and time, not from major rollouts of new products or processes.
The environment that supports experimentation is one of critical inquiry and discussion, of trial and error, and of the courage to fail. That doesn’t just happen overnight. It starts with a recognition by management that, in the ever-changing business world, innovation is survival. It starts with a philosophy, one that recognizes that there are multiple sources of new innovative ideas and that people need to do meaningful work. And above all, it starts with a management team willing to embrace the challenges of a new paradigm.
Innovation is creative by nature, but it isn’t just about creativity. Nor is it just about testing and learning. It is about transforming new ideas into tangible results. Execution is the key, the critical result. Nothing changes until the new processes are implemented or new products are made available. The real bottom line purpose of developing an innovative culture is to create products and processes that sustain the organization. This innovative culture not only creates paths for solving today’s and even tomorrow’s foreseeable challenges, it also creates a pathway for solving problems and meeting new challenges that we cannot predict.
The Role of Management
In the current business environment many companies, large and small, are redefining what they do. In some areas change is happening so fast that a company may find itself in new areas, even in a new business. Boundaries become blurry. There is no one set of rules to guide this rapid change. So how do companies survive and thrive in what has become a rapidly changing global market? Innovation is the key to moving into the future. It’s a hard quality to define, but it is the factor that leads to revolutionary breakthroughs and too long term success. It’s not enough to simply say that innovation is important, to declare it a priority. You actually must be willing to take steps into uncertainty, to try things. The leader’s role is to create an environment where new ideas can come to the surface and be accepted and recognized. This requires providing just enough structure to help people navigate and function effectively and enough support to allow the expression and development of new ideas.
It’s not just about giving employees’ broad permission to think up new ideas. A random approach can end up causing people to work at developing unconnected ideas that don’t really coalesce into a workable plan. Strategies more likely to find the best ideas, the ones most likely to work, involve people collaborating, sharing insights and ideas from across the company.
Sometimes companies approach innovation by scheduling brainstorming meetings, providing whiteboards and lots of sticky notes, or they open a lab devoted to developing innovative ideas or processes but then become frustrated because they don’t see results. Those companies want to innovate, to create something new and gain an enhanced place in the market. But they have no clear viable strategy for how to do that. Creativity, idea creation, is important. Every perspective is considered. But, in the end, ideas will only have value if they are actionable and action is taken. Innovation is about bringing those ideas into reality.
There are several things management can do to create an environment where innovation can flourish. Here are a few ideas for developing an innovative culture
About Creative People
Innovation first takes imagination. Someone must have a vision, an idea for “what could be.” Those ideas can come unexpectedly from any place in your business environment. Sources might include employees, customers, suppliers, even competitors. But the reality is that most people, including organizational leaders, are somewhat uncomfortable with uncertainty. And uncertainty in management leads to a short-term focus and to short-term goals. That might feel right, but the failure to also have a long-term plan for developing new systems and new products can, in the end, lead to the demise of the organization, ruin its value.
Because this is true, there needs to be support for the development of new ideas. To this end, organizations need to develop and support persons other than the specialists who carry out current functions. There needs to be room for people who can tolerate a level of ambiguity and who can generate ideas for what “might be possible”. Leaders need to create an environment where ideas can come to the surface and innovation can happen. Management must lead the way, to create an environment where visionaries are accepted and recognized. The balance between objectivity about the present and a passion for new ideas must be supported and protected.
Not everyone is equally likely to have compelling creative ideas about future possibilities. People who develop creative new images and ideas are often a little outside the mainstream. Sometimes they may not have a strong appreciation for stability or predictability. Because they may sometimes seem a bit “out there”, it can be easy to overlook them or not see the value of some of their ideas.
In a static system, you might not even see the creative mindset of employees. But in a system that is ready to embrace new ideas, those individuals will emerge. You may begin to recognize them in meetings. They may be the individuals that people look to when there is a difference of opinion during discussions. They may be the ones clarifying to get people on the same page, or the ones looking at the big picture or talking in global terms. They may be the individuals who tend to bridge differences or plug the gaps in a plan. They may emerge in informal gatherings where the exchange of ideas or personal experiences is more relaxed and ideas may flow more readily. Don’t be afraid to surround yourself with people who have ideas different from your own. Idea generation is at the heart of innovation.
It’s important to take into account that not everyone in an organization will be ready to change behaviors at the outset. Expect some misgivings and some resistance. But if you want to build a climate that supports innovation, you will need to take the lead role. Leaders must be the role models for innovative behavior and they must provide incentives to support that behavior in employees.
The Innovation Decision
When considering a change, take time to talk with both current and potential customers and with your employees. Find out what they need, what they want. Then create a hypothesis that says implementing this change will have some defined positive effect. Then test it. Implement the change on a limited basis. Then evaluate. Did sales increase? Was expense or time saved? Did a new market open up? Make your decisions based on data rather than on opinions or feelings.
Innovation should be a part of the overall strategy for your business. But innovation activities do, to some extent, encroach on everyday functions. They can be perceived as distractions or encroachments on core business functions. Some managers may feel anxious over what they perceive as a distraction and might express their discomfort as concerns about risk.
Therefore, it is important to communicate the goal of the innovation efforts across the organization and to stress the need to ensure competitive advantage by constantly improving both the speed and effectiveness of the business and of ensuring relevance as the business environment changes.
At some point, you will have collected ideas about changes, modifications, possible new systems or products and it will be time to evaluate those ideas and decide whether to implement any of them. The real test of whether innovation can become a business success or not is:
The other overarching decision about implementing a change is about whether or not what you are considering supports the strategic goals of your organization. Will this change take you in the right direction?
While any changes you make should have a positive effect on revenue, your plan for the organization should also make sense in terms of overall goals. Some changes, when deployed, may involve adjustment to current processes or addition to a product line. But strategic change can and does sometimes mean large scale change. In either case, innovations you decide to implement should be consistent with the overall direction of the organization. Implementing even good ideas doesn’t make much sense if it takes the organization in a direction you don’t want to go.
In general, coming up with ideas is not much of a problem, but turning them into something that delivers value, not just something different, can be another story. So how do you measure an intangible like innovation? Measuring the efficiency or quality of innovation requires the gathering of real-time relevant data and smart decision making. Common project measurements such an “on time” and “on budget” may not tell you what you need to know. Consider that measuring Innovation effectively may involve innovative metrics. An effective measurement process will be unique. The first step is defining what innovation means within your organization. Determine and gain agreement about which activities are innovative, choose key performance indicators for those activities and then develop your evaluation efforts around them.
Be strategic about testing. Measure what is meaningful. This means only assessing those elements that contribute to providing a high-quality product or an efficient meaningful process. Measure to see what works – no more, no less.
The only way to really test something is to try it. You will need to build a minimum viable product or design a test version of a process. Then you need to deploy it on a trial basis and gather input. Seek feedback from multiple areas. Be ruthless. You want to make needed improvements now – before deployment.
The innovation process can result in a wide variety of benefits for an organization. Possibilities include:
Transformation: radical change that is measurable and positive resulting in a more viable organization, one that is poised for future success
Simplicity and Cost Reductions: process or products that are streamlined and simplified resulting in a reduction in both overall and specific expenses
Cultural Transformation: An environment where change is no longer scary or a barrier to innovation, and where all members of the organization can provide meaningful input.
Quality: Enhanced quality of both products and services
Customer Satisfaction: Improved response times to customers and increased satisfaction
Increased Market Share: An enhanced ability to attract new customers
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