Innovation Value and key Drivers to Success

The ability to increase business value through innovation is a critical success driver for most organizations. The markets that we operate in provide both opportunity and risk from an innovation perspective as they are rapidly changing.

Markets provide opportunities if we get it right and threats if we do not, particularly given the intense competitive nature of most industries. Our quest to realize innovation results is further complicated by the complexities involved for most firms – the sheer number of players to potentially coordinate with in the value chain; rising costs; margin erosion; increasing regulatory, customer and consumer demands; evolving business models; shorter cycle times; and new sources of competition, just to name a few.

The good news is that if you can get it right, you stand to gain a competitive advantage and will reap the benefits of increased revenue and profits. Hence, the lure of identifying new growth opportunities, increasing volumes and market share, securing a competitive advantage, improving margins and strengthening brand loyalty, provides a powerful incentive to be successful at product innovation. However, the challenges that organizations face do not make this easy. Developing new products and technologies is consequently one of the more complicated initiatives an organization can undertake.

Take for example the telecom market wars occurring over the past year. Samsung and Apple have emerged as two clear winners that have been able to leverage powerful innovation machines. The competition (Nokia and Research in Motion) have stumbled badly in their respective innovation capabilities and ultimately paid the price in the marketplace.

Figure 1: The Innovation Performance Framework

The Innovation Performance Framework™ (Figure 1) is a useful framework that examines the complexity and addresses some of the challenges in product innovation by separating them into four key themes: product innovation strategy; portfolio management; new product development process; and climate and culture (see Figure 1 for illustration). Interestingly, past studies suggest that organizations that excel or master these four key themes do, in fact, achieve better results from their product innovation efforts.

Let’s examine some of the challenges innovators have in each part of The Innovation Performance Framework:

Product Innovation Strategy: It all starts at the top. If there is not a clear and crisp product innovation strategy that supports the business strategy, problems begin. Some key challenges are: Do we have one? Is it clear? Is it the right strategy? Is everyone aligned? Are people walking the talk? Are there realistic expectations on new product revenues?

Lack of a product innovation strategy tailored to support the strategy of the business is often cited as a most common problem.

Portfolio Management: This is the strategic allocation of resources that ensures innovation efforts advance the product innovation strategy. This is also the prioritization of projects in the pipeline to ensure that resources are being tactically deployed on the right projects for the right reasons. Some key challenges are: too many projects and not enough resources to get everything done, difficulty in deciding which projects to select (when evaluating multiple projects that are competing for the same resources), difficulty in optimizing the portfolio of projects (i.e. short-term versus long-term, high-risk versus low-risk), poor alignment on priorities, and resources that are simply stretched too thinly.

Idea-to-Launch Process: This is the roadmap or playbook that takes each project from idea to launch including all of the activities and decisions that must occur in order to be successful. Some key challenges are: not enough high quality ideas; not having a standard playbook that can be used repeatedly for projects; leadership that cannot articulate the importance of their idea-to-launch process; employees who have not received training or have not developed a knowledge foundational base on and around innovation best practices; not tailoring the development process to support the business strategy and project needs; being unable to say no to projects and/or the need to be realistic with actual time and resource expectations that otherwise lead to unrealistic speed-to-market pressures; expectations for resource commitments to work on projects that are not in the official process; too many minor projects that negatively impact the resources available for innovation projects; and the inability to yield effective decisions in a timely manner (i.e. everything is a high priority thus creating ‘gridlock’ which in turn results in significant delays). It is no wonder given the above why achieving and then sustaining success is so difficult for many companies.

Climate and Culture: This is ‘the way the organization works’: the typical behavior, norms, values and leadership style that enables or hinders product innovation performance. Some key challenges are: difficulty in striking a healthy balance between ‘discipline and focus’ and ‘flexibility and judgment’, driving projects to successful completion while managing cross-functional teams (i.e. shortage of trained project leaders, staff turnover, gaps in necessary skills, lack of training and/or experience), management of failure, and poor support from other parts of the organization. In other words, creating and supporting a climate and culture that supports innovation company-wide.

How is your organization performing at product innovation and how does it compare to other companies? Without clear metrics and a way to compare them it can be difficult to know whether you are doing good or bad at product innovation; whether your investment in R&D is producing the desired results, and what areas of your performance in and around the Innovation Performance Framework might need to be improved or strengthened. The good news is you can change, the question is do you want to?

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Why Is Creativity More Important Than Capitalism?

Creativity (Photo credit: Mediocre2010)

Haydn Shaughnessy, ForbesContributor

Do you know your creativity quotient?  Creativity sounds a little weak, a touchy-feely topic, but it turns to be one of the most important memes of the past 100 years, and very definitely ranks alongside concepts (or ideologies) like capitalism in the pantheon of big ideas.

I admit to being a creativity sceptic. When it came into vogue thirty years ago I cringed. Creative? What’s wrong with busy? Or dedicated. Or hard working. But creativity’s rise – measured by the use of terms “creative” and “creativity” in Google‘s nGram database – has been relentless for over a century. It is NO fad.

For those that don’t know it the nGram database contains roughly 4% of all books ever published, in the case of this data in the USA and Britain.

The problem of creativity – how to manifest it in disciplined environments – hasn’t changed much during that period.



But if you look at the chart below you can get a sense of its importance.  The use of “creative” dwarfs terms like technological progress and scientific progress.

In fact digging a little deeper I found out:

The use of the language of creativity is increasing when people write about scientific progress. Progress itself is a term in declining use, seemingly replaced by the idea of creativity, at least in the sciences. You can’s see that from the chart – to get to that data I examined the use of a variety of terms over the period 1960 – 2010.

The best Google nGram data goes up to 2000 but I checked search interest in these terms, post 2000, and the patterns continue.

The use of creativity is increasing in business and management literature, declining where people write about religion and education, and of course rising when people write about cities.

Jonah Leher’s book Imagine underlines the slacker nature of creativity but also it’s importance. Let’s face it the quest to be more creative as a society is as old as (modern) business.

Creativity is big in entertainment too, naturally, if entertainment is taken to include art and music but surprise, surprise the use of the term in entertainment declined in the period 1981 – 2000, while it increased in association with business and management.

Is all this just a reflection of publishers pumping more books out? No, all data is normalised.

Is there anything to conclude from the data?  The themes of creativity have been pretty consistent down the years – how organizations stifle it, how necessary it is, and how it creates risk.

The one lacking ingredient seems to be a creative answer to those problems, though I think we may be on the cusp of one (more of that later in the week).

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