May 01, 2015

Innovation as Usual

What is innovation? To many managers and executives, the idea of defining innovation can be daunting. Innovation may not be simple but it is straightforward. And in today’s fast-paced market, it is just as standard and as essential as any other core business function.

To frame it in another way, was there a time when HR was not a core function of a company? Many might say no since HR has been a critical business function for quite some time. However, the concept of HR is fairly new – in the early 1900s, we started to recognize its value and in the 1920s, we started to formalize worker rights and HR processes. In today’s business world full of multi-billion dollar companies with thousands of employees, it would be impossible to imagine a company where HR is not a core business function.

In many companies, innovation today is a business process in the same transition period that HR was in during the early 1900s. No matter what you read, everyone is talking about innovation. Executives and managers know that innovation is a priority, and many companies are trying to find ways to innovate within their industries. The problem is that some companies are unsure of how to get started.

Why is it Difficult?

Often when we think about innovation, we automatically consider it to be an amorphic concept which has no structure, is complex, and immeasurable. But in reality, innovation can be quite the opposite. It is possible to structure the innovation process, and make it as measurable as any other function in business.

The difficulty is not that innovation is too complex, but rather that companies do not precisely define what innovation means to their organization. Companies need to consider what makes innovation a success.

Getting Started on Innovation

One of the first steps a company should take towards solving the problem of innovation is to define what innovation means to the organization. This involves considering how important innovation is to the company and its business model, and what strategic purpose innovation would serve. Managers should consider where the company currently stands in terms of innovation, and identify the greatest areas of opportunity for innovation within the organization. Also important is to consider if innovation is a priority, and if so, does the organization or its key functions need to be re-structured to make room for innovation. And finally, it is important to discuss the implications of not innovating.

Many managers think of innovation as simply new products or services. But really, innovation applies to all business activities, not just end products. Innovation can be in logistics, merchandising, business strategy, marketing, selling, or even within human resources and recruiting. The idea behind integrating innovation within the core business model is to think creatively and holistically about the entire business concept and to rethink the way the company does things.

Types of Innovation

Types of Innovation

In companies that embrace innovation as business as usual, innovation has its own budget, goals, teams, and projects.  In many leading companies known for their innovation, managers encourage “what could be?” thinking rather that “what should be?” thinking. It’s a continuous ongoing process that goes beyond one specific project. For example, Google allows employees to work on innovative project for 5-6 hours per week, and 3M encourages workers to use office time to develop innovative ideas.

Bringing innovation into the core business involves creating an environment that encourages collaboration, creative thinking and accepts failure as a part of that process.

Measuring Innovation

While innovation programs can be costly, when they help to meet corporate strategic goals, they are often worth the investment. So it’s important to align innovation objectives with the company’s strategic agenda. Assessing the connection between the innovation program and the company’s goals provides an opportunity to measure innovation. Some common innovation metrics include looking at the impact of innovation. For example, after the implementation of a service innovation, is the company seeing better customer service ratings? Or after a transformation of a business process, is there more efficiency or productivity? For an innovation program to really become business as usual, it needs to generate value.

The Generation of Value Through Innovation

The Generation of Value Through Innovation

Other metrics look at the process of innovation itself. For example, how many innovative ideas were actually acted upon and implemented? Or how quick is the turnaround between idea suggestion and implementation. Innovation programs are naturally creative, and require flexibility and some risk-taking, but the rules of planning and goal setting still apply.

Measuring the Innovation Process

Measuring the Innovation Process