Innovation: coming soon to a company near you?
In case you hadn’t noticed, innovation has become a favoured buzzword of late
Thursday, September 30 2010 || Comment || BY Brett Roberts
Innovation is often most obvious in the form of new products entering the market, but there’s more to it than just creating a new widget. It is about revisiting, rethinking and re-engineering anything and everything from business models to customer and supplier engagements through to organisational structures and financial processes (with the US sub-prime meltdown being a wonderful example of how the latter, particularly when poorly monitored or controlled, might not always be a wonderful thing).
The concept of ‘doing more with less’ is now an everyday reality in the business world and while funding and other resources have become more tightly controlled over recent years the requirement for companies to compete vigorously has, if anything, increased and, as a result, many of them now view improving innovation levels as crucial to their survival and success.
Innovation itself can be subject to innovation. A great example of this is the current move from closed innovation models to more open approaches. Once upon a time companies operated under the prevailing view that the best way to stay one step ahead of the competition was to do all of their innovating inhouse. For larger companies this often manifested itself in the formation of large R&D departments and the amassing of intellectual property and patent portfolios.
Today many companies are beginning to embrace the concept of open innovation and now view themselves and their activities as part of a larger environment or ecosystem. Under the open innovation model they are willing to acquire or licence innovation from outside their organisation and provide some of their own IP to other organisations via similar means. The book Wikinomics, by Dan Tapscott and Anthony D Williams covers open innovation in considerable detail and provides many examples of companies that are using this approach and succeeding as a direct result.
However, it is not just about models and systems. Leadership is, I believe, the single biggest determinant of long-term innovation success. Without senior-level vision, engagement, sponsorship and understanding it is a relatively safe bet that innovation initiatives will eventually fall prey to cost cutting or slow decay.
The job of a company’s leadership is to ensure that innovation becomes part of the organisation’s culture, which is embraced and encouraged and with internal processes and policies set up and managed in a way that ensures this happens. It is not an easy task.
Successful organisations are inherently risk averse and moving a culture from its comfort zone towards intelligent risk taking will often run into considerable internal opposition. Almost everybody in management or leadership positions will have had the ‘take more risks’ conversation at some point, but being willing to take a risk is a million miles away from actually being able to do so.
For the first time ever, there are now four generations in the workforce: Traditionalists who were born between 1922 and 1945; Baby Boomers (1946 to 1965), Generation X (1966 to 1980) and Generation Y (1981 to 1995). If you think about the risk profiles of those generations they vary dramatically for reasons of both age and background.
For example, Traditionalists, who may now find themselves in very senior roles, have a very different appetite for risk given that they are approaching retirement and were raised by parents who lived through the Depression. Generation Ys, on the other hand, are often more willing to take risks and, as they have grown up immersed in technology, they are a potentially lucrative resource of latent innovation talent.
Engendering a culture of innovation across such a diverse workforce is no mean feat. But the opportunities innovation provides are real and it is for that reason that many organisations today are embarking on long-term innovation initiatives.
At least one study — the Innovation Index of New Zealand, conducted by IBM and the University of Auckland — has shown that this country’s levels of innovation are static or slowly declining. For a nation built on the number 8 fencing wire mentality and facing a somewhat uncertain economic future, I find that more than a little worrying. If I had my way every business leader in New Zealand would be given a copy of Wikinomics and told to read it. And there would be a quiz afterwards.
Brett Roberts is a partner at Business IQ
Good article. I recently spoke at a conference just before Wikinomics author Dan Tapscott. I thought it was the greatest irony that while he talked about online 'open' collaboration, over 1200 people sat in their seats at the conference and were not challenged to create or collaborate in any way. It felt like a lost opportunity.
I think the bigger issue is this -- manufacturers have learned how to invest in R&D for their new ideas, processes and products that lead to tomorrow's profits. R&D has sophisticated tools and models to create a 'capacity to innovate.' Yet the majority of all organizations in society are service based. We have yet to conceptualize new models, tools and processes to build an equivalent 'capacity to innovate' in our service sectors. Hence, we drag inappropriate models and tools from the manufacturing world into the service sectors and then wonder why they do not work well.
Posted by ed bernacki at 03:50 on October 3, 2010
I would say that is the gen x group which is the most innovative at this time, maybe because they has experienced ups and downs on an economic level. A bit of balance and have role models from the baby boomers to aspire to. Ge n Y is often seen as innovative but often they just use the tools x built.
Innovation requires passion, and when you have had it good all the time, passion becomes lacking.
I agree with your comments about leadership, but again suggest that a little passion in that respect goes a long way.
Posted by andrewnim at 09:33 on October 1, 2010
Good point you make about innovation models that are appropraite for the service sector. As you rightly point out, innovation encompasses not only new product development, but the development of new services, improvements to operational processes, improvements to organisational capability and new marketing methods.
Check out http://www.innovatingnz.org.nz/consulting/sub-categories/service-design?rrn=2421. Here is a service specifically designed to help service sector companies to innovate and improve company performance.
Innovating NZ is a NZ polytechnic initiative to encourgae the transfer of knoweldge and technology from the ploytechnics to industry.
Posted by Alexis at 09:35 on October 7, 2010
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