As I make my way through my morning routine, innovation bombards me. The word “innovation” is in every radio commercial, touted by advertisers of universities and car repair shops alike. Everyone wants to be “innovative”. But what is “Innovation”?
To understand why innovation is so appealing, we need to get past the buzz word. The allure of innovation is that it is the opposite of “stale” or “known”. Innovation represents change that brings a significant and positive impact.
In the business environment, companies often struggle with defining the difference between incremental change and real innovation. While incremental change is frequently managed through continuous improvement teams, breakthrough innovation falls into the domain of product development. But the product development processes are often too slow or labored to produce “game-changers”. When Heinz introduced its upside down bottle that ensured that its traditional ketchup formulation would no longer sputter as it found its way to my hotdog, was that innovation? The history of fracking dates back to the 1860’s – is that innovation?
Each company must define innovation in the context of its own business. NineSigma’s point of view is that innovation is defined as something that:
• Is significantly new or different
• Is broad in scope and impact
• Results from a process that translates an idea to an outcome
• Yields commercial impact, measured by value to the customer and commercial benefit to the creator
Whereas most organizations are programmed to leverage historical perspective to minimize risk and avoid failure, innovative processes are regularly suffocated by this culture. Organizations (and people) by nature are resistant to change, and there are abundant examples of how “not invented here” syndrome stymied a company’s innovative opportunities.
Instead of setting the expectation that an organization can be reinvented with an executive mandate, NineSigma recommends adopting elements of an innovation roadmap over time that incorporate engagement with the external innovation community. We coach our clients to embrace three basic best practices to launch them on an effective innovation path:
Define the company’s core competencies.
What is your organization good at and where are the gaps? What knowledge, expertise and technology are unique to your organization? In what areas do you lead your industry (and in what areas do you lag)? Knowing the answers to these questions will lay the foundation for an innovation strategy that combines the best of internal and external innovation.
Embed innovation into the nerve center of your organization.
Innovation is a tool for your R&D and Product Development teams – it is not intended to replace them. Many organizations evaluate their development portfolio against three filters: value and commercial impact, technology readiness, and required investment. The concepts that yield the greatest impact may also be commercially immature, requiring significant financial investment, or they may be outside the organization’s internal know-how. While these factors present as impediments that may detract from their viability in traditional development channels, these factors create ideal opportunities for innovation teams.
Open Innovation (OI) is the process of reaching beyond your team, company or industry for technologies, solutions, and ideas/knowledge available through global solution provider networks. Companies that successfully leverage open innovation are able to accelerate the development of groundbreaking products and get them to market faster. Many leading organizations even require that specific R&D, product development, or even marketing initiatives include an OI component, because they recognize that “We don’t know what we don’t know.”
As these best practices yield successes, the organization becomes more receptive to incorporating more innovative processes instead of viewing these changes as a threat.
Companies across industries are adopting the practice of collaborating with external innovation partners to open themselves up to new approaches and solutions from within and outside their industries. There are many benefits to this approach, but there are concerns as well. For example, will IP be compromised as a result of working with external partners? Patents are still needed, and IP can be protected within an OI environment. Companies searching for solutions can keep their needs hidden, for example, by sponsoring an anonymous technology search. The interactions with potential solution providers can be managed in a non-confidential environment where no IP is disclosed by either party until the discussions progress and an NDA is implemented.
On the flip-side, many companies are choosing to be open with many of their needs and engage with solution providers in a more transparent way. A food company, for instance, might be looking for a more environmentally friendly alternative to its chewing gum formulation, and is not afraid to let people know.
There are choices and multiple paths to the best solution. Being open is not a “one size fits all” proposition.
Denys Resnick is the executive vice-president of NineSigma, an innovation services company that helps organizations in the public, private and nonprofit sectors find new solutions, knowledge and partners to accelerate the innovation cycle.