WHITEPAPER
Assessing the State of Innovation
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By Dave Matheson
President and CEO
SmartOrg
In partnership with Frost & Sullivan
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Below is an excerpt from the whitepaper. Download the full white paper (text-only) PDF here.
The last few years have seen a major wave of management attention on innovation. For a time, regular articles appeared in Business Week and other publications; a series of prominent books like Blue Ocean Strategy, Open Innovation, and The Innovators Dilemma (along with a flotilla of greater and lesser books) vied our attention ; new innovation buzzwords like “Design Thinking”, “Idea Management” and “Voice of the Customer” demanded action.
Swept away with enthusiasm and by the promise of easy growth, many of us tried many of these innovation approaches. We had varying degrees of success.
After the recession and with brightening prospects, it is a good time to look over this past wave of attention on innovation and assess what we have learned. In June of 2010, a group of about 30 executives active in innovation from a variety of industries (see end of article for list) came together to share experiences and develop their collective expertise by assessing the state of innovation.
Some of these approaches are truly new and great ideas that will become part of the canon of innovation. Ignore them at the risk of hampering your growth. Others of these approaches are great ideas, but you probably already know them, a sort of “old wine in new bottles.” We endorse these approaches and celebrate their renewal in the recent wave. A few of these approaches were significantly oversold or ineffective, “innovation fads” if you will, that will fade into history like dot com enthusiasm. Ignore these.
The bottom line: our executives identified four areas of innovation practice as must-dos. If you have started down the path in these areas, kudos to you—keep up the work of continuous improvement. If you have not started these things, you risk missing out on some of the real gems of insight polished over the last ten years. Here are the top four vote-getters from a list of about twenty candidates:
Allow innovation to challenge your strategy. It is an article of faith that innovation should start with strategy: first figure out what your corporate strategy is, then innovate around it. To everyone’s astonishment, we found out that this conventional wisdom is wrong and counterproductive, or at least very misleading.
At the beginning of the assessment, we asked executives to reflect on what they had tried in innovation in the last several years and to make a list of things they were disappointed with and things they felt had produced fantastic results. No theory, no pitches, just what worked and what did not work. Then we clustered the experiences on each executive’s list into meaningful groups to map out the innovation landscape.
One of the clusters we named “fit to strategy.” The cluster contained a surprising number of disappointing experiences, with people calling out things like “innovation aligned to corporate strategy” as a major problem. During the discussion of this cluster it became clear that innovation frequently occurs at the boundaries of the existing business, and therefore often seems not to fit. People impose constraints and assumptions on the current business and strategy too quickly, killing great ideas too early and unintentionally converting innovation into mediocrity.
History is littered with examples. It is only a bit of an exaggeration to say that many great companies were created in frustration as an effort to escape the strategic shackles of a now moribund predecessor. Xerox PARC famously invented the personal workstation, computer networking and laser printing, while Xerox only capitalized on laser printing. A host of other companies, such as Apple and 3Com to name only two, have built an entire industry around PARC innovations.
Our group also came across examples of ideas that at first blush challenged corporate strategy, but with the maturation of the idea helped reinvigorate it. Paraphrasing one executive, “In the end, our strategy is to serve customers with our capabilities. This imperative trumps pre-conceived ideas dreamed up in the corner office. Properly positioned, innovation creates a learning opportunity for the executives about what their strategy should be.”
To be clear, we are not saying strategy is unimportant. Usually goofy ideas or opportunities a company has no business pursuing are properly screened out because they do not fit the basic capabilities of the company. Our executive group would be horrified if someone argued that it was OK not to fit to strategy as a cover up to fund a poorly conceived idea or to avoid the heavy lifting involved in demonstrating why the innovation is, in fact, a great strategy.
The take home is this: if you begin only with strategy, you probably will not hit your innovation growth objectives. You need to allow innovation that is a bit off-strategy to occur, and create the space for hard work to demonstrate that the strategy should be refined.
How do you do this work? Where do innovations with enough potential come from? How do you demonstrate something so powerfully that it becomes compelling? The next two top-vote getters provide insight on these questions.
To read more, DOWNLOAD THE FULL WHITEPAPER (text-only) PDF here.
About the author
Dr. Matheson has helped senior management of firms in the United States and Europe improve the value of R&D, product development, innovation, capital investment and strategy. His practical experience covers a wide variety of industries, including software development, biotechnology, telecommunications, chemicals, pharmaceuticals, manufacturing, electric power and entertainment. He is co-author of the best selling book, The Smart Organization: Creating Value through Strategic R&D (Harvard Business School Press).
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