Innovation on the Cheap

I've just returned from the PDMA's Fall innovation event and had the chance to talk to a number of people who are involved in innovation initiatives. It's clear that many senior executive teams are very interested in becoming more innovative. It's also clear that few of them understand the commitment and investment necessary to innovate on a consistent basis. They want innovation on the cheap.

Now, it is entirely possible to create a new product or service on occasion, through the dogged determination of a small team of people or serendipitous insight, but no firm can count on that as a consistent basis for new products or services. Without defining an objective and consistently reinforcing the efforts of a group of people who support and enable an innovation process, most firms simply won't generate a lot of new ideas. And they certainly won't produce a lot of new products or services.

Sitting in on some roundtable discussions, the most consistent refrain was that the management teams recognized that they'd cut as much as they dared to, and now needed to grow or differentiate. Cost cutting as a long term strategy has just about run its course. Now, firms need to be able to create and launch interesting new products and services much faster. The product development process and launch processes have been refined, but there are few if any ideas flowing into the system.

Additionally, everyone seems very focused on PRODUCT innovation. Let's look at the figures. The US economy is over 80% services, yet most of us are still focused on product innovation. We need to think more broadly about service innovation, packaging innovation, new processes, new business models. The benefit of these types of innovation is that they are more easily developed and deployed, and don't necessarily cannibalize your existing positioning or products.

I sense a real frustration from many mid-level managers who've been asked to create new products and services but haven't been provided with sufficient leadership commitment, resources or funding. Innovative ideas can bubble up from anyone in your business, but the commitment and cultural attitudes flow from the top down. Too often, there's an expectation without the necessary investment or commitment.

Innovation is not cheap, and it is not easy. It requires a full commitment from the senior leadership - in terms of attention, communication, strategic focus and investment. If these are lacking, then the firm will suffer. Probably one of the most telling problems is that while every speaker identifies senior management commitment as one of the most important drivers for innovation success, none of the senior managers are at the event to hear the message.

I know I am preaching to the choir, but we need to find ways to create a compelling message to take to the senior executive teams to link corporate strategy, innovation investment and long term profitable growth. Without these linkages, the executives will continue to demand innovation but will not provide the necessary investments, and most of the rest of the organization will continue to operate as it always has. The complete dominance of process excellence as a strategic focus over the last ten years has stripped many firms of the ability to take risks, look beyond a quarter or two or even consider creating new ideas.