Tuesday, February 15, 2011

Innovation: The last people-centric process

It's really astonishing to realize how little most firms understand about innovation, especially the fact that people are paramount to innovation success.  In the title I've made a fairly definitive statement.  Innovation is the last people-centric process, and yet we starve innovation efforts of our best people and chip away at the time dedicated to innovation even of the people who want to participate.

I'll claim innovation is the last people-centric process because most firms don't have a well-defined innovation process.  If you think carefully about how most businesses work, they are organized around well-defined business processes, some of which are named.  The procurement to payment process manages how a business acquires products and services and how it pays for them.  The order to invoice process manages how a business receives customer orders for goods and services and how it collects payment for those products and services.  These are well-defined, well-understood processes that have been optimized.  People who "belong" to these processes understand their roles and responsibilities, and a software solution, usually an ERP or financial system, supports and enables the process using workflow.  These processes are the lifeblood of the company, they are well-documented and carefully preserved.  People in these processes are there to ensure the process works as designed, to manage exceptions and to defend and protect the processes from disruption.

So, what's the most important activity in a business that isn't defined as a process?  Innovation.  Most innovation, if it happens at all, happens in an R&D lab or as part of new product development.  While most product development teams have well-defined "stage gate" programs to help develop and commercialize a product, they don't have well-defined and organized idea generation and development methodologies and processes.  But the lack of a defined process isn't the only reason that innovation is a highly people centric process.  There are several other reasons.

First, people generate ideas.  For the foreseeable future, people will be much better at generating ideas and spotting opportunities than machines.  While we may use automatic ordering to place a new purchase order or use automated triggers to pay invoices, people are required to generate ideas.  There's no automation and no regularity to creativity and the ability to spot ideas.

Second, people place ideas into context.  We need to understand the future needs of our markets and the unmet or unarticulated needs of our customers.  No machine, no automated process can do that work.  Only people, well-trained and highly engaged, can do that investigation and synthesis.  Good ideas that don't solve important problems are useless.  Customer needs that go unresolved by new products are missed opportunities.  Nothing about this can be automated - well-trained people who understand their roles and responsibilities are critical.

Third, people are necessary to evaluate, judge and develop ideas.  While we may seek to develop a set of criteria and have a "system" to evaluate and select the best ideas for development, there are too many subtle factors and too many unknowns for a system or process to do this without the intervention of people who exercise their judgment and their "gut".  We may long for a systematic, computerized method for idea ranking, evaluation and selection, but evidence shows innovation is far from that probably unreasonable goal. 

The fact is that people play a disproportionate role in innovation when compared to any other important function.  That's because, unlike many other processes, the work can't be divided into simple tasks that can be automated by a computer or accelerated by inanimate processes.  So here's the important question:  if people play such a vital role in innovation, why do we starve innovation of the best people in the organization?  If people are so vital to innovation, why do we intentionally limit the amount of time we allow for innovators to work?

Further, recognizing that people are the most important input to an innovation process, why don't we provide the necessary tools, training and leadership for those teams to be successful?  Why don't we define a consistent methodology that they can follow to improve their chances of success?

Over the last twenty years, through business process re-engineering and the implementation of Enterprise Resource Planning and management systems most businesses have optimized most of the major processes in the business.  That work has led to greater efficiencies and lower costs.  However, most businesses are still confronted with the facts that 1) innovation is important and 2) it is a very people-centric process while 3) people cost too much and innovation is too risky.  So many businesses pretend to innovate by placing people who are available but not the "best" on a short-lived innovation effort.  This contradicts everything we know about innovation success.  Why don't most businesses place at least some of the same emphasis on improving the innovation process (and people involved) the way they did on optimizing the other important processes?
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posted by Jeffrey Phillips at 6:59 AM

4 Comments:

Blogger Reff said...

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Yours faithfully,
@iamreff

9:17 AM  
Anonymous John Cousineau said...

Jeffrey: thxs for this post. Great points, thoughtfully made. My 2 bits: B2B sales, too, is a people-centric process and it, too, is innovation-challenged. Fundamentally, most business innovations over the past couple of decades have been around improving efficiency. Next gen innovations will center around improving effectiveness. Systems of Engagement vs. Systems of Record, in Geoffrey Moore's terms. IMO, it's going to be incredibly rewarding and a lot of fun for those with the courage and curiousity to seek better than what's always been.

Trust this adds some value. - John

4:49 PM  
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Blogger better ck said...

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