Wednesday, January 18, 2012

What is the definition of "innovation"?

As an innovation geek, I always enjoy reading over the latest reports about innovation.  Like a kid at Christmas I eagerly await reports on innovation from management consulting firms like PWC or Booz Allen.  They provide a yearly assessment of the world of innovation, and especially what CEOs believe to be true about innovation.  And, like Christmas, many of them occur at this time of year.  Recently, GE published an innovation report entitled the GE Global Innovation Barometer.  It is worth taking a look at if you haven't done so already.

One of the items that surprised and, yes, troubled me the most is to be found near the back of the overview presentation, on page 30 of 32 pages.  That's where the report analyzes how CEOs define innovation.

The report offered five definitions and asked the respondents to choose two.  Here are the five definitions:
  1. The implementation of new processes, products, organizational
    changes or marketing changes
  2. An environment/culture that embraces positive change, creativity
    and continuous improvement
  3. Research and development, new intellectual property (IP), and
  4. Staying ahead in the market and being a market leader
  5. Solutions that benefit society and societal outcomes (including
    environmental outcomes)
These definitions don't trouble me too much, although they define very different things.  What troubles me is that no definition above was selected more than 35% of the time by the respondents.

I'm sure we could spend hours debating about the definition of innovation, much like ancient scholars argued about how many angels could dance on the head of a pin.  Unlike the angels on a pin, however, the definition of innovation MATTERS.  While it could get academic and esoteric, it needn't be.  The reason a definition of innovation is so important, if not at a global level at least at company level, is that a definition signals intention, commitment, direction and importance. 

Innovation is tough enough when well defined.  After all, in most cases an organization is asking its people to dream up new products or services that aren't aligned to existing products or services at a time when there are few resources or dollars to accomplish the most rudimentary tasks.  If innovation is poorly defined, innovation is like discovering a new continent without a map, without a compass, and without knowing what's important when you discover it.  Columbus went west to discover gold and spices.  Imagine his disappointment to discover just a bunch of sandy islands with little demonstrable wealth.  That's what innovators who work without clear definitions face.

Returning to the definitions GE used, the first (implementation of new processes, products, organizational changes, etc) is a COMPONENT of innovation, but only if those changes add significant value, are truly new and unique and important and relevant to a customer.  Implementing change is only innovation when it brings new concepts or new ideas that are valuable to a customer or stakeholder.

The second definition (environment/culture that embraces positive change, creativity and continuous improvement) is an ATTRIBUTE of innovation, not a result!  Good innovators know these conditions must exist, and by the way, this definition is too limiting.  It only mentions continuous improvement, not disruptive innovation.

The third definition (research and development, IP, inventions) is an INPUT to innovation, and too limiting.  R&D and IP are definitely a part of innovation, but this definition doesn't consider commercialization and market success.  Creating new ideas and new IP is great, but only if there is a market that needs and wants the concepts.  Moreover, this definition limits innovation to products, when innovation can clearly be applied to business models, services and customer experiences.

The fourth definition (Staying ahead in the market) is a STRATEGY, and not even a well-defined one.  You could accomplish this by cutting costs, acquiring other firms.

No wonder the CEOs struggled to define innovation - because true definitions of innovation are complex.  What a CEO says about innovation matters, in terms of the commitment of the rest of the organization, in terms of direction, in terms of investment, in terms of strategy.  The starting point for any successful initiative or venture in any business is a clearly articulated goal, definition or strategy, which is then backed by deep commitment.  If we can't define innovation well, how can we possibly be committed to its success?

Here's a really simple tip for any firm trying to become more innovative:  create your own definition of what innovation should be for your business - and not just for an initiative, but an overarching definition for innovation.  Then, ensure you have the commitment to follow through on the definition and that the people responsible for carrying out the definition understand it, and the vision, strategy and goals behind the definition.  Otherwise, like a rowboat with only one oar, you'll find your team constantly circling.
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posted by Jeffrey Phillips at 6:20 AM


Blogger Unknown said...

Thanks for reviewing the GE report Jeff. I agree with you that the way CEOs define innovation is troubling. They are all over the place. No wonder most companies suffer from "death by a 1000 initiatives" and are so vulnerable to being disrupted in the market.

My definition is simple. Innovation is a better way to deliver value.

Saul Kaplan
Founder and Chief Catalyst
Business Innovation Factory

9:38 AM  
Blogger Sharat said...

Well written post Jeff. Glad to have stumbled on to your blog.
I believe that innovation is essentially applicable across strategic, tactical & operational requirements...and as you have pointed out, it has to work across culture, products, processes, and markets.
While Saul's definition in the above comment is very succinct, I agree with your point of view that it is too complex a term, which requires specific definitions for every individual organization.

Look forward to reading and discussing more.

Freelance consultant (India Tech Markets)

1:44 AM  

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