Tuesday, February 16, 2016

Innovation and Maturation

So many companies make so many claims about innovation, and yet so few are really, deeply engaged in innovation.  In the next decade we'll say goodbye to some of the firms who are talking about innovation but aren't exercising the muscles.  Disruption and market transformation will occur (will? is occuring) at a far faster clip than before, and as Warren Buffet likes to say, when the tide goes out we'll know who was swimming in the buff.

How do we get a better understanding of who is merely talking about innovation, and who is actually practicing it?  Beyond that, is there a way to determine who is merely sustaining a veneer of innovation, and which firms are driving innovation into the core of their business?  Can we create a barometer of innovation capability and engagement?  I think the answer is "yes", based on evidence we can observe and measure.

Three maturation paths

There are at least three ways we can determine if a company is truly engaged and serious about innovation.   These are:
  • The level of innovation capability
  • The breadth of innovation output
  • The amount of simultaneous innovation
Let's look at each of these in turn.

Innovation capability

Long ago, over a decade ago when we started OVO, it was unusual to find people who could run an effective brainstorming activity within most companies.  Innovation was rare and brainstorming activities were more likely focused on solving Six Sigma challenges than aligned to creating new products and services.  As time has passed, some innovation skill has filtered in, and many companies have acquired innovation training.  Innovation capacity grows as more people have the skills to lead innovation, and as corporations establish more formal methods and processes.  While there are definitely more people with more innovation awareness in corporations, there is still a lack of consistent innovation methods or processes.  The new explore:exploit mantra, which is emerging and yet I believe incomplete, demonstrates that many companies are beginning to understand the importance of distinctions between the efficient practices that sustain current products and the divergent processes and methods that create new ideas.  Until a company can adequately sustain existing products and efficiency WHILE executing new innovative projects and managing ideas, doing both within a defined framework, there is little innovation capacity.

Breadth of Innovation Output
Beyond the new explore:exploit dynamic we hear, daily it seems, about the importance of "business model innovation".  It seems as though every year introduces a new innovation theme of the year or quarter, with business model innovation as the current hot topic.  Doblin did us all a favor by defining ten types of innovation (products, services, business models, experiences, brands, value networks and so forth).  A firm cannot succeed by innovating in only one of these dimensions, because change is happening in all dimensions.  Focusing on product innovation is important, but so is business model innovation, and customer experience innovation.  Nascent innovators will focus primarily, if not exclusively, on one innovation outcome or type.  People who place inordinate emphasis on one type (like the current business model craze) are doing so for their own purposes, not providing the right emphasis that suggests that multiple types are important.  To assess the maturation level of a particular company, simply review the innovations that they report.  How many different types are represented?  How radical or disruptive are any of the outcomes?  In most cases you'll find little variation, representing only a couple of innovation types.  Further, most innovation in nascent innovators is incremental, with few attempts at radical or disruptive innovation.

Innovation Capacity

When a company congratulates itself on one innovation, it can be evidence of a dramatic innovation, combining business models, design, new product innovation and a host of other factors.  Apple's introduction of the iPhone was such an occurrence.  Since Apple was betting big on a small handful of products, their innovation capacity was less important than the impact of the output and the disruptive behavior of the solution.  Few companies have four discrete products in the way that Apple did at the time.  This means that maturation has not only to do with observable capability (methods, processes and capable people) and a range of outcomes (product, service, business model innovation) but must also sustain multiple, simultaneous innovation activities, in a number of phases.  Any company can sustain one innovation activity for some period of time, but only a company that is truly mature in innovation can sustain multiple projects at the same time with wildly different intended outcomes.  This simultaneous innovation demonstrates that innovation isn't reliant on a few highly motivated people but is a core philosophy anchored in good process and corporate culture.

When you hear companies talking about their innovation acumen, capability or experience, let's evaluate three key factors to see just how capable and mature they are:  their observable and defined processes and people, their plans for and ability to generate a range of innovation outcomes and their ability to sustain operations while managing multiple, simultaneous innovation activities.  These three factors will signal a truly mature innovator.  A company that can demonstrate one or two of these factors will have advantage over others that only demonstrate one, but only a firm that can demonstrate all three is truly innovative.
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posted by Jeffrey Phillips at 6:41 AM


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