There’s a lot of talk these days about innovation. Companies have opportunities for what I call innovation with a lowercase “i” and innovation with an uppercase “I.”
First, let’s define each.
Lowercase “innovation” is opportunistic in nature. The firm is reacting to some external force in the marketplace, such as new government legislation, changing consumer behaviors, and competitors. These opportunities rely primarily on distribution channels, sales, and marketing teams to repackage products to create new sales prospects. Product development is certainly involved, but normally isn’t altering the product roadmap or vision drastically to accommodate the opportunity. Usually it is short-term revenue opportunity that does not drive long-term loyalty and value for the organization.
Uppercase “Innovation” comes from within and it is proactive and more long-term focused. It’s a ‘pull’ strategy vs. a ‘push.’ It’s purposeful, well thought-out and attempts to be transformational. Uppercase Innovation means the firm is constantly experimenting, defining new opportunities and challenges, and has a deliberate process to sift through and test ideas.
Both approaches are useful and have their own purpose. Too often though, companies only implement a lowercase innovation approach, and cut themselves off from real market opportunities. Corporate America is full of these firms that grow each year, but never really redefine their marketplace or create new market categories or sub-categories. Forbes just recently published a set of articles based on a book called the “Innovator’s DNA” that ranks companies on innovation based on an assessment of each company’s “innovation premium.” Innovation Premium measures the premium the stock market gives a company for anticipated or expected innovation. Salesforce.com came out on top of the rankings for its Chatter application that takes the best of Facebook and Twitter and applies it to enterprise collaboration.
So, the question arises, ‘how do you go from just ”innovation” to “Innovation” with an uppercase “I”?’ Here are few thoughts:
1) Make failure a possible option. You can’t innovate if employees are afraid they are going to get fired if they have a failed attempt at something. Failure should be a recognized part of the process. Silicon valley is full of failures. I’m not saying that it should be celebrated, but rather looked upon as a learning opportunity. To read more about Failure take a look in the Harvard Business Review’s April 2011 issue.
2) Reward and Compensate. I’m a firm believe that behavior follows incentives. If you want your employees to to innovate then there needs to be an incentive program that supports that Innovation effort.
3) Create a context. Set an Innovation vision. The CEO and top management are responsible for establishing a vision (strategy) which embraces Innovation. Without a vision of where the company and market is going, often there can be limited success with Innovation. Management must create the inspiration to push people to stretch, to make the current pie bigger. At the same time it must be realistic, and it falls upon top management to create direction in which they want those innovation efforts directed.
4) Investment Sandbox. Encouraging Innovation without giving development teams budgets to experiment with is just talk. To be a serious Innovator, budgets need to be created for Innovation. Make the process simple and easy to access sandbox funds for experimentation. Once the idea is developed, put it through a more rigorous business case procedure.
Those would be my top four pillars for creating an “I”nnovation strategy. What are your additions?