Why do so few of us innovate?
In the summer of 2012 on the behalf of the Winnipeg Chamber of Commerce we talked to CEOs of 44 Winnipeg companies about their innovation programs. What surprised us was that very few were doing any kind of innovation that significantly impacted their bottom line. Only one centered their business on innovation and making it the fabric of their being. In their case the results were impressive. During one major recession they gained immense market share, became the industry leader and now dominate their niche. Innovation dominates everything they do.
Another company by its very nature is nothing but innovative. Again amazing growth was the result Some few others use innovation in one place or another within their organization, but innovation was supplementary, not primary to them. So of those 44 we had a handful being in one way or another truly innovative. What about the rest?
The statistics about innovation are telling. On average only about one in 10 major innovation projects succeed, and only when accompanied with real initiative and diligence. In part the problem is the inability to detect the real and emerging user needs in one’s own marketplace (see Market Targeting & Decision Making). The greater difficulty is the inability to understand innovation and the consequent piecemeal approach to the discipline.
Systematic, Comprehensive & Thorough Standards
To succeed at innovation we need to go about it in a “systematic, comprehensive and thorough” methodology. Innovation is a system made from many interacting and interrelated parts that when addressed and connected form a complex whole. If these parts are not fully addressed and connected, and if there is an emphasis placed more on some parts at the cost of other parts, effective and sustained innovation will be difficult if not impossible to achieve.
“Innovation standards” help us know and measure the extent to which our methods are systematic, comprehensive and thorough. With standards we can audit, assess and identify gaps in our innovation system, if indeed we have one. The standards prescribe norms by which an organization can measure its innovation capability. Standards help us compare ourselves to ourselves as well as to benchmark against others’ innovative capability in our industry.
Innovation standards set a common language which reduces confusion and allows learning to be shared. They enable discussion within our company between professionals in different disciplines and departments. By their very nature standards provide us with diagnostics to improve our performance and see more clearly how to achieve our goals. They are very important.
Implementing better innovation standards increases output and reduces time-to-market. Fuzziness disappears. The amount of waste shrinks and the cost of experimentation (learning from failure) drops dramatically. Understanding the intricacies of our own capabilities accelerates. Proficiency in new product development jumps for both individual participants and the collective teams throughout the whole company. Organizational talent rises. Ongoing improvement becomes a habit.
Learning Innovation
Accreditation and formal training in innovation standards is available. There are five levels of “innovation maturity” to progress through starting with level one “self-declaration” (an action based committed intention to become an innovative enterprise). As a company learns it can aim for a higher level of capability by having a professional auditing organization rate them especially in three broad dimensions: planning, execution, and deployment. The assessment provides broad categorical scoring and more importantly delivers detailed reports on areas for improvement. Typically it takes about two years to go to the next level of maturity. Some progress faster, others slower. Within a decade an organization can become an innovative powerhouse.
Innovation standards provide the basis for developing our own innovation management system (IMS). Every IMS is unique to each organization, no two systems are the same. No boilerplate, no one-size-fits-all, no cute little formula will do. Using the standards we have to tailor make the system to the exact needs of our distinct organization. These innovation standards will be adapted to our organizational structure and our special processes, fitting like hand in glove, and not disrupting our normal business practices but rather advancing them.
Our innovation philosophy and strategy will be developed in the same way we generally carry out our business. Perhaps outsiders could produce a more sophisticated innovation system but the one that work is the one that is developed by ourselves for ourselves. In the field of innovation we must become our own experts - - nothing less will do. We do best utilizing outsiders for a little guidance and coaching… especially as they keep us aligned with the standards and the general principles of innovation.
Most innovation training and tools come piecemeal, focusing on one or two parts of the elephant instead of the whole animal. Too many programs focus on theory instead of on the down and dirty real life practical applications.
Very few start with the complete scheme and structure and then work their way down into all the critical individual components. The TIM Foundation (Total Innovation Management) in conjunction with PDMA (Product Development Managers Association) is the only organization in the world that has produced the standards required to develop a “systematic, comprehensive and thorough” innovation management system. The standards are distributed through companies like ours as well as through Thomson Reuters. The innovation audits take place through TUV one of the world’s largest global testing, certification, and inspection providers who are known for the tangible economic value they add to their users.
What to Do Now
At this point in time yours truly, Armstrong Carter Pe-Trick, is the only company in Canada certified to deliver training and workshops to utilize these innovation standards in developing our very own innovation management system. Please see in Articles : Article 171 Course Outline - Develop an Innovation Management System TIM. The workshops are centered on developing a capability to innovate in an effective and sustained way. Participants will receive a registered copy of TIM’s latest Innovation Management Standard and over 50 sample templates used for developing an IMS. From the get-go the workers will begin custom developing a corporate IMS manual, a critical tool. The workshops are tailor-made 2 to 5 day programs that emphasize hands-on-work to be put to immediate use in our own company. Smaller companies can make use of our co-op programs where they can learn and collaborate together with other SME firms. Contact us for further details.
Commitment & Planning
Innovation is for those who want to not only survive but thrive. Some might want to put together a full-scale department while others might want to establish the discipline with part-timers working on teams. Others just want to move forward with what they already have, perhaps in a quite a bit bigger or more dynamic way.
The critical thing is getting started; that takes first a realization (of finally “getting it”, seeing and knowing the truth and consequences of our now very real global online village) and then a commitment. This commitment needs to go further than just giving approval to proceed, that would be considered the initial commitment. Commitment needs be made to: real change, full-time innovation, re-allocation of resources, accepting some failures, high intensity personal participation, constant quest for improvement, as well as for a more pervasive and constant communication… these require a continual commitment from our self as leader and from management at all levels. If this realization and commitment to innovate does not exist we cannot go any further - -we are wasting our time.
Risk
We are all against waste… and we are too often suspicious that innovation will turn out to be a big waste of time and money - - and that it will get us off track of what we really do well. The reality though is just the opposite. Good innovation makes us better at our core competencies, better at our main way of generating cash flow, and better at finding new paths to profits. Fear needs to be turned to confidence if we are going to make a commitment to innovate.
We need to understand that creativity, invention and R&D is not innovation. Knowing the differences between systematic and ad-hoc practices (with its hopeful pursuit of serendipity) can be the critical difference between success and failure.
The statistics about innovation’s high failure rate are true. But many are making a fortune and a reputation from their innovation skills. The comfort to commit comes from accepting that three things are lacking in the innovation process. What is needed is:
- finding hidden customer frustration, regularly and predictably, and focusing on it
- understanding a complete innovation system is required, not just some of its components
- the will to succeed; full-scale wholehearted business commitment
Corporate giants Kodak, General Motors, IBM and industry-specific cell phone giants Blackberry, Nokia and Motorola all neglected full-scale innovation to everyone’s great pain. They stayed stuck in their past glory and thought today’s profits would last forever. They had to reinvent themselves, but it came too late in all cases, and at great cost to their stakeholders. Their cash flowing performance engines died (as their industry moved inevitably forward) and they were not able to build new performance engines in time. Innovation is important because it keeps us focused on where our world is going. The above-noted companies could have stayed the top industry leaders, but instead they became survival stories fighting for their lives; some have turned themselves around and others are still hanging on by their fingernails.
What has changed?
Scott McFarland of the Huffington Post has said:
It's no longer the speed of business that creates challenges. It's the speed of disruption that is permeating our business models in seemingly every possible way that is causing businesses to rethink how they operate. The speed of disruption is also the trigger that is causing entire industries to think about how to re-purpose what they have, and redefine a new sense of the brand. They are realizing their current model may not be sustainable. Welcome to the new business paradigm. Welcome to innovation management.
Peter Drucker defines innovation as “change that creates a new dimension of performance”. We have to know that innovation is a complex and lengthy process that involves creativity, commitment and a lot of hard work. Change is never easy but it brings wonderful results.
In business we must look ahead, not behind. It's not just the big companies that need to do this. Every business must innovate to survive. We must create new products and services for new markets. We must be creative, and come up with new ideas that never would have been thought of before. This is our new management paradigm. We better get used to it, it's not going away anytime soon.
Here's what is happening now. A massive paradigm shift has occurred in how business is conducted; it has paved the way for an environment that desires more and demands more. Everything is speeding up: processes, functions, data, inventory turns and speed to market. Expectations are now rising at alarming rates, and the speed of business is no longer fast enough to keep up with the speed of innovation. We are being forced to learn a whole new language called innovation. Business as usual doesn't cut it anymore. That’s our new reality for this week, not next week.
Therefore
We have to decide whether we are going to innovate or not.
In the Chamber of Commerce study and other places we have found out that most companies don’t innovate, not really, for whatever reason. Some try toe-dipping exercises but those type of activities are doomed from their start. Some few realize that sticking to the status quo isn’t really safe (and in fact, they have pre-decided that they are not going to be an ostrich with her head stuck in the sand). These pluck up their courage to move into the unknown. In the case of innovation the unknown is knowable, a certain path to success. It just has to be done right, with both a little bit of guidance and wisdom, as well as an awful lot of good old-fashioned hard work.
It’s time to think about what we really need to do next to keep leading our company forward. To train or not to train, that is the question, the innovation question.
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