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What Does “Innovation” Mean? Many Things.

Tree bud A friend recently said he didn’t know that when I talk about innovation I am referring to improvements in processes, workflows, and efficiency, in addition to new product and service development.  So, let me set the record straight.

According to The American Heritage Dictionary (2006), “innovation” is defined as:
n. 1. The act of introducing something new. 2. Something newly introduced.

In Oxford American, it’s:
Change, alteration, revolution, upheaval, transformation, metamorphosis, breakthrough; new measures, new methods, modernization, creativity, ingenuity, inspiration….

So, as the terms "new methods" and “new measures" don’t exactly indicate radical marketing breakthroughs or revolutionary unique products, being innovative can simply mean applying ideas to doing routine procedures in somewhat more efficient or more effective ways.

Making Improvements in Processes vs. "Process Improvement":
The term "process improvement," for some, brings a system like “Six Sigma”to mind.  Although there is resounding evidence that formal programs such as Sigma have made significant contributions toward achieving greater efficiency and eliminating waste, this sort of system has been found to be detrimental to the creative process in research and development departments, such as the one at innovative 3M, as reviewed in an interesting Business Week article

Many of us would agree that it's a matter of balance, and one solution certainly does not fit all situations.  Of course, R&D programs should discipline themselves to be as efficient as possible in their planning, collaboration and communication processes, in vetting ideas, and rapid prototyping, without being hindered by some of the Six Sigma-type constraints.

KISS 2 K.I.S.S. (Keep It Simple, Silly!):  For some of us, the term “process improvement” simply means what it always has: modest improvements in how we do things.  Such as, “Let’s start writing the dates completed on the boxes that we’ve sorted through so no one wastes time going back through them.”  It can be any “new method” that’s never been done before that helps us to achieve greater efficiency in our workflows or improve quality – like the 100+ ideas that each Toyota employee is encouraged to contribute to their company every year.

Most of us have numerous process and work-flow improvement ideas pop into our heads at work all the time.  As Langdon Morris has written, part of innovation involves the creative tension of “seeing things as they are and things as they could be.”  Unfortunately, many people are not empowered by their employers to share their suggestions, let alone see them discussed or implemented.   This all too common situation is a tremendous waste of brainpower and resources, frustrates employees, and contributes to low moral and higher turnover.

 

Many Forms of Innovation:
At a conference on innovation, Brownell Langdrum of Draw Success (www.DrawSuccess.com) supplemented her own list of types of innovation with ideas generated by a group of chief innovation officers from companies such as Google, Mattel, and Hewlett-Packard.  A few of these are included below.   If you go to her full document, you will find that some of the descriptions are, fittingly, quite original.  Actually, the list itself could be a very useful tool for generating ideas!!

 

First, let’s look at some of forms which are perhaps less recognized as “innovation, but which relate to Quality & Productivity Clock
Improvements in internal operations:

Efficiency Innovation:

Efficiency innovation delivers ways to improve efficiency and the speed of effectiveness.  It can include internal systems and processes or ways to expedite the customer/client experience.

Financial Innovation:
This form of innovation conveys ways to increase sales, reduce costs, improve tracking of expenses, and reduce accounts receivable, along with other ways of managing finances to enhance profitability.  It also includes ideas to improve tax/audit compliance.

Process Innovation:
Process Innovation encompasses the implementation of a new or significantly improved production or delivery method.

Note: I’m a big fan of efficiency, so I believed that process improvements imply greater efficiency.  But, it was pointed out to me that changes that improve quality do not always result in greater “efficiency,” in that these can slow speed of operations down.  I think the argument can be made that improvements in quality are ultimately more efficient uses of time and effort, but for now, I yield to these as being two distinct forms of innovation.

Systems Innovations:
This form of innovation includes introducing a new infrastructure or system, which could produce new sectors, and induce major change across several areas of business.

 

Fireworks 2 And now for some of the more 
Flashy Definitions of Innovation:

Breakthrough, disruptive or radical innovation:
These forms of innovation involve launching entirely novel products or services rather than providing improved products and services along the same lines as currently marketed.  Breakthrough innovations are rare because of the risk and uncertainty, but they can deliver tremendous rewards.  They require large leaps of thought and a high-risk tolerance.

Business Model Innovation:
Business model innovation involves changing the way business is done, whether in terms of sales and distribution, marketing, pricing or any other core business strategy.

Incremental Innovation:
This is when one adds something extra to a product or service that the competition doesn't have or isn't doing.  Or, when one makes something last longer, more convenient or faster.

Marketing Innovation:
This involves development of new marketing methods with improvement in product design or packaging, product promotion, communication or advertising, pricing or distribution.

Product Innovation:
Product innovation is the introduction of a good or service that is new or substantially improved, which may include improvements in functional characteristics, technical abilities, ease of use, or any other dimension.

Service Innovation:
Service Innovation, compared to goods or product innovation or process innovation, delivers ways to improve the delivery of a service or expertise and is both interactive and information-intensive.

Technological Innovation:
This may include coming up with new technologies to solve a problem or new uses for existing technologies.  Solutions may be high-tech (i.e. computer systems) or low-tech (a better mouse trap).

 

In summary, when I use the term “innovation,”  I mean a range of ways of putting good, new ideas into action within operations, workflows, and processes as well as in the marketplace and in solving social, environmental, and economic issues.  The organizations that will survive and thrive in this rapidly changing environment welcome and apply ideas on a wide range of topics – the more the merrier!

Lightbulb full of ideas

* WikipediaSix Sigma is a business mangement strategy originally developed by Motorola, USA in 1986.  As of 2010, it is widely used in many sectors of industry, although its use is not without controversy.  It seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. 

  Whoa tornado While doing research for a training program I delivered last week on structures and processes needed for organizations to shift their cultures so they become conducive to creative thinking and innovation, I came across a sobering 2010 report compiled by the Boston Consulting Group (BCG).  Although 51% of the global leaders polled in the IBM CEO study said they didn't believe their organizations were prepared to succeed in the increasingly complex global environment (second blog post), this BCG report summarized below makes the IBM study look like a Hollywood romance by comparison.

As I wrote in the launch of this blog, my interest in and commitment to this topic comes from a deeply-held conviction that our imminent economic future as a nation depends on U.S. organizations getting on board the innovation train, quickly. Certainly for me, the BCG study strongly reinforces that perspective. In addition to the business case, when it comes to our myriad environmental and social problems, as Albert Einstein said, "We can't solve problems by using the same kind of thinking we used when we created them." 
(The report is cited by permission of The Boston Consulting Group.  Click on the link below to see the full report.)

"Innovation 2010: A Return to Prominence–And the Emergence of a New World Order":       

Working in partnership with BusinessWeek and its Market Advisory Board, The Boston Consulting Group (BCG) conducted a survey for the seventh year in a row, gathering input data from 1,590 executives from around the world representing a range of markets and industries. 

This most recent 2010 report postulates that as a result of the U.S. and other mature economies' general lack of commitment to and investment in innovation, "a new world order in innovation is taking hold, one in which rapidly developing economies (RDEs), led by China, India, and Brazil, will increasingly assume more prominent positions, while the United States and other mature economies continue to play major roles but gradually become less dominant."  (p4)

Apple and Google were ranked by international executive respondents as the two most innovative companies, with Apple once again as the hands-down winner (a rank it has held in this survey since 2005). Yet, more than half of those who participated in this survey expect that U.S. will lose its standing as the leader in innovation within the next five years.  

These predictions are similar to the warning flags waved by Thomas L. Friedman in his book, The World is Flat. Among the precipitous trends, Friedman points to:

  • America having recently slipped from 1st to 4th place in the number of patent applications.
  • The increasing dearth of math and science students training in U.S. universities just as our nation’s top scientists prepare to retire.
  • Tightened U.S. immigration policies that have caused a significant drop in foreign math and Tsunami Wave students attending American universities and who now have considerable job opportunities in others countries that are investing more heavily in innovation.
    • And funding cuts to the National Institutes of Science.  

If these trends remain, then it only goes to follow that American business will lose even more of their global market shares with our nation losing considerable economic strength. 

Implications for Leaders: 
BGC attributes the low level of U.S. investment in innovation to companies “hedging their bets about the economy” with incremental improvements versus “moving aggressively to discover, invent, and capitalize on new growth areas.” The report ends by offering the following recommendations to business managers in the established economies who have yet to “fully come to grips with” the consequences of not making innovation strategic priorities.

1.    Becoming better at innovation is probably the single most important thing that you can do this year.   (p20)

Why?  Although you survived the Great Recession – so did your competitors.  Like you, they too largely "mastered the cost, productivity, and operational excellence playbook." However, many of them, upon realizing they had survived, saw innovation as a top strategic priority and started investing heavily in it around the middle of 2009. If you are not one of those companies – you are about a year behind (when this report came out, mid 2010).  

 2.    If you don’t get better at innovation, your boss (or board) will eventually either stop spending money on it – or find someone who can improve things. 

“Part of the issue may be that most companies can’t even define what they really mean by innovation, let alone measure it. And while there is no right or wrong definition, you do need a definition that everyone agrees on and that aligns with your company’s strategy.” – Get a clear, shared definition.  (p21)

 3.    Top management is really going to have to get its head in the game this year. 

“In every highly innovative company we know, the CEO truly has innovation near the very center of his or her radar screen. Indeed, the difference between a company whose CEO and leadership team have an “all in” mentality regarding innovation and one whose leadership supports innovation merely at an abstract level is unmistakable – and so is it’s impact on culture and results. 

 If you think your company can win at innovation without your being truly committed, you are wrong and will be increasingly exposed.  Too many companies are being led by fully committed and engaged leadership teams that have linked innovation to the company’s business strategy, put in place the needed measurement systems, and are investing to see the results.”   (p21)

4.    Your company cannot afford to cut back on its innovation investments in the BIC countries and other RDEs. 

If you thought competition was tough in the past, just wait. …As can be seen from our list of the most innovative companies, the “BIC*-plus” world has arrived on the innovation front and is quickly moving into the mainstream.  *(BIC stands for Brazil, India, and China.)

‘To deal with this new reality, you need to increase your investments in these countries, not decrease them. …Lower your investments in these countries at your own risk.”  (p21)

 The report concludes:
“Keeping pace, let alone flourishing in this environment will demand a two-pronged attack.  Your company needs to be actively innovating both in and for the slower-growth, mature economies, which remain very large and profitable.  Simultaneously, you need to be ever more focused – no matter how focused you think you already are – on the much faster-growing developing economies, especially China, India, and Brazil, with their promise of large markets and newly innovative competitors.  Striking the right balance here will obviously be highly challenging. But the potential competitive rewards of hitting the mark are vast – as is the downside of coming up short. Indeed, skillful leadership in innovation has never been at such a premium.”   (p21)

  
Wake up call Dramatic natural disaster photos aside, I hope I've won over a few more believers that we need to rally and inspire others and send wake-up calls around our organizations that the time is upon us to do whatever is needed to engage the other half of our brains. 

 

 

 

 

 

 

 

 

 

 

Scrared AfAm woman The "stand-out" leaders cited in the 2010 IBM Global CEO survey (those who had successfully capitalized on the increasing complexity of the global markets through creative thinking and innovative practices) encouraged other leaders to similarly increase their comfort with ambiguity and ongoing experimentation. They also advocated letting go of command-and-control management styles in order to foster more mutual trust in organizations.

Sfumato,” which translates to “going up in smoke,” is a “willingness to embrace ambiguity, paradox, and uncertainty,” and is the fourth of the da Vinci habits recommended by author Michael Gelb. He writes, “As you awaken your powers of Curiosità, probe the depths of Dimostrazione (experience), and sharpen your senses, you come face to face with the unknown. Keeping your mind open in the face of uncertainty is the single most powerful secret of unleashing your creative potential.” This ability does not come to those who rely solely on their left-brained, analytical thinking capacities.

Gelb writes that the ceaseless application of these practices led da Vinci to many great insights and discoveries, “but they also led him to confront the vastness of the unknown and ultimately the unknowable. Yet his phenomenal ability to hold the tension of opposites, to embrace uncertainty, ambiguity, and paradox was a critical characteristic of his genius.” The theme of the tension of opposites grew in his work over the course of his lifetime – we can see this in even a cursory look at the maestro’s Mona Lisa.

Gelb writes, “In the past, a high tolerance for uncertainty was a quality to be found only in great geniuses like Leonardo. As change accelerates, we now find that ambiguity multiplies, and illusions of certainly become more difficult to maintain. The ability to thrive with ambiguity must become part of our everyday lives. Poise in the face of paradox is a key not only to effectiveness, but to sanity in a rapidly changing world.”

In his self-assessment on the strength of our own Sfumato, Gelb invites us to rate ourselves on a scale of 1-10 on each point, with one being a "maniacal" need for certainty at all times, and ten approximating that of an enlightened Taoist master.

  • I am comfortable with ambiguity.
  • I am attuned with the rhythms of my intuition. Chicken or egg?
  • I thrive with change.
  • I have a tendency to “jump to conclusions.”
  • I enjoy riddles, puzzles, and puns.
  • I usually know when I am feeling anxious.
  • I spend sufficient time on my own.
  • I trust my gut.
  • I can comfortably hold contradictory ideas in my mind.
  • I delight in paradox and am sensitive to irony.
  • I appreciate the importance of conflict in inspiring creativity.

He then offers a variety of good exercises that help participants to explore the various aspects of their own Sfumato and ways to increase ability in this area.

In closing, the author points to a study conducted by the American Management Association in the 1980’s that concluded thatthe most successful managers were distinguished by ‘high tolerance for ambiguity and intuitive decision-making skill.’” In the The Logic of Intuitive Decision Making, Dr. Weston Agor reported his findings from extensive interviews conducted of senior executives who overwhelmingly concluded that their worst decisions had resulted from not following their own intuitions.

Gelb’s bottom line conclusion: Embrace and enjoy ambiguity and trust your gutCeltic knot

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