The Innovation Wave: Meeting the Corporate Challenge / Edition 1 available in Hardcover
The Innovation Wave: Meeting the Corporate Challenge / Edition 1
- ISBN-10:
- 0470847425
- ISBN-13:
- 9780470847428
- Pub. Date:
- 12/30/2002
- Publisher:
- Wiley
The Innovation Wave: Meeting the Corporate Challenge / Edition 1
Hardcover
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$75.00Overview
Product Details
| ISBN-13: | 9780470847428 |
|---|---|
| Publisher: | Wiley |
| Publication date: | 12/30/2002 |
| Pages: | 224 |
| Product dimensions: | 6.24(w) x 9.49(h) x 0.92(d) |
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The Innovation Wave
Meeting the Corporate ChallengeBy Bettina von Stamm
John Wiley & Sons
ISBN: 0-470-84742-5Chapter One
'We make it clear that innovation is not only about new product development.'
What do we mean by 'Innovation'?
At the DTI's first Innovation Lecture in 1992, Akio Morita, then Chairman of the Board of the Sony Corporation, felt it necessary to emphasise that innovation is more than technological advancement. In fact, his lecture was titled: S [not equal to] T, T [not equal to] I, meaning, Science alone is not Technology and Technology alone is not Innovation. He elaborated, 'Just having innovative technology is not enough to claim true innovation. I see true innovation to be made up of three key elements which I call "the three creatives". Creativity in technology, of course, plus creativity in product planning and marketing as well.' Since his lecture, this broader understanding of the term 'innovation' has spread and today more and more people understand innovation to be a mindset rather than a particular technological advancement. While this is certainly true for those who drive innovation in organisations, it is not necessarily true for the rest of the organisation.
This change in meaning has an important consequence for organisations that want to be innovative: in order to be innovative it is not enough to plough money into research and development (R&D): they need to consider all aspects of theorganisation. They need to align all systems and structures, culture and leadership styles, to support the goal of becoming more innovative.
The interconnectedness of key areas for innovation - leadership, culture, strategy and vision, and process - will be revisited throughout the book. Good leadership is a key ingredient but, without supporting processes and a clear strategy, it cannot achieve its full potential. The interconnectedness is something which Akio emphasised in his 1992 address:
On a structural level, innovative management demands that all phases of the operation be seen as links in a single chain of innovation. Each link is allowed to pursue its own challenges - but is also aware of how it should integrate with the others. By links I am talking about applied research, development, design, production engineering, manufacturing, sales and service. Each link is vitally important - but equally so. It is important that the 'prestige level' of each link be similar in order to keep high achievers motivated in each group. And the creation and promotion of this approach is the responsibility of top management.
The innovation process does not begin by bubbling up from the research and development laboratory, or from brainstorming sessions by the product planners. The innovation process begins with a mandate which must be set at the highest level of the corporation by identifying goals and priorities: and once identified, these must be communicated all the way down the line. The targets you set must be clear and challenging because you cannot wait for innovation to just show up at your company one day. But you need not, and should not, possess the entire solution to the challenge you set. You just have to be sure that the target you raise is realistic, though it might appear impossible.
The innovative mandate, as determined by top management, can only succeed in an environment which nurtures it. That corporate environment must promote goal-sharing, unity of purpose, and the sense that everyone from the CEO to the factory operator are 'all in the same boat'. To sail, or sink, as one. Creating this environment is not an easy task, but without it innovation does not have much of a chance.
The importance of innovation
The importance of innovation as a key instrument for achieving competitive advantage was first emphasised by management gurus such as Tom Peters, Rosabeth Moss Kanter and Gary Hamel in the 1980s, then by governments. Now, there is hardly any manager who would deny the important contribution innovation makes to an organisation's success. This is reflected in the findings of a survey of 100 UK-based best-practice companies, conducted by the British Department for Trade and Industry (DTI) and the Confederation of British Industry (CBI) in 1995. This showed that things such as quality, reliability and low cost are merely qualifiers; they are the minimum requirements that have to be met. The prime drivers for differentiation and competitive advantage are innovation and customisation.
But there are other reasons why innovation has moved up companies' agendas. While the 1990s saw a great deal of growth through mergers and acquisitions, many companies now feel that they have grown as much as they can via this route. Any future growth will have to come from different avenues, primarily innovation and collaborative partnerships. A few interviewees from Innovation Exchange member companies, when asked what drives them to become more innovative, also mentioned external forces, such as the need to respond to competitive pressures and the fact that today good financial performance is no longer enough to satisfy financial markets. Organisations are increasingly interested in understanding what it means to be innovative, and are keen to gain insights into what innovative companies actually do.
The current status of innovation - a view from the Innovation Exchange
While few companies would publicly disagree with the statement that innovation is essential for future business success, the reality varies considerably, as the following quotes from Innovation Exchange member companies show:
'Innovation in this company is not really wanted.'
'Innovation and new product development are something we worry about if we do not have anything else do to; we don't have time for it otherwise.'
'Innovation does not get high priority from the board; they say it is important but not urgent.'
'Innovation is someone else's job.'
'The attitude towards innovation in our organisation is: good idea but ...'
'At present innovation is done enthusiastically by amateurs.'
'Once every two months there is a session solely on innovation; this involves three to four senior trade people plus three to four board members. This sends a clear message about the high priority of innovation.'
Every organisation will be at a different point in its innovation journey, and every organisation is likely to have taken a different path. Becoming a (more) innovative organisation is a journey, and as with any journey, it is helpful to know where you have come from, how far you have travelled and, most importantly of all, where you want to go. As one innovation exchange member put it, 'In order to innovate, you need to put strategy, planning and vision in place first.'
Although each organisation needs to understand its specific context and constraints, some overriding trends among innovation leaders can be identified. The CBI conducts an annual survey on the innovation performance of companies based in the UK. Building on insights from the previous year, the 2001 report, sponsored by 3M and the British Design Council, focused on company culture and collaboration. It opened with the statement that, 'Some things have certainly improved, such as faster development and turnover of products and processes - increasing the rate of innovation. But other factors affecting innovation, for instance collaboration, training and capital expenditure, have had their ups and downs.'
As the CBI survey identified, collaboration is an important contributor to innovation, and a willingness to collaborate is strongly influenced by culture, not only company culture but the professional cultures that exist within the organisation. An interviewee from a scientific organisation observed, 'Scientists understand the rationale for collaboration but in their hearts they don't buy into it. To them, collaboration is a sign of weakness.' This point highlights the importance of understanding an organisation's culture and context when choosing a path to innovation, as a good understanding of a company's culture and the underlying models of the world can help identify potential obstacles to change and innovation.
Other characteristics that are widely believed to support an innovation culture include:
accepting failure as an intrinsic part of innovation;
having an explicit strategy for the development of new products that is linked to the organisation's overall strategy;
having a product portfolio - actual and under development - that balances risky and less risky products as well as short-term and long-term projects;
the existence of a new product development process - though if followed slavishly it can become an iceberg that sinks great ideas rather than a gentle current that carries them along;
the use of multifunctional teams;
reward and remuneration systems that encourage entrepreneurial behaviour;
ensuring top management understands and buys into the importance of innovation;
monitoring and measuring innovation activities.
How did Innovation Exchange member companies do against these criteria? At first glance, quite well:
Two-thirds indicated that they accept failure as an intrinsic part of innovation.
All declared that they use multifunctional teams or are at least starting to do so.
About half stated that they do use compensation incentives to stimulate an entrepreneurial environment.
Taking a closer look at the answers, however, shows a slightly different picture, which is indicative of where organisations are with respect to their own innovation journey.
Accepting failure
While two-thirds of participating companies had spontaneously declared failure to be accepted as an intrinsic part of innovation, closer questioning revealed a gap between rhetoric and reality. Even if a company states it has a blame-free environment, reality may look very different:
'Yes, but then we would kill it in a very slow way.'
'Yes, we are trying desperately not to have a blame culture - to a degree where people don't get blamed even when they deserve it.'
'We tend to ignore failure.'
'People would not necessarily be sacked but moved sideways.'
'No, we get twitchy when we fail, and want to find the person responsible for it.'
So rhetoric and reality vary considerably but it is not all bad news, as there were some positive answers, including the following:
'Yes, it is accepted as a part of the process in supporting high risk/high potential projects. We have found that failing fast can be very useful.'
'Innovation does not happen over night, the big bright ideas take time to develop. I strongly believe that behind big successes is the learning from two to three years of experimentation - probably called failure by some.'
And despite the widely acknowledged fact that failure is an intrinsic part of innovation, how many organisations make a conscious effort to carry out post-mortems to capture the learning? Besides the most obvious excuse, a lack of resources, the problem lies in the expectation that failure is a one-off affair. The other is that people move so fast within organisations that it is often difficult to analyse and document failure without pointing fingers. And even if a 'post-mortem' is undertaken, are the lessons learnt shared throughout the organisation, and are mechanisms in place to ensure that the same mistakes are not repeated?
New product development strategies
When asked about a specific new product development strategy, only a few companies declared not to have one at all, but about 25% were in what one might call a 'grey area'. For example one company declared, 'Sort of, we have a strategy - me too. And while we are trying to break out of it and things are beginning to happen, it is by accident rather than design.' Continuity after change in top management was seen to be a problem: 'We used to have a clear product strategy, but it all got stifled when the person at the top changed: most of our projects were cancelled and are only now starting to come on line again.' Unless the reasons behind such change are explained and communicated well to those concerned, a U-turn can lead to resentment and frustration on the parts of those involved in the planning and execution of the projects. Problems can also arise when those who do the product planning do not involve those who have to execute the plans, as illustrated by another quote: 'Yes, we do have a product strategy. It is developed by our headquarters - but then it is us who have to find ways to sell it to the customer.' Without some sort of process to achieve buy-in, projects are unlikely to receive the level of energy required to drive them through. It is always worth remembering that one of the critical success factors for innovative projects is the enthusiasm and determination of the individuals involved. Without that energy, many will just die a slow death.
Balanced product portfolios
Eighty per cent of the participating companies declare to balance short- and long-term projects through a balanced project portfolio. To quote, 'Absolutely, that's what we spend a lot of time on. We have a portfolio management group which meets three times a year. Their aim is to ensure that our product portfolio is balanced across a set of established criteria.' Best-in-class companies may look at as many as three or four different aspects:
We have three balances:
1. Between brands and product portfolios by making sure there is enough innovation in each area.
2. Between developed and non-developed markets, recognising that nondeveloped markets take longer for payback.
3. Across time horizons, which in our case equate to different levels of innovation.
Only one participant emphasised the importance of co-ordinating company strategy and innovation activities - coming back to the theme that the entire organisation needs to be aligned to innovation. For example, looking at individual innovation activities without considering the broader picture can lead to the rejection of ideas or developments that do not yield immediate financial returns.
But having a strong vision for innovation activities creates another challenge for companies. How do they deal with promising innovations that are only marginally relevant to the company's core business or which could potentially threaten it? (This is discussed later when we consider radical innovation.)
New product development processes
It is surprising to find that not all participating companies had a defined new product development process even though, as one interviewee put it, 'Having a systematic process does not necessary mean that it is good.' Another issue is that many organisations have introduced a process - but it only exists on paper: 'Yes, we have a process, but it does not work.
Continues...
Excerpted from The Innovation Wave by Bettina von Stamm Excerpted by permission.
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Table of Contents
Acknowledgements.Sink or swim - Introduction.
1. Gauging the sea - understanding where we are.
What do we mean by innovation?
The importance of innovation.
The current status of innovation - a view from the Innovation Exchange.
Change is the only constant.
Drivers of change.
Anchor points.
2. Rising tides - establishing an urgency.
The rapids of change - Gary Hamel, Strategos.
Anchor points.
3. Fishing where the fish are - the need to focus.
Strategy and vision.
Throwing a brand a lifeline - P-Y. Gerbeau, former CEO of the Millennium Dome in London.
Context and constraints.
Walking on water - how to win by breaking the rules - Costas Markides, London Business School.
The role of communication.
The issue of measurement.
Anchor points.
4. Riding the wave - how to make it happen.
Where ideas come from.
Freak waves - make the most of them - Gareth Jones, formerly Head of Human Resources at the BBC
The role of market research.
From concept to implementation.
A note on processes.
Approaches to infusing innovation.
Keeping innovation afloat - innovation as a cycle of tension and tranquillity - Stephen Moon, GlaxoSmithKline, and Ben Bryant, London Business School.
Anchor points.
5. Riding on the crest of the wave - how to stay on top.
The role of leadership.
Culture.
Finding the fish and aligning the fleet - making innovation an everyday capability - Jens Maier and Ian Owen, Zurich Financial Services.
The role of the human resource (HR) department.
Work environment.
Anchor points.
6. Endless as the sea - innovation challenges.
Innovation paradoxes.
Future innovation challenges.
Final comment.
Suggested reading.
References.
Index.