Is your organisation innovative?

Economy March 10, 2014 00:00

By Richard Gilman

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What does innovation mean to you and your organisation? For many people innovation means having a great idea or generating lots of ideas and working on all of them.

However, whilst ideas are obviously important, that is not in itself innovation. I believe that innovation is most usefully defined as the process of generating, developing, and commercialising an idea that has value. An idea is just an idea, but if it has true value to the customer, then it can become an innovation in the market. 
We all like to feel that we are living in an innovative time because of the changes that technology has introduced to our lives in recent decades, but the reality is that research shows that companies are becoming less innovative and more conservative compared to 20 years ago. Furthermore, there are worrying performance gaps between the best, the average, and the poorest performers. Very few organisations are managing innovation well and even the average performers are doing poorly. 
How would your organisation rate on an innovation assessment? To answer this question, you might have to ask yourself the following questions: Do you have a clear strategy that guides the focus of your innovation by product and/or service line? Do you have a process for involving customers in idea generation, concept testing, and development or do you just launch a new product/service and hope someone buys it? How many genuine breakthrough ideas has your company introduced in the last five years? What proportion of your ‘new products or services’ are simply upgrades and adjustments of what you or a competitor already had? What proportion of your revenue and revenue growth comes from new products or services introduced in the last five years (for great innovators it’s around 50 per cent)? 
If you don’t have the answers to these questions, you should begin by establishing these three core capabilities:
lFocus: take a hard look at the markets you are in and the technologies and product lines you are relying on. How attractive are these markets now and what are the trends? What is the level of competition and profitability? Where are the emergent and disruptive technologies? Where should you be looking to focus your innovation effort and investment?
lVoice of the customer: it is the customer who decides if something has value, and how much they are willing to buy and pay, not the head of your innovation department, chief engineer, or anyone else. You need to identify what the customer needs (not wants), find a way to create it, and then check along the way with the customer, “Is this really what you need?”
lRuthless process: it’s rare to come across a company that has a shortage of ideas or an excess of resources; almost always it is the reverse. It’s critical to develop and follow a clear system that takes an idea from concept through to launch through a stage of incremental investment decisions. It is equally important that part of this process is weeding out and killing of ideas that are too risky, impractical, and lacking commercial viability. The process should be a funnel with many more ideas going in than new product/services coming out. You can only do so much with your resources, so make sure that you focus on those ideas that will meet their commercial objectives.
Every organisation understands that innovation is the growth engine for the business and almost all employees want to work in an innovative environment. There is every reason and motivation for innovation to be done well but it requires more than a statement of intent; it requires a strong, systematic process and discipline in following it. 
Richard Gilman is corporate consulting specialist at APMGroup. You can con?tact him at