Innovation is necessary for any business to thrive and succeed. However, it’s safe to say that most companies don’t get the ROI they expect from their innovation efforts. In any organization, at any time, there is an abundance of new and good ideas. The challenge is for businesses to capture these ideas, sort them, and nurture them in a way that’s systematic and efficient.
The reason for failures in innovation efforts can generally be attributed to a number of factors. The organizational culture may stifle new ideas due to internal politics, lack of incentives for individuals to collaborate and share their good ideas, lack of a formalized and disciplined innovation practice, lack of funding to bring ideas to fruition, lack of strong leadership support for innovation efforts, among others. Most companies don’t know how to measure the ROI on their innovation spending and the metrics around innovation are usually vague or missing.
This a good time to discuss the concept of innovation. Innovation is the process of gaining a business advantage through the know-how and thinking of the organizational members. Innovation can come in many different forms and at many different levels. Innovation can be applied to a product, a campaign, a business process, or management practices. Innovation covers a wide spectrum from an improvement, to a novelty idea, to a transformational brainchild. The source of the innovation can be an employee, a business partner, a customer, or management. This breadth is what makes innovation possible but also makes it challenging to formalize a systematic approach to innovation.
Managing innovation is a critical issue for executives especially in the high technology industries. High Tech companies drive a notable portion of their top-line growth through innovative products and services. These companies need to have a steady pipeline of innovation feeding their constant growth appetite. Even in mature industries, companies need a way to innovate to get out of having to compete over price alone and avoid the commoditization syndrome.
An innovation incubator inside a company needs a number of capabilities: A means for capturing employee ideas, a process for vetting and grooming ideas with experts, ability to build business cases for further developing the idea
To share their ideas, employees need incentives and rewards for bringing their ideas forward and willingness to collaborate with others to refine the idea. Management must find ways to encourage and reward participation. The importance of innovation must be understood by the employees and they should easily find out how they can contribute. Management must empower employees to collaborate together on an idea and get involved with ideation efforts. Ideas promoted by employees need to be documented in a central repository so they can be reviewed and further detailed out. Employees must have access to functional subject matter experts who can provide technical advice, assess market opportunities, conduct analysis, screen ideas, and identify barriers or help formulate solutions. A formal approval process with stage-gates tied to formal budgeting allows the selected ideas to get further nurtured. Management need visibility to the overall pipeline to assess progress, evaluate quality, and accelerate promising opportunities. Use of technology tools can facilitate the innovation process.
In conclusion innovation cannot be an ad hoc process that’s left to chance. It requires process discipline and proper decision making to ensure that good ideas are contributing to the value proposition and converting to positive revenue opportunities.