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“Innovation” has become a popular business buzzword and continues to advance by the many charges to “Innovate or Die!”  But when you stop to think about the practice of innovation, the drama subsides and you are left with the same questions organizations have struggled with since the dawn of competitive markets. This article will discuss:

1. What is driving the “innovation" buzz?

2. Why Dorothy understands.

So what’s with all the hype around “Innovation”?

“Innovate or die!” is to the technology world as “breathe or die!” is to humans. Technology-driven companies have always needed to innovate, or face extinction. Take, for example, the 100 automobile manufacturers who competed for market share in the early 1900’s, leaving a bloody trail and only three manufacturers standing in the end (soon to zero?). If asked about their demise, they probably would have used excuses like “we needed more money”, “the market wasn’t ready yet”, “the infrastructure is not there”, or “there are no standards”.  I’m going to guess that when many of the 100 or so Wi-Fi companies arrive at a similar fate, we will hear these excuses again. 

Simply stated, companies fail because they are out-innovated.  A superior business model, better products, better services, a lower cost structure, better marketing, faster execution - these are all ways to out-innovate your competition.  Generally, the same variables that companies worked with 100 years ago are the same variables companies work with today.  The current cry for innovation is well founded, indeed. However, it’s not the need to innovate that is new; rather the rate at which companies must innovate that is accelerating.

Given the onslaught of freshly minted startups, disruptive technologies, and roving talent pools, there is a significant requirement for established technology businesses to innovate faster, or die.

 “Lions and Tigers and Bears… Oh My!” (Note 1)

The concept of innovation reminds me of the old joke of two friends in the woods:

Two guys were hiking through the jungle when they spotted a bear that looked both hungry and fast. One of the guys reached into his pack and pulled out a pair of Nikes. His friend looked at him.

"Do you really think those shoes are going to make you run faster than that bear?"

"I don't have to run faster than the bear," his friend replied. "I just have to run faster than you."

This was the way it was for a long time. As long as you were ahead of your known competitors, you had a good chance of survival.  Enter the new Dorothy age of innovation:  “Lions and Tigers and Bears, Oh My!”

Today, you not only have to run faster than your friend, you also have to outrun all the bear’s friends! This is obviously a little tougher; requiring more than a pair of Air Jordan’s to evade all of your potential nemeses.

Business is currently at a similar stage with innovation as it was with quality control in the 1950’s. We know we need to do something, but we lack consistent terminology, metrics, and processes to learn how to DO innovation and recognize when we get it right.  We still have a long way to go, but the elements are coming together.  We are beginning to understand what it takes to BE an innovative company and stay ahead of the lions and tigers and bears, including going beyond 3M's much-hyped policy that allows employees to devote 15% of their time to innovation.

So what’s a young girl in the woods to do? 

Innovation doesn’t necessarily mean always having cutting edge products and services, but it does mean moving from serendipitous and ad hoc breakthroughs to an organized and targeted approach to innovation, whether it’s innovative business models, marketing campaigns, process improvements or products and services.

Having researched various innovation models, including Planning Innovation Group's and those developed by the PDMA, Dr. Robert Cooper, and others, there are commonalities in each model that have been effective in organizations aspiring to consistently innovate.  Here are the common elements of almost all of the models: 

1. A Culture of Innovation

Willingness to take risks – There is never enough information to make perfect decisions.  Don’t wait until you hear your competition announcing the product you were thinking about!

Open communication - Listening to fringe competitors and dissident employees can unearth trends and opportunities that a structured chain of thought processes will automatically filter out. 

Discipline and commitment to the innovation process from the CEO, down – Innovation happens by asking everyone for breakthrough ideas and creative decisions, the ability to make decisions even when it seems risky, and by taking time to drive the process.

2. An Innovation Process

Opportunity discovery process  - According to a study by Stevens and Burley, it takes 3000 ideas to create just one successful product. Having a process in place to capture and generate ideas specifically targeted to your goals will help you eliminate the 2999 bad ideas.

Gate-oriented product development process – Dr. Cooper’s Stage-Gate™ and other gate-oriented processes have been proven to keep an organization focused and provide a process for making decisions.

Portfolio management methodology – Just as in personal investments, a portfolio strategy can provide the right mix of risk and return for your company. Specify how much you want to invest in high-risk innovations and stick to it.

3. Significant Expertise

Systematic market awareness – Changing consumer trends, emerging business models, and shifting demographics can be just as detrimental to an organization as missing a technology trend. Nintendo stuck with Donkey Kong games while the average videogame age soared to 29 years. Results? Nintendo plummeted from 90% market share to 15% in 10 years!

Thorough technology understanding and expertise – Being technology-driven obviously means having the expertise to back up your strategic plans. Ensure your team has the resources and training to stay on top of technology.

Deep connection with customers – Customers aren’t always right, but they know their problems, and every once in a while you run into some who are forward thinking (these are sometimes called "lead-users"). Customers can provide valuable insights into your next move.

If your company is relying on only one or two of the three elements of innovation above, you may want to rethink your innovation strategy. Smart companies are developing strategies around all three areas to identify trends, adopt new technologies at the right time, and move faster and more accurately than their competition. 

As with “re-engineering”, “TQM”, and other industry buzzwords, the word “innovation” will surely die down as consultant and business gurus move on to the next trend and companies stop paying to hear about it.  But you can be certain that the concepts and disciplines, when applied correctly, will live on and continue to foster successful companies.

Note 1: Used without permission from Warner Bros., but with our sincerest apologies. If you are a Warner Bros. representative and are upset with this article, please send us a letter and copy our PR agency. We’d appreciate the publicity.

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