innovation at the enterprise level

innovation at the enterprise level

An innovation is something original, new, and important that breaks into a market or society. Innovation is generally considered a process that brings together better outcomes from novel ideas to make an impact on. It is not invention, which is about the idea itself; nor is it improvement, which is doing the same thing better.

Innovation is essentially a learning process. Within organisations, it demands an understanding of why we do what we do, as a starting point to looking at things differently.

Why innovate?

Novel ideas from innovation have been the hallmark of the progress of mankind for centuries. Today, in a world characterised by a collapse in timeframes and rapid reconfigurations of business models, enterprises face a harsh ultimatum – innovate or die. The factors which cause business death are almost certainly not the ones that are being currently focused on, but they can be identified by a systematic innovation process.

Companies employing effective innovation practice drive six times more revenue from new products than companies which don’t. Apart from the differentiation benefits, competitive advantage and profits from new products, innovation reinforces brand, fosters continuous improvement and future proofs an enterprise. Innovative companies also typically attract and retain better people.

How to innovate?

Effective innovation requires leaders to create the right climate and for innovation processes to become embedded in every aspect of the organisation. It requires an innovation mindset within a culture that nurtures, guides and supports innovative thinking and practices. In fact innovation potential can only be sustained if the culture of the organisation allows it.

 While an innovation mindset fosters innovation throughout an enterprise, the best case studies of systematic innovation seem to involve fully involved and endorsed innovation teams from all levels of an organisation, incorporating inputs from customers, suppliers and external experts. Success comes from the ability to deal with the uncertainty of the future and not from an orientation through pre-established objectives or organised plans.

There are no silver bullets here, but success is most likely from a process which inspires vision, creates the right environment, stimulates ideas and then tests the ideas before implementation. Success is when we take those ideas from possibility to probability.

Handbrakes on innovation

Most of the constraints come from leaders who don’t understand innovation processes or who just pay lip service to it. Not only can leaders squash innovation but they can be overconfident in their ability to nurture it. Development Dimensions International measured, in 500 companies, how successful leaders fare at promoting innovation in four major areas: inspiring curiosity, challenging current perspectives, creating freedom and driving discipline;  and found a gap of 35% between leaders and employees perceptions of what was happening. So despite what managers think, many of their employees don’t believe that their leaders actually want to challenge the status quo or hear new ideas, less still champion these ideas to senior management. Sound familiar?

Nilofer Merchant compares many innovation efforts to an “air sandwich” – that is, the top tells the bottom what to do and all the stuff in the middle – the debates, trade-offs and necessary discussions – is missing. This air sandwich is the source of most strategic failure.  The change from a closed exclusive concept of who can participate, to an open and inclusive approach is essential for effective innovation.

Traditional methods of assessing financial viability are also one of the biggest barriers to innovation. It is only by having different KPIs that organizations can understand the different elements of risk and reward in innovation and how they relate to investment levels and financial viability. There needs to be a commitment to the long term view, which is mostly not the focus of standard metrics.

Further material

If you want to dig deeper, Scott Berkun suggests five great books on the subject. There is also a good EY report and a link to an overview of disruptive innovation below:

  • “Innovation and Entrepreneurship” by Peter Drucker
  • “Thinkertoys” by Michael Michalko
  • “Dear Theo” by Vincent van Gogh
  • “They all Laughed” by Ira Flatow
  • “Brain Rules” by John Medina
  • Innovating for Growth” EY report
  • The explainer on disruptive innovation HBR

                                                     “the power of imagination makes us infinite” John Muir


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