Managing Innovation
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“Innovation distinguishes between a leader and a follower.”
Companies are catching on to this sea change. In an Ernst & Young study, European and North American companies called innovation the most important criterion for success in the future. Jack Welch, CEO of GE and seen as the world’s greatest living manager, obsesses about his company’s ability to “break the glass”—that is, continue to innovate. He worries whether it has “the right gene pool— do people who join big companies want to break the glass? We’ve got to break this company to do this—there’s no discussion, we’ve just got to break it.”
Organizations, therefore, have to thrive to innovate constantly to be the leader. Innovation involves a lot of processes. It, thus becomes imperative to manage these processes. It can be used to develop both product and organizational innovation. Without proper processes, it is not possible for R&D to be efficient; innovation management includes a set of tools that allow managers and engineers to cooperate with a common understanding of goals and processes. The focus of innovation management is to allow the organization to response to external or internal opportunity, and use its creative efforts to introduce new ideas, processes or products. There are two major types of innovation – product and process innovation. As a third type hybrids combine product and process innovation. Product innovation is concerned with bringing new or greatly improved goods or services to market. Process innovation concerns itself with improving the business functions required to profit from providing goods or services. Innovation management is the economic implementation and exploitation of new ideas and discoveries, and the implementation of an innovation culture in an organization, to promote and make possible the development of new ideas and business opportunities.
It is driven by any of the following business imperatives:
• The need for enhanced growth beyond current strategic plans
• The need to find alternative ways of mitigating cost pressures going forward in a rising cost environment
• The need to create strategic flexibility for the business going forward in order to create options and choices for management
• The need to improve market perceptions of a business. Empirical evidence proves that those companies who are constantly innovating trade at a premium to those that do not. The markets price in an expectation of innovation and growth
• The need to adapt a tired business model in the face of global competition
Management must ignore the temptation to try and appease shareholders and analysts in the short term, by following through on their convictions. They will in any event be held accountable at some future period.
The challenge for any competent management team is to determine whether their strategy will ensure that once they are done with all the cost cutting and increased efficiencies, they have something else in their quiver to off-set the unavoidable effects of inflation on their input costs in year two and three.
“The winners will get below the buzzwords and be recognizable by their focus on the outputs of innovation or real value delivered. They will create actionable platforms for experimentation and a road map to scale early success” - Anon
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