What is innovation?
Leaders in almost every organisation on the planet say that they want the organisation to be innovative. However, once you start to scratch under the surface of what they mean by that, things typically get a little sketchy. Before we even look at what innovation might mean for any specific organisation, let’s just define it broadly.
As you might imagine, there are actually many definitions of innovation (in the organisational context alone) and debates rage on as to which definition is ‘right’. Fortunately, however, when it comes to defining innovation, there is indeed a consensus amongst most innovation experts and academics. The consensus is that whilst the words you use to create your organisational definition don’t matter all that much – feel free to create your definition in a style which suits your organisation’s personality – what does matter, is that your definition contains two key elements.
The first element is that innovation is something novel, or new. Some organisations choose to substitute this with “change” and whilst this is close, we’ve seen circumstances in which the “change” definition runs into problems, so we advise sticking with the concept of an innovation needing to be new or novel (more on that later).
This brings us to the second element, which is that innovation must create and deliver value to the organisation. New for the sake of new is not innovation; something new must create and deliver value for it to be categorised as being truly innovative.
So, go ahead and define innovation using whatever language and tone you like; just be sure that it contains the two important elements: that it is something novel/new; and that it delivers value for the organisation.
What innovation is not
Most people certainly understand what ‘deliver value for the organisation’ means. However, defining what is novel or new often creates misalignment. New in what context, one might ask? First of all, innovation is not the same thing as invention. Your organisation can innovate without inventing something which had not, until its invention, existed. Simply put, something is innovative if it meets the two element criteria explained above, in the context of your organisation.
We often hear people dismissing ideas in organisations as “not being innovative because Google has been doing that for 6 months” or “because they already work like that in the financial services industry”, the list goes on. However, you shouldn’t define innovation or your innovation strategy, or innovation focus areas, based on what other industries or countries or competitors are doing. If something will be innovative for your organisation, it will have the best chance of success if you treat it as an innovation, rather than as a business-as-usual (BAU) project, product, or undertaking. Innovation projects need a specific approach if they are going to be successful so if it is innovative in the context of your organisation, treat it as such, regardless of what others are doing.
What does it mean to be innovative?
There’s a big difference between being an innovative organisation and positioning your organisation as being innovative. We’ve lost count of the amount of times we have seen the word innovation appear in the documented strategies, missions, visions, values, the list goes on – of organisations; however, very few of these organisations actually do much more than talk about being innovative.
Being positioned as innovative is seen as a feather in the organisational cap for myriad reasons, not least of which is that it can have a significant impact on attracting and retaining the most sought-after talent. Ironically however, many organisations which just position themselves as being innovative quickly lose their best people when those people realise that the organisation’s commitment to innovation is little more than paying lip service to it.
Organisations which are actually innovative however, don’t rely on chance and a lot of talk. Innovative organisations have clear strategies for innovation which are supported by robust structures like best-practice processes, resourcing models, governance structures, and metrics, just to name a few key elements. Additionally, highly innovative organisations develop innovation capabilities amongst staff (built on established, robust methodologies – they don’t just provide a couple of HCD, Design Thinking or Lean Start-up courses), ensuring that the right people have the right skills across the innovation process, and that leaders understand how to drive innovation (and not block it).
What are the ‘types’ of innovation?
Innovation can certainly be categorised in many different ways, across many different dimensions. As this article is provides high level information on innovation, we won’t get too technical here, however it is worth pointing out that a couple of good dimensions about which to start thinking about innovation are: wherethe innovation is focused on creating value; and the extent to which the innovation is radical.
People often assume that innovation is about shiny new products – and indeed it can be – however, many of the most impactful innovation projects we have helped clients with, have been developing business model innovations, service delivery innovations, and process innovations. Of course, product and proposition development innovations can also be highly impactful (and profitable!) for organisations but it is important not to limit your innovation efforts to just products or you are likely to be leaving a lot of organisational capability value on the table.
It is generally good practice to balance the focus of your organisational innovation effort across both radical and incremental dimensions. Broadly speaking, incrementally focused innovation is innovation which will help your organisation to improve the ways in which you currently create or capture value, whereas radically focused innovation is innovation which will help your organisation to create and capture value in completely new ways. A good innovation strategy will articulate where different types of innovation focus are appropriate.
Why is innovation important & how does it benefit an organisation?
One thing we all know for sure is that the world is constantly changing – and every marketplace and industry in it is changing too. The needs of the people your organisation serves, whether they are consumers, business customers, citizens, beneficiaries and so on, are evolving constantly and this means that the ways in which your organisation creates, delivers and captures value today, will be different from the ways in which it will do those things tomorrow.
All of this means that your organisation must keep evolving to stay relevant and to stay ahead of the game. And this evolution needs to extend beyond just products and services. To stay relevant, you’ll need not only to ensure that you keep delivering improved products and services, but you’ll also need to be increasing efficiencies by improving the ways in which you deliver value and the ways in which you support the delivery of value in the ‘back end’ of your organisation.
With the expectations of customers constantly evolving as technology evolves and the ways in which we all live our lives changes, any organisation which fails to innovate consistently risks becoming irrelevant. On the positive side however, organisations which do innovate consistently are able to become leaders in their fields and set the standards for how value will be created and delivered. Doing so will ensure relevance and, if you are in an organisation in which differentiation and competitive advantage is important, it will do that for you too.
Why innovation culture is important
Having an innovation culture has become one of the most sought-after organisational attributes right across the globe. Importantly, it is often erroneously seen as a silver bullet – an end unto itself – however, in reality whilst an innovation culture is a critically important piece of the innovative organisation puzzle, it’s not the only piece. An innovation culture can be both a driver and an enabler of innovation, but it will not do either of these things effectively if it is all you are relying on to do both. Having a clear innovation strategy, getting all the right structures in place and developing innovation capability in people are all equally important pieces of the puzzle so having an innovation culture should be seen as simply one of the important pieces, but not the only one.
With that said, organisations which ignore the innovation culture piece do so at their peril. Without an innovation culture in place, people tend to consistently revert to the status quo and create enormous inertia for change. Moreover, they tend to either avoid risks or take enormous risks (because they don’t apply methodologies such as lean start-up which minimise innovation risks), either of which is extremely dangerous in the modern business environment.
Organisations which have strong innovation cultures are customer centric; open to new ways of working; enthusiastic about creating and delivering value in new ways; less risk-averse (but manage risk appropriately); and perhaps most importantly, they are learning focused. These are all things which have been proven to underpin organisational success.
How does an organisation get started?
There are indeed a few different ways that organisations can approach getting started. A couple of the more common ones are: to use a specific project as a catalyst to start building organisational capability (whilst achieving a valuable, innovative outcome!); or to set up a structured organisational innovation program (described in our white paper).
However you decide to make a start, the important thing is that you do make a start. There’s a well-known Chinese proverb which feels highly relevant here: “The best time to plant a tree was 20 years ago. The second-best time is now.”
If you’d like to find out more about this topic, I’d love to hear from you mark@orangesquid.com.au I really do love talking about this stuff and I’m always more than happy to discuss it further over a coffee!