"The world leaders in innovation and creativity will also be world leaders in everything else."

--Harold R. McAlindon

The need and importance of innovation is well established. Society needs implementation of successful (and often unsuccessful) innovative ideas in its evolutionary process. The world has seen many a innovation of great importance in fields of science, technology, medicine, utility services etc that have influenced the minds and course of people's lives. Innovation is a genuine source of drastic change in environment and hence has far reaching consequences than incremental 'process' improvements.

Corporations realize this and hence include innovation in their mandate for growth. The last couple of decades have seen sudden surge in the popularity in the concept and trials of innovation among enterprises. What is the process and dynamics of innovation that companies follow?

Innovation first of all has to be defined for purpose of filtering out conflicting concepts.
Innovation is an actionable potential in a product or service developed that creates new wealth. Innovation is not equal to incremental improvement – it is more drastic in form and result. It is described by Peter F Drucker as “..the creation of new wealth, new businesses (from existing resources) ”. Note that the focus here is on the word 'new'. Innovation practices should as a rule aim at creating new avenues of revenue generation and growth. However the meaning is often wrongly diluted to also include improvements in products and services.

Innovation is also not a technical term – instead a truly socio-economic one. Very often technological advances and breakthroughs are seen and lauded as brave innovations. However the very germ of innovation springs up from the social and economic opportunities for the society. The need may then addressed by use of technological strength. However innovation remains a wholly socio-economic phenomenon. Consequentially, its measure of success is its impact on its surrounding environment. Every successful innovation is market focused. It starts with the innovator's curiosity to improve the service or experience offered by his product to his customers.

Innovative strategy

To become innovative in the truest sense of the word, the company should start with a basic assumption of obsolescence – all that is existing today – customers, supply chains, products, services will be obsolete to give way for a new round of phenomena. Likewise the business shifts its focus from creating “better and more” to “new and different”!

It is however much easier said than done! Difficult to let go of today as the new tomorrow looks uncertain and small as compared to the ‘big and important’ today. But ‘purposeful abandonment’ is necessary to free up the resources (especially human) from unprofitable and non-promising activities and direct them to more innovative ventures.

Every innovator starts with his existing knowledge and resources. But knowledge in its purest form is useless unless it is applied to some resource to derive value for the end customer. The innovator senses or perceives the ultimate potential or capacity that the knowledge can create to generate value. He foresees the maximum economic (and social) benefit derived from this knowledge. And there is the birth of the innovation! What results is a product or a service or an application that we term as innovated.

This holds true in context of an enterprise or an enterprising individual. However the business also has to manage its ongoing activities that earn its bread and butter today. Innovation is a term that gives results tomorrow…whereas the business has to survive today. Innovation needs a judicious but generous investment in time, money and other resources and often businesses get wary of the wait and (apparent) insignificant expenditure when the innovation activity is measured against the usual business. What results is the usual hold and subsequent stalling of the innovative activities.

This leads us to realize that the two (daily operational business and the innovative business unit) cannot co-exist under the same lens of business success parameters. The innovating enterprise enjoys a distinct difference in form, function and tasks from that of a normal business. The normal business is about 'today' while the innovating business is about 'tomorrow'. Companies that are successful innovators realize this and retain two different and distinct operational authorities and responsibilities to the two ‘business units’. Consequently all the parameters of survival, success and growth are different for the usual business and innovative business.

Business frameworks

The difference in concepts and visions between normal business and the innovative business also carries forward to the business structure, framework and hierarchy. Different businesses have different ways to manage innovation project teams. Sometimes the teams are managed separately as ‘autonomous units’ in the same company giving them specific authorities, responsibilities and reporting structures. At other times, these innovation projects are managed as completely different companies with the parent institution having a major holding in the offshoot. During the dotcom era many companies had innovation teams (irrespective of whether the subject matter was actual innovation or not); had authorized individual efforts as partnerships with the company where the individual innovators (or teams) were provided with resources needed to come out with ideas and their execution and also a share in the ultimate return gained by the company. At the same time, there are companies like 3M and many a Japanese corporation in the post industrial time that used none of the above. They neither had separate companies nor individual idea partners – instead the innovative attitude was ingrained in the fabric of the company and innovators’ motivation for recognition and authority along with responsibility was truly recognized. Innovative companies exercise their choice above to give enough motivation and convenience to the 'entrepreneur'.

Parameters

Along with different set of tasks and priorities, the innovative business also holds a different set of parameters for success as compared to the traditional business. Peter Drucker points out the difference in case of budget allocation. In deciding budgets for a normal business project, the questions that are asked by the management are: “Is this item of budget necessary and what is the minimum support that will be required by the project! “ For innovation projects the question is: “Is this the right opportunity to maximize the returns from existing knowledge and what is the maximum number of resources needed to support this idea at this stage of development? “

Again, the payback time on innovation projects is extremely uncertain and usually high. (Because of this gestation and uncertainty, they are sidelined by seemingly important and urgent projects). Hence the parameters of success to be considered for innovations include ultimate opportunity to be realized, risks involved and efforts & expenditure needed to take it to fruition.

Change management

What is perhaps the most important problem faced by companies in innovation projects (and many other areas) is the resistance to change. The resistance to let go of the past and meet the new. This resistance is usually due to the apparent uninformed approach in implementing innovation projects and their measurements. Innovation projects need an adequate authority and explicit encouragement management support in the form of budgets, time and specific to try out different things. Many a times the risk of losing rank or post or not meeting targets set under usual business is the main de-motivator against the employee going gung ho in innovation. A company is not going to be successful at innovation if its employees are constantly under pressure to innovate and also perform the usual business tasks. Businesses hence need to maintain a distinct separation between the usual business matters and innovation projects.

The management should adopt an encouraging attitude towards those with ideas. Very few successful ideas make sense on the conceptual level – they may sound downright silly. And many ideas that look unfailing in their concept may not be a success. Nobody knows. This makes trust and encouragement towards the innovation team a very important matter – and this should continue till the project succeeds or is called of (within reasonable means). Once the team or the employee is given a go ahead with the project, he should receive full and justified support from the organization and its resources. And to check undue advantage of the trust, an accountability system does the work. Here not the success or failure but the actual idea potential, the risks involved in its success and the efforts & resources required should be considered. Monitoring employees over a period of time can also help the company understand which employees are genuinely interested and dedicated lot.

Freedom with accountability is the mantra for innovation. At most times it is necessary to fall out of the existing authoritative or administrative web to be able to make way for more creative thinking. As pointed out by Drucker, it took freedom from usual university patterns for the Royal Academy to be able to offer great discoveries and studies in the field of science and Napolean started the grandes écoles in Europe only outside the usual academic streams.

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