#220 from R&D
Innovator Volume 5, Number 6
Innovation, the Core Competence
Dr. Higgins is
president of James M. Higgins & Associates, Inc. in Winter
Park, Florida, helping organizations increase creativity and
innovation (Phone 407-647-5344).
He is also a professor of management at The Crummer School,
Rollins College, and is author of 101
Creative Problem Solving Techniques and Innovate
or Evaporate (The New Management Publishing Company, Winter
Park, FL, 1994, 1995).
Corporation was forced to withdraw its low-priced monochrome ink
jet printer from the market only four months after its
Because the dominant firm in that industry,
Hewlett-Packard, had already beaten them to the market with a cost
reduction of forty percent on its monochrome ink jet printer and
the introduction of an improved color printer.
HP used product innovation to enhance the existing
products, and process innovation to reduce costs and create a
relative low-cost position in the market. HP’s entire philosophy of business is based on innovation,
from product development to human resource management. There are other firms where innovation is also a way of life.
Then there are
firms where innovation may not be a way of life, but where it has
been critical to success. For
example, when Intel was faced with new and nimble competitors, it
chose speed of product development as its key strategy, and blew
the competition out of the water.
Electric’s introduced best practices (GE’s version of
benchmarking), process mapping (reengineering) and workouts
(energetic, highly participative employee-manager retreats), all
in order to get more new ideas from employees.
These ideas were aimed at significantly increasing
innovation in order to substantially increase productivity.
These actions were taken in a firm which already, in most
years, files more U.S. patents than any other firm headquartered
in the U.S. In each
case, these firms—Hewlett-Packard, Intel, and GE—as well as
some others, met strategic challenge through innovation.
All of the above
companies live and breathe innovation; or, at the very least, find
it fundamental to their success.
These types of firms are the ones that others should
emulate for they know that to do business,
as Peter Drucker suggested in a recent Harvard Business
Review article, “Every organization—not just
businesses—needs one core competence:
these firms a competitive advantage.
Now and in the future, more than any time in history, the
secret to competitive advantage is innovation.
But innovation can help businesses meet all of their
strategic challenges, not just competition; for example, in
confronting accelerating rates of change, globalization, rapidly
advancing technology, a more diverse work force, and a change from
an industrial to a knowledge-based economy.
Meeting all of these challenges helps the firm achieve
competitiveness, and meeting these challenges appropriately
depends on innovation.
If a firm uses
textbook solutions for these or other market-oriented challenges,
it becomes dangerously predictable, and at best, ends up in the
same relative position as its competition.
The more likely scenario is that the firm ends up at a
competitive disadvantage. We
know that a firm must differentiate itself from its competition
and/or possess a relative low-cost position compared to its
allows a firm to solve its challenges in unique ways that build
competitive advantage either through relative differentiation, a
relative low-cost position, or some acceptable level of both.
Innovation can’t guarantee success, but success cannot be
achieved in the long run without it.
Innovation Quotient Inventory (IQI)
Many firms fail
to produce much that’s new or to improve the processes by which
they provide their products or services.
Is there something different about organizations that are
consistently innovative? Absolutely!
Extensive examination of case and research studies has
revealed a set of characteristics that are shared by innovative
firms, despite certain differences in their organizational
cultures. It is these
characteristics that will enable a firm to survive and prosper in
the coming years. These
characteristics create the profile of the innovative organization.
In the following
survey, I’ve organized 14 of the 49 product innovation
characteristics according to the McKinsey Seven S’s: strategy, structure, systems, style, staff, shared values,
and skills. The
survey of these 49 characteristics and similar surveys for
process, marketing and management innovation comprise the
“Innovation Quotient Inventory” or IQI.
Check this sample of the IQI for product information as it
relates to your firm.
Rating (from 1 to
with 1 being low,
and 10 being high)
To what extent
does your organization:
Have a stated and
working strategy of product innovation.
managers to have objectives for product innovation and
Use alliances to
obtain product innovation.
cross-functional and customer/supplier new-product teams.
creativity and innovation.
information systems for product innovation to scan the
approaches when managing innovative personnel.
to make mistakes when innovating products.
Use many of the
100 or more creativity techniques such as brainstorming,
facilities that are conducive to the exchange of ideas and
Place a high
value on change and make it part of organizational culture.
organizational culture to make it more innovative.
create new opportunities, and respond to change relative to new
create new products or services and/or enhance old ones.
Simply add up
your total score from all fourteen questions. Experience suggests that scores higher than 115 indicate a
very innovative organization.
Scores between 100 and 115 are good.
Scores between 85 and 100 are acceptable.
A score below 85 leaves plenty of room for improvement.
Scores below 57 reveal firms likely to possess little
below 28 indicate firms in serious trouble.
higher the score, the more likely the firm is to be innovative.
But the requirements of some industries and/or certain
situations may cause a firm to have a high score but not be as
innovative as another because one or two vital characteristics are
missing. For example,
speed strategies (of product development and placement in the
market) are more critical in rapidly changing environments than in
others with a slower pace of change.
How did you score
your company? How did
your colleagues, at various levels in the organization, score your
company? Perhaps this
can initiate further discussion on what needs to occur to improve
your innovative capabilities.