#242 from R&D InnovatorVolume 5, Number 10          October 1996

Managing for Innovation

by Guy A. Hale

Mr. Hale is chairman of Alamo Learning Systems, in San Ramon, California (phone 800-829-8081),  providing a workshop for corporate innovation, called Innovators.  He is author of The Leader’s Edge (Irwin Professional Publishing, Illinois, 1996).

Even under the best of circumstances, staying competitive today is more difficult than ever before.  Why?  Because the conditions that determine competitive advantages change at an unparalleled speed.  Today’s hot product is tomorrow’s flop; the secure, stable market of yesterday is racked by technological advances and increased competition.  Examples of the “rise-and-fall” nature of today’s environment are everywhere with small start-ups rapidly rising to great heights, and large multinationals going through massive layoffs.

Innovation:  The Key to Competitiveness

The cold truth today is that a company can hold its competitive edge and stay ahead of change only through innovation.  Innovative companies are those that keep their collective eyes and ears open to change and opportunity, and respond with ideas and action that keep them growing and profitable.

Companies that compete through innovation know that new (or borrowed) ideas apply not only to products, but also quality, productivity, service, financial discipline, employee attitudes and renewal.  All are critical elements in a company’s competitive ability.

Two Categories of Innovation

Two basic categories of innovation contribute to the competitive strength of an organization.  On one level are continuous improvements:  innovations conceived and implemented by an individual or small group to make their job easier, better or more productive.  Examples of these small-scale innovations include an improved form, a simplified ordering system, a slightly readjusted tool.

At the other level are organizational innovations:  more impactful changes that involve different functions and levels within the company.  Organizational innovations vary widely in scope, but in all cases require commitment and cooperation from management, supervisors and employees.

It’s important to note, as does Tom Peters in Thriving On Chaos, that continuous improvements and organizational innovations have a synergistic relationship:

“The reality is that millions—literally an unlimited number—of innovation/improvement opportunities lie within any factory, distribution center, store or operations center.  And you can multiply that by more millions when you can involve the factory and distribution center working together as a team.  And multiply again when you add in involvement in innovation by suppliers and customers.”

Environment for Innovation

The first goal of executives seeking to build competitive innovation is an organizational climate that encourages, supports and rewards innovative effort.  Climate emanates from the very top of the organization, and must be carried out at every level of management.

The challenge is to erase the common fear of being punished for “rocking the boat.”  Executives must say and show, through incentives, rewards and recognition, that the organization needs and will listen to the ideas of all its people.  Adding a sense of urgency—making innovation a key to the company’s security and growth—can help emphasize the organization’s commitment to new ideas.

Ford Motor Company achieved success when it gave a cross-section of employees the charge of designing a new car—one that would set Ford apart from its competition in customer appeal, yet be practical to build with quality.  The result:  the Taurus, Sable and Thunderbird, a successful line of popular, distinctive automobiles.  Ford’s employees, dealers and suppliers knew the climate was ripe for ideas.

Building the Innovation Process

Innovation—particularly within an organization—is not magic.  Peter Drucker has called it “hard, focused, purposeful work.”  The company that competes through innovation is one that has made the process of innovation a part of its daily operation.

Success-story anecdotes do little to clarify this process or provide a model that other executives can use in their own organizations.  However, by looking deeper into the success stories and working with innovative companies, we have identified five key activities that any company must develop to compete through innovation.  The key to following these activities is to focus on areas most in need of improvement, and then to seek innovative ways to foster an innovative climate.

1.  Opportunity Identification

Competitive innovation is proactive.  Instead of waiting for threats to make innovation a necessity (by which time it’s often too late), your organization can set up systems to scan for innovation opportunities.

Pure research, though important, will not by itself make a company truly innovative.  Many of the most important innovation opportunities are found by individuals who are closely tied to the products and customers.  Most employees have a pretty good idea what can be improved at their jobs, and can learn—given the right climate and training—to recognize innovation opportunities in the changes, successes, surprises, mistakes, customer inquiries, and other events around them every day.

2.  Focus and Direction

Obviously, not every idea is a winner, nor does every good idea meet the needs and objectives of the organization.  Determining the general direction for innovative efforts, therefore, enables a company to quickly concentrate on those opportunities most likely to make it more competitive.  Some of the important aspects of establishing focus and direction include:

            a)  Clearly communicating goals and objectives. 

            b)  Defining what type of innovations are not sought, so efforts can focus exclusively on                  the goals at hand.

            c)  Presenting limits or constraints—so employees can be realistic in their assessment                  of opportunities.

3.  Idea Generation

Generating ideas includes that mysterious aspect of innovation:  creativity.  Creativity, is not, as some believe, synonymous with innovation, but it is a critical element of the innovation process.

Fortunately, generating worthwhile ideas isn’t the exclusive realm of “creative types.”  Anyone can participate in the exercise of generating ideas for innovation, both at the individual and group levels.  The important responsibility of management, however, is to provide the time, resources and direction needed for people to be creative.

4.  Analysis and Implementation

A flood of ideas isn’t, by itself, innovation.  The organization must ensure that these ideas are captured, analyzed and, if deemed valuable, brought to reality.

A first step, and a real resource saver, is for the idea-generation team to refine its ideas and develop recommended solutions.  Just as importantly, managers who receive ideas must analyze them objectively, rather than reject or accept them based on subjective biases (e.g. a marketing executive shouldn’t be partial to a marketing-based solution unless it’s truly the best innovation idea).

Innovative organizations use project-management techniques—with adequate resources and personnel—to guide an idea to implementation.  These techniques permit repeated assessment of the idea and help ensure that the innovation meets its “window of opportunity.”

5.  Management Support.

Support is critical to the success of any organizational innovation.  But support isn’t limited to the tangibles of money, personnel, space and equipment; innovation requires philosophical support as well.  Executives must be committed to the principle that their company must change, must innovate, if it is to remain competitive in today’s changing business environment.

Support for innovation works against what has been called the “Corporate Swamp”—that tendency of an organization to squash or ignore ideas that threaten the status quo.

At each phase of innovation, different roles become central to the support process:  the inventor is the individual (or group) who finds the opportunity or generates the idea.  Inventors, however, are often not qualified to sell the idea through the organization.  That’s the role of the champion, who can gather input and build backing for the proposal in other parts of the organization.  Champions possess advocacy skills to effectively “sell” promising ideas to key individuals within the company.  Those individuals who become allies of the champion are innovation supporters.  Finally, in the case of the most are-reaching innovations, a sponsor from upper management is often essential to ensure that resources and attention are devoted to developing the idea.

Beginning With Self-Appraisal

It’s not enough to wait for others to act, each manager must accept responsibility to initiate the process of innovation.  Gather data on what must be changed in order to stimulate innovation.  Then establish priorities and outline actions to build the innovative process in your organization.

It’s not a simple challenge, and innovation is by no means a simple process.  It will require managers courageous enough to begin making their organizations effective, innovative competitors.