Innovation and New Product Development - Does Leadership Matter?

Innovation:  Bla, Bla, Bla Innovation is one of the most over used, least understood descriptors for product creation – yet it is very important for those companies that strive for higher margins.  We think there are a lot of myths floating out there around this elixir innovation, and we would like to explode them.  After laying out what is wrong with peoples understanding of the “i-word” we will describe four related elements that support innovation.

First, let’s define innovation and some related concepts.

Innovation (classical): A discontinuous, large new concept (invention) that makes a large impact (usually commercially).

Innovation (context of this piece): We will be using a looser form, with a lower hurdle, which is a significant new concept with meaningful business impact.

Related to innovation and of increasing Importance is the role of social media in increasing innovation.

Social Media Technology: Broadly defined, social media technologies are internet-based tools and applications that facilitate “the creation and exchange of user generated content.”

Social Innovation: Innovation leveraging Social Media Technology

Now, we have some working terms out of the way,what are some of the commonly held assumptions?

Innovation Elements

 

Though there are myths out in the manager’s imagination, there are some foundational elements that can support – and in many cases – drive innovation.

In all cases these best practices may or may not help your organization –it all depends on what are your innovation limiters.

In all cases these best practices may or may not help your organization –it all depends on what are your innovation limiters.

Leadership is critical for innovation, and may be the most critical of all the core elements because the success of innovation is contingent on culture, strategy, organization, and people which all are ultimately tied to the leadership.  First and foremost is the emphasis placed on innovation and the budgets that go toward innovation. Second, the leadership bakes innovation into strategy and demands hitting key metrics  – for example the percentage of revenue comes from new products.  We would say leadership and innovation are odd bedfellows because rarely does leadership innovate – but they provide the nutrient rich environment.

Organization (and people) places an important role too.  The structure of the organization can be an enabler of innovation.  Why?  Because creative new concepts can be sheltered from other organizations competing for resources.  Another important organizational factor is how the most creative people are managed (if such a thing is possible).  Related to this is the importance of a dual ladder,which we assume most all companies have, where innovators are given the same salary, rewards, and recognition of senior management.  Given the need for sheltering, and the potential for high compensation, does management walk the talk? Are your innovators forced to participate in the administrative overhead that other managers of the same pay grade are asked to do, or are they given dispensation and allowed to concentrate their time on creativity?  Too frequently we have seen these incredibly rare resources used in wasteful ways.  Lastly, some organizations have benefited from a “CIO” Chief Innovation Officer who supports the cause, reporting into the office of the CEO.

The role of culture is very important since innovation is not easily measured and is very fragile. Does the organization tolerate real failure, or is it given lip service?  Cultural transformation is impossible without the leadership of top executives, so Tata created the Tata Group Innovation Forum (TGIF), a 12-member panel of senior Tata Group executives and some CEOs of the independently run companies (BusinessWeek, Aug. ’09).

Often process is held up as the enemy of the good, but why?  Because process tends to take variation out of the system, while innovation requires it!  However, if one looks beyond the rhetoric, there are many areas where process – if applied sparingly – can make a huge, positive impact.  Process can help in at least three areas.  Idea selection is an art, not a science, but this critical area can be supplemented by light weight systems for picking the strongest ideas.  Innovative ideas are fragile, and many die in the transfer from research to development.  Focused technology transfer processes can help minimize the risk in transfer into mainstream development.  Social Innovation, as demonstrated by Netflick’s iPrize, can be a winning way to innovate.  But it is not fast or free.  Nevertheless, a good partner innovation process yielded a very successful outcome.

We have yet to tackle Social Innovation – yet that is where many of the leading organizations are heading – or at least exploring.  How can you tap the collective ideation of your internal workforce?  How can you leverage the outside community of customers, partners, and suppliers?  We can see the future of innovation to include a fifth element on the Venn diagram “Social Innovation”.

As a later piece, we will examine the most innovative companies and products, along with the critical barriers, to gain additional perspective on this over used but nevertheless critical term, “Innovation”.

And yes, leadership matters.