Innovation

How innovative firms get twice as profitable

How innovative firms get twice as profitable
Companies that want to manage innovation need a management culture that is ready to sift through and implement ideas. Photo: Thinkstock
Published: 6:21 AM, December 18, 2013
Updated: 4:50 PM, December 18, 2013
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It is said that innovative organisations — those that systematically create new sources of value from their products, services or processes — grow twice as fast, both in employment and sales, as firms that fail to innovate. What’s their secret?

What are they doing differently and what can be learnt from their experience? Research says that, among many other variables, they are particularly good at managing the innovation process and harnessing two unlikely bedfellows: Creativity and discipline.

When we think of innovation, we often think of the first bedfellow — creativity — but being creative, no matter how important, is only one part of being innovative. Being successful at taking an idea, retaining its novelty and creating value out of it requires discipline as well.

It is a complex raft of skills, capabilities and processes, not to mention a particular type of culture, that makes organisations successful at innovating. We may not like to speak of innovation and management in the same breath but, in fact, to be really successful at innovating, we need to be good at management: Innovation management.

 

TENACITY, COURAGE, LUCK REQUIRED

 

When I started working in this field many years ago, in organisations grappling with this complex raft of requirements, many of the tools and processes that I found were very technical in nature and developed mostly for R&D and technological product development. Others, particularly in consumer-facing organisations such as Unilever, Coca-Cola and Diageo, mirrored internal business planning with “stage-gates” for various decision-making processes.

However, when one distils the essence of different approaches, some common themes and ideas emerge. Most innovation management processes fall into three distinct phases: Idea generation (how we get new ideas), selection (how we choose ideas) and implementation (how we make ideas happen).

But innovation is not just a process and certainly not a linear one. If only it were so easy. Ideas rarely move in a straight line. Unlike other management processes, innovation is perhaps one of the most human. It requires ingenuity and imagination to even get off the ground.

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