Do you really need to innovate?

Why don't people catch the "Innovate or Die" imperative?

Today's companies know that they must constantly innovate and accept R&D as part of their day-to-day operation to be competitive. Creativity needs to happen naturally, primarily through employees continually looking for opportunities for new products, services, and values. Although this is obvious, there are many failed internal research or innovation programs: companies make substantial investments to create new processes and new product designs, but the results are far from conclusive in many cases.

The problem of Return on Innovation Investment (ROI2) is often attributed to individuals who lack the "culture of innovation" or who demonstrate a "resistance to change". These factors exist, but they are overestimated, and the fundamental reason is more complex to catch.?People know they have to innovate, but they must personally see the benefit of a new concept to adopt it and change. Depending on the job position, the benefit is not always obvious, and then start the problems.

Don't take R&D for Innovation and vice versa.

Here is a simplified definition of the difference of processes between R&D and Innovation, that is often attributed to Dr. Geoff Nicholson, the "Father of Post-it Notes".

R&D transform

Money into Knowledge,

Innovation transforms

Knowledge into Money

R&D and innovation are both processes carrying a certain level of uncertainty. Just as there is no guarantee that by throwing much money into a research program, you will find new knowledge faster, there is also no guarantee that new knowledge, no matter how fantastic, will turn into commercial success.?

You surely have heard the statement, "an idea is worthless".

As long as we haven't finished the process of transforming an idea into a product, a process, a service that creates measurable value, in reality, we haven't done anything innovative. We may be on the way to innovation, but we are certainly not at the stage of being qualified as an innovation.?

So we could ask ourselves the question: "Who is innovative? Startups, for example, are not innovative until the public has adopted their product. On the road to innovation, which can be very long, by the way, the only thing we can be sure about is that the startup ... has started. Startup capacity to generate innovation is speculation. In the same way, when millions of dollars are given to a research fund for the fight against cancer, nothing has been settled until the researcher has found new knowledge on the research subject.

As such, researchers who are by definition "in the process of research" are better named than "innovators" who cannot be called innovators while they are still on the path of innovation.??I remember hearing from a speaker that the portmanteau "innovactor" would be more appropriate. A researcher is a discoverer only when his or her research has been successful. Why should an innovator be one when everything has yet to be proven??

You probably think it's semantics, and you're right! Because the words we use to define the abstract notions that surround us influence our perception of these notions, and when we are a manager, our perceptions influence our decisions. This word's confusion is why many CxOs have difficulty giving R&D and innovation the respective places they should have.?

Now that we have established together that there are two twins while different concepts, R&D and Innovation, why isn't this article titled "Do you really need to do R&D and innovate?"

R&D: the spoiled twin

R&D has at least three sub-notions: fundamental research, applied research, and experimental development. I will not detail each sub-notion in today's article as we are discussing innovation (tell me in the comments if you want me to talk about it in a future article). However, what I can tell you today is that the common point between the three is the objective: the creation of knowledge.?

In itself, technical and commercial success or failure is not important in R&D, since only knowledge matters. Thus, doing an experiment that demonstrates that a hypothesis is false is a success in R&D.?In Innovation, demonstrating that the product is a total commercial flop is an interesting lesson.... but it will cost you your job.?

In this sense, we can say that those who are in R&D have less pressure than their colleagues who are in the innovation process. If a researcher publishes a paper that disproves a hypothesis he will surely be congratulated or even rewarded with a Nobel Prize. But the innovator has only one judge: the target market! The innovator is very rarely rewarded by his peers. The only reward comes from the end-users who adopt the innovation. Innovation is adoption. R&D is discovery.

However, it would be impossible to innovate without new knowledge as input to the process. This is one of the reasons why governments are much more supportive of R&D in their funding policies. It often happens that innovators have used new knowledge that is not local, or that is totally foreign to their industries. It is also very often the case that innovators have combined several pieces of new knowledge, a priori unrelated to each other. Thanks to their creativity they have succeeded in creating a new product or service that will be a hit with the customers.?

Researchers do the same thing, as they "stand on the shoulders of giants" and build on the knowledge acquired by other researchers to push their analysis further and discover new knowledge. They also combine knowledge from completely different fields to create new fields of research and therefore new knowledge.

In short, what distinguishes the two processes is the relationship with money.

• R&D sees its budget coming from people aware that the acquisition of new knowledge is crucial: government and large companies mainly.?
• Innovation gets its money from a source that has no idea that your innovation exists, that has limited attention, and is divided between countless sources of distraction: consumers.

Of course, not all governments and large companies contribute equally to the creation of new knowledge. The UNESCO site offers an interesting interactive graph that compares the % share of countries' spending on R&D to the number of researchers in the country.?

South Korea, which spends 4.1% of its GDP on R&D, is the champion and this is surely what has allowed the country to climb to the table of the great industrial powers, taking over Canada's place in the G7 at least in terms of R&D.?

In my network, the majority are based in one of those 5 countries:

• USA: 2.7%
• France: 2.3%
• China 2%
• Canada: 1,7%
• Vietnam: 0,4%

On average, all countries spend 1.7% of the world's GDP to create new knowledge. If your country or your company spends less than 1.7% then it is not contributing to the evolution of global knowledge.?

If your company does not spend the equivalent of what your country spends, then your company is not contributing to local knowledge growth. This in itself is a strong incentive to do R&D, and many entrepreneurs have realized this.??

Innovation: the catch-22 problem of companies

The innovation is not quantified. It is a strategic secret well kept by companies. No statistics and no way to know how much your competitors are spending right now to make you irrelevant.?

Whatever type of innovation it will be (yes, there is also more than one type of innovation, tell me in the comments if you want me to detail it) the objective is always the same: the generation of value.

To innovate, it is necessary to have the knowledge and to finance an innovation program whose success is not guaranteed. But if a company doesn't innovate while its competitor (or aspiring competitor) does, it's a guaranteed loss of market share (dixit Uber and Taxi, AirBnb and hotels, smartphones and Kodak etc.).?In short, it generation of value for the new comer and a net loss for the non-innovative one.

There is limited government support for innovation and internal business intelligence programs. The risk of innovating, as opposed to the risk of researching, lies exclusively on the backs of companies that must innovate out of their operating revenue. It is a risk that the board of directors, shareholders, and management are rarely comfortable with.?Some companies are smart enough to outsource some of this risk by buying startups or organizing hackathons that allow them to acquire knowledge and talent at a lower cost. But this does not eliminate the need for a strategy, a budget, and a method.

If you've made it this far, you'll understand why the article is entitled "Do you really need to innovate? The answer is obviously "Yes". Yet the question still arises because of the fear of doing more harm than good to the company. Decision-makers are not able to quantify the risk and the investment required, so they only ask the question "Should we really innovate? Behind this question is a scream for help to the whole science of innovation management.?

The government can do R&D in its universities and you can take advantage of it with Technology Transfer Offices for instance. But nobody will innovate for you!

In fact, this is not quite true for China, which has largely caught up with its technological backwardness thanks to technology transfer programs. In fact, it was like getting free economic intelligence and having foreign companies finance localization (adaptation to the local market) when they wanted to enter China. Chinese innovation is largely the result of this scheme. But if you are not the all-powerful decision-maker in a nation of 1 billion consumers, this strategy is difficult to implement. As an entrepreneur, all you have to do is open your wallet to avoid disappearing.?

The solution to the problem is to actually manage R&D and Innovation. Companies cannot afford to ignore these investments, which are as necessary as business insurance, savings to re-roof the building in 5 years, or tax provisioning.?

An R&D and Innovation (RDI) strategy is a complex but essential exercise as it will give a guideline, a budget, and objectives to the management. Then, proven R&D and innovation management methods will help reduce risks and maximize ROI2 by drawing on best practices. Regular benchmarking exercises with competitors, focus groups, and customer feedback will allow for a quick turnaround if success is less than expected. And design fiction workshops will allow anticipate the future in order to better adapt to it or even to create the one we want to see happen. These are only a few of the strategies, tactics, and techniques that make the innovation process more serene.

By taking this subject not as a risk to manage but as a necessary activity to grow your business, you will consider that since you really have to innovate, you might as well do it with the right approach.??