It's Not The Idea, It's What You Do With It
The allure of innovation is that it’s attractive and sexy. As a result, the word innovation is used loosely by many managers to drive creativity, especially in technology organizations. Yet people often use the word innovation to mean very different things. Let me start by saying that idea is not necessarily invention, invention is not necessarily innovation, innovation does not necessarily lead to business results. Here are a few misconceptions people tend to have about innovation.
Innovation is not ideas. Innovations needs ideas and good ideas, a lot of ideas. However, Ideas are just start of an arduous process which requires sustained commitment and hard work. Otherwise, idea is just idea and it is worthless.
Innovation is not invention. People often confuse innovation with invention. invention simply means that you have invented something new which could be wonderful. However, you have not necessarily answer the question of what you are going to do with it, or if the invention satisfies a new or existing market or business need.
Innovation is not always about technology. Innovation obviously can be from technology improvement or technology breakthrough, but also could be from many different parts of business ranging from marketing channel, business process, and business model. The key is the sustainability of the innovation. When it is technology driven, your intellectual property rights generally give you certain unique rights (e.g. patents) to maintain your competitive advantage. For innovations driven by other aspects of the business such as business model or business processes, the competitive advantage is often associated with culture and business practice. Maintaining those competitive advantages requires different business strategy and has to be managed differently.
Innovation is not cheap. People sometimes assume that innovation is associated with R&D investment and using R&D numbers to make assumptions and conduct business analysis. For most industries, innovation requires significant additional investment for commercial deployment beyond invention. People often assume invention be the most critical part of innovation. In fact, getting the initial IP is only the beginning of the process, commercializing a process takes significant effort and investment for an invention to become reality, which explains the failure of high percentage of start-up companies. The analogy for medical research is the clinical trial stage which can run hundreds of millions. Most inventions get killed for a variety of reasons before any chances for full commercializations.
So what defines innovation? It is wordy, but the following definition given by Crossan and Apaydin describes the essence of innovation:
Innovation is: production or adoption, assimilation, and exploitation of a value-added novelty in economic and social spheres; renewal and enlargement of products, services, and markets; development of new methods of production; and establishment of new management systems.
With that premise, it is not difficult to imagine that innovation is enabled by and depends upon the connectivity of strategy, customer needs, market insights, processes, technology, capability and ideas. It takes the right corporation culture for that to happen.
Other than culture, innovation is also about execution. Most companies hire smart people who have many great ideas. Yet most companies fail to capture the ingenuity due to poor execution of innovation. Having an organization structure and adequate support to focus a few good innovations is more powerful than one that has lots of great ideas with no way to execute. For a company to be in the forefront of innovation, it has to have the right leadership to facilitate the culture for cultivating the ability for people to connect dots, and provide the sustained commitment of resource for execution.
No wonder innovation is hard and not too many companies do it well.