Mark Turrell,
CEO, Imaginatik
In a recent Bain & Company survey, nine out of ten senior managers saw innovation as a critical source of future competitive advantage. The ability to consistently capture, build and develop new ideas has a direct impact on revenue growth. Yet while all businesses want to be labeled innovation leaders, corporate America is passing the buck.
More and more businesses have turned their attention to "innovation outsourcing"--relying on outside resources not just for manufacturing, but for research and development and leading edge ideas. Outsourcing can boost short-term capacity, but if innovation outsourcing becomes the industry norm, how will companies keep their edge? Do employees stay motivated selling someone else's ideas? And what’s to stop innovation "partners" from turning the tables and becoming competitors?
Another roadblock to successful innovation results from two common misconceptions: 1.) Innovation is a matter of guesswork and serendipity and 2.) Innovation only relates to R&D and new product development.
The truth is that successful innovation in the best companies touches all aspects of a business. Improving business processes, identifying new ways to reduce costs, improving existing business models, and creating new ways to market products are just a few examples of innovation that impacts a company’s bottom line.
Achieving consistent innovation relies on a process that must be formalized within a business. Executives must foster a culture of innovation that encourages people across the organization to share their ideas and insights. They must create a series of processes that guarantee success. There are seven key components to creating an innovation culture:
Manage Ideas Although to some this may seem strange, businesses need an Idea Management process in order to scale innovation in a networked, distributed organization. Otherwise organizations "invent" the same ideas over and over again, and foster idea silos where people only share ideas within a specific group. Idea collection is only part of the problem. The top firms devote 60 percent of their attention to structuring ideas, the evaluation process, and making sure that ideas are implemented.
Focus Old fashioned suggestion programs encouraged 'any idea, any time’. Random idea sharing has some intellectual merit, but unfortunately it tends to disrupt management and business processes. The most successful systems for idea sharing use short-term, focused business challenges to encourage employees to solve specific problems quickly. This is the basis of the Event-Based approach (short business-focused ideation) in use in over 75% of companies doing Idea Management. Focused ideas are significantly more likely to be implemented , 30-fold better than the suggestion box approach.
Awareness Part of the problem is that managers do not know that good ideas exist, and are sometimes afraid to ask. Businesses need to create "hubs" for idea sharing, both physical and virtual, that get people talking and creating a dialogue about what they know.
Innovation skills Successful companies train their workforce on 'foundations of creative thinking' and train their management to lead the innovation process. If employees and management are more skilled at developing ideas, they will create more ideas, and as a result, create solutions to problems. More innovation skills means higher quality ideas and more creative solutions.
Dedicated innovation resources Innovation is so important to companies that many firms have established roles such as Director of Innovation, and are in the process of setting up dedicated innovation or 'Concept Development' teams. Applying dedicated resources is a commitment point for management: if they are not willing to assign quality people to work full-time on the innovation process and specific projects, they are not fully supportive of the initiative.
Know the value of ideas and how to protect them. Ensure employees know the legal 'rights' around ideas so that they do not accidentally accept ideas from outside the firm with unsure legal provenance, and share ideas appropriately inside the firm to protect trade secrets and to ensure proper patent protection if appropriate.
Managing expectations Most ideas will not be adopted by an organization, and few that are adopted will be implemented. Therefore it is vital to set people's expectations so employees do not get frustrated and disenchanted with the program. This can be managed through good internal marketing, a good selection of business-focused topics, and a thoughtful reward and recognition approach.
Companies that use these building blocks to successfully create an innovation culture consistently reap the ROI rewards. For example, after creating a formal process to manage innovation, chemical manufacturer WR Grace engaged thousands of employees in developing and sharing new ideas. The company has run more than 34 different ideation campaigns that collected 2,685 ideas yielding 76 new products and 67 business process improvements that cut costs.
WR Grace employees participating in an event titled "Customers Do the Darndest Things" reported on unexpected uses customers were using their products. As a result, the company found new ways to market existing products that boosted revenues by as much as $3 million. Another initiative on cost reduction yielded an idea on how to better manage magazine subscriptions across the company that saved an immediate $200,000.
Georgia Pacific tapped into the expertise of its 16,000 North American employees to help identify new product ideas and ways to improve efficiency. The paper goods manufacturer saw impressive results once it successfully created a process for innovation.
When Georgia Pacific ran an ideation event to find ways to streamline the cost of producing its multi million dollar line of paper towels, a mill worker had an idea to simplify the way cardboard cores were manufactured, shaving a remarkable 4% off annual production costs.
In another ideation event, the company asked a group of 100 employees from numerous sites and job functions to come up with new product ideas for its wipes market. Employees created 260 ideas, of which 19 were deemed worthy of development and were included in the company's annual strategic plan. The company posed the same challenge to an outside marketing group at a cost of roughly $250,000 in 12 weeks the firm submitted just five ideas, all of which were identical to ones created by its own employees.
Employees are an organizations’ greatest asset—businesses that engage them and provide them with a process to harness their ideas are true innovators that will thrive in today’s global marketplace. Those that don’t are simply passing the buck.
biography
As CEO of Imaginatik--specializing in enterprise idea management software, research and consulting services--Mark Turrell has been involved in developing corporate programs and processes for more than 200 businesses. Imaginatik clients include companies such as Bayer, ChevronTexaco, Goodyear, W.R. Grace and Yahoo.
