All companies talk about innovation and its growing importance, but why is it that still so few succeed in actually doing it on a repeatable scale?
What inhibits innovation? What would drive innovation success? What aspects of innovation are critical to achieving such innovative growth? Where should a company place its emphasis to gain both an improving impact on its performance and strengthen its innovation capabilities?
The difficulty for many is that innovation is a complex process that has many intangibles within the total mix to manage. Management today is far happier managing the ‘harder’ aspects of business, the current physical ones of everyday organization, not the ‘softer’ more intangible ones, where innovation often lies or emerges from.
There are many variables or factors for ‘innovation success’; organisations often suffer from the inability to sustain innovation over time. There is a failure to fully appreciate or recognize that many interdependencies surround innovation. Often, ‘selective’ activities only generate limited success but sustaining innovation is often elusive without a more comprehensive, holistic approach.
If we take the view: that “Innovation is holistic in nature, it needs to be addressed in this way. It covers the entire range of activities necessary to provide customer value and a satisfactory return to the business. Although innovation cannot be touched, heard, tasted or seen, it can be felt. It is probably best described as a pervasive attitude that allows businesses to see beyond the present and create the future. In short, innovation is the engine of change and in today’s fiercely competitive environment resisting change is dangerous.
The key driver of the organization’s ability to change is innovation. However, deciding that the organization has to be innovative is insufficient. That decision must be backed by actions that create an environment where people are so comfortable with innovation that they are naturally looking to create it.”
There are so many challenges in managing innovation.
The key is knowing what are the critical factors for your innovation activities and their dependencies for sustaining innovation success? Identifying these is becoming a vital necessity to understand so an organization can place the appropriate resources behind them and continue to invest in the evolving aspects associated with these capabilities and competencies.
The question is, which are critical, which naturally occur when others begin to be put into place, and which seem to have limited or no real effect on changing the dynamics of innovation? Knowing these and having these clearer shown as a ‘return on impact/investment’ (ROII) has real business value.
Today, we lack a clear system model that brings the critical innovation factors out and gives them their appropriate values, and then can equally provide the ability to model different future states and conceive future scenarios through different impact investments.
Innovation is still not treated company-wide in a holistic way as recognising the dependencies is poorly understood. This is what needs to change.
It is the issue of ‘rapid change’ that calls for more dynamic capabilities
The world of innovation-based competition, price/performance rivalry, increasing returns, and the ‘creative destruction of existing competencies constitutes rapid change are all rapid and changing constantly, and we need the ability to respond, be agile and fluid to seize the new business opportunities that come with this evolving environment.
How do you sustain innovation, is it more through the structuring of everyday work, by creating a particular set of social rules and resources that foster specific routines or is it in creating greater specialization or competencies 100% dedicated to building a robust innovation system?
What are the firm-specific capabilities that can be sources of advantage, and how can combinations of competencies and resources be developed, deployed, nurtured and protected? These need to be difficult-to-imitate combinations and integrative enough to give new sources of competitive advantage to stimulate new growth and financial return; we need a structured pathway.
So what are the challenges of the knowledge-driven economy that innovation needs to drive?
They are increasing new characteristics of markets that are constantly changing, product life cycles are shortening, and knowledge is consolidating, which leads to additional competitiveness from firms. We need to address:
- New types of innovation are taking different forms to address these changing circumstances (product, technology-led, service, business model, process and operational driven, open, in design thinking, needs relating, research-driven and in marketing and extending existing products in different ways.
- New needs of combining different stakeholders are pushing higher expectations to get winning products or services to market on time, which are exciting, new, engaging and often transformational. This calls for new ways of collaborative working.
- New approaches to innovation management that encompass efficiently and continuously innovating working together have become the prime driver for achieving both top-line innovation growth and bottom-line efficiency, the two main challenges facing business today but needing this combining and blending of innovation and efficiency through new, effective ways.
- New technology innovation is prompting firms to access and implement the most appropriate technology according to their need, often to simply keep competitive. There is this need to distinguish between sustaining and disruptive aspects as technology constantly changes.
- Also, pressures from both customers and shareholders often influence where firms engage and with appropriate technology, but it is increasingly disruptive and disturbing to the existing structures and systems. Building a more responsive, adaptive organization open to exploration and adoption is critical to move towards.
- A continuous need for switching and investing in different innovation management tools, not just technological ones but relational tools in the way of doing business and achieving insight. The important part of any adoption of new tools, techniques, methods or processes you need to understand the consequences and to do that, you need dedicated resources capable of interpreting the potential impact and value.
Shifting our thinking into a more dynamic frame becomes essential today
Innovation understanding and building strength in competencies and capabilities take an organization beyond the accepted norm of managing efficiency, quality, responsiveness, and speed- all challenging within themselves.
We need both the internal and external orientation to innovation and build a real “sense and respond” set of capabilities.
Innovation represents today’s competitive advantage statement that should be supported throughout the organization. The issue is knowing the valued dynamic capabilities needed to deliver innovation with real business value.
There are countless challenges to adapting and becoming fitter to innovate. Fitness comes from a deeper understanding of the parts that make innovation up. These are far from static; they are dynamic and constantly changing. You must provide an adaptive organization to manage these and many more than the abovementioned areas.
The emphasis points towards the need for defining the dynamic innovation capabilities required.
Dynamic capabilities emphasise management capabilities and the inimitable (unique) combinations of resources that are constantly at work across all functions to make them distinctive and valuable.
Distinguishing innovation capabilities that are relevant are based on the type of knowledge they contain.
Functional capabilities allow the development of technical, practical knowledge. Integrative capabilities allow firms to absorb knowledge from external sources, where absorptive capacity development comes in.
Innovation requires more of a higher-order integrated capability approach to constantly learn, develop, mould and manage multiple capabilities. This required the integration of critical capabilities to successfully stimulate innovation for effective and improving performance.
Innovation is core in any business that wants a future.
The important point, though, is successful innovation contains core elements and processes regardless of industry, form, or type of innovation we are pursuing. Much of the difference, though, is in its varying degrees based on these core elements.
My search is to find those core elements to leverage and strengthen the dynamic capabilities within an organization’s capability to innovate continuously in a sustaining manner.
We as organizations strive to achieve a distinct competitive advantage, and innovation is one of those real contribution points this can achieve. The need is to make the innovation capabilities and capacities a distinctive, not easy to copy, unique set. These are shaped by the context and content of innovation, the organization’s position and its choice of evolutionary paths it has decided to take or needs to take.
So individual components on their own have limited effect, it is the combined effect that generates the improving performance. Equally, the needs do change over time, and you have to constantly ‘refresh, challenge and stimulate’ these otherwise, you can have core rigidly set in.
The solution, I firmly believe, is a framework that shows the mutual dependencies, how the innovation ‘system’ behaves, what are its more important impact factors which are weaker and what should be considered in the ‘best’ innovation environment?
I will explore my suggested model in subsequent posts. This builds, as introduced here, a dynamic environment that responds and adapts to the required innovation needs.