What is the missing cost of not innovating?

We can often be asked “what is the ROI on this particular innovation or alternatively, on our innovation activity?” This questioning increases particularly when there grows even more uncertainties in marketplaces, when you are forced into making tougher investment decisions, in allocating resources, in adjusting a strategy to meet changing circumstances. Then you get the “well, what’s the payback period then?” Often we struggle to offer a half-decent reply as most innovation has stayed mired in incremental approaches and so becomes fairly complicated in identify the new part from the old that is already the invested part, or it remains uncertain, as it is often exploring the unknowns.

Perhaps we should reverse this question or be ready to ‘gazump’ it and beat them to the question before they ask. Two specific ways to think about this come to mind. The first was suggested in a post back in 2005 by Ruth Ann Hattori called “the cost of not innovating” and I like this one. The other came from a post by my innovating friend and collaborator, Jeffrey Phillips “what are the opportunity costs on not innovating?”  Jeffrey is still not residing on a tropical beach as he still has not got the complete answer to that one. Both are tough questions but well worth reflecting over. Continue reading

Striking the balance for exploitation across different innovation horizons

Nobody said innovation was easy and I was reminded of that recently. Innovation can certainly be, without doubt, fairly complicated in larger organizations. What must not be forgotten is that we must manage the innovation activities across all the three horizons of innovation and that adds even more complexity.

What is ensured from this complexity is that you can expect innovation does get very entangled in balancing out the resources that are available and needed, to handle all the conflicting, competing demands placed within the innovation system. For the innovation teams involved in the multiple tasks, getting this balance right and also trying to justify further support to keep all the activities progressing on time, is tough. We need to exploit and we need to explore and those often require different mind-sets or structures.

Each of the innovation horizons can demand different management’s attention for allocation, response and focus.  Horizon one represents the company’s core businesses today, horizon two includes the rising stars of the company that will, over time, become new core businesses, whereas horizon three consists of nascent business ideas and opportunities that could be future growth engines. This link takes you to a series of discussions on the three horizons http://tinyurl.com/d97bkhh for a deeper explanation.

Dual needs are often conflicting Continue reading