“There is only one valid definition of business purpose: to create a customer. Therefore, any business enterprise has two — and only two — basic functions: marketing and innovation.”
Peter Drucker (1954)
The debate articulately presented by Lieberman and Montgomery (1988) attached to the business decision of whether to be a first-mover or a rapid follower, in bringing pioneering technologies or practices forward into an industry continues, with organisations competing to be disruptive, through identifying game changing opportunities and developing innovative solutions, in a range of purpose built environments. With the prospect of being left behind, being the alternative to being one of the aforementioned groups, organisations have accepted that the need for a pronounced commitment to research and development. The value created from the thoughts and ideas resulting from the work that takes place within effective research and development teams can be described as innovation.
Recognising not only the necessity to constantly strive to improve and to develop new products, services and processes, but also the attractive power of an innovative culture to prospective employees from both the Millennial and Gen Z generations, organisations have placed ‘Innovation’ on the strategic wish list. Alongside a number of other terms, such as ‘resilience’ and ‘transparency’, innovation is at risk of being used without a clear definition being attached to it. Innovation may mean different things to different organisations and to different people. Much like asking an organisation “what does success look like to you?”, a similar question which could perhaps be asked is “what is innovation for you?”.
Attempts to define innovation have been made previously with a degree of agreement having being reached that innovation involves the introduction of something new, in order to create value. The creation of innovative designs and processes can take place in a variety of places or ways, what is important is that organisations develop as best they can, as fast as they can. Accepting that the need for innovation is being accepted across the majority of industries, this article will propose a phased approach to developing an innovation offering or service within an organisation. Like any pathway, it is possible to stay at a particular stage of development, if that level of focus and commitment to innovative developments is suitable for a business.
Business as Usual
“But this is the way we have always done it”
These words may have foundations based in a fear of change, a leaning towards lethargy, or a belief that what currently exists and is practiced is good enough. Whatever the reasoning for the resolute commitment to the existing norms, the fact that it is the way something has always been done, does not mean it is right. In fact, an unwillingness to consider new opportunities and approaches can eventually result in the decline of an organisation. A plethora of examples exist that were formerly household names, like Blackberry and Yahoo, that can now be viewed as examples of how a self-assured attitude towards ones place in an industry and market can result in a failure to adapt to change and competitors’ moves. Similarly, in congruence with an aversion to risk, public sector organisations may actively avoid adopting new technologies or ways of working, given the perceived risk of negative public attention, should things go wrong. This approach may not enable an organisation, public or private, to fail fast, to learn and to improve. Failure is a key component of the design process for radical innovation.
As suggested by the business strategist Michael Porter (1979), if organisations do not strive to make themselves clearly different or superior to substitutes and competitors in some way, they will struggle in terms of profitability. Therefore if an organisation has not adopted a business strategy which requires for it to do all it can to enable it to sell products at a low prices,in what has been described as a period of exponential disruption, it will struggle as not many organisations can afford to retain the status quo for very long. Business as usual should perhaps be an evolving process. This can begin by embracing an on-going programme of business process improvement
Looking at Ourselves
“How can we be better?”
The human desire to improve has created an industry in itself with individuals reading an array of self-development books, teams engaging with speakers from a variety of backgrounds, listening to their personal accounts of developing high-performing teams, and organisations inviting the same consulting firms to tender for the provision of business transformation and improvement services. In essence each of these areas requires for individuals and teams to consider what they do, why they do it, how it is done, when and for whom. By breaking this down, development opportunities can be identified and processes made more effective and efficient; performance can potentially be improved across all levels. This is exactly what Sakici Toyoda, Kiichiro Toyoda and Taiichi Ohno did at Toyota.
The Toyota Production System (TPS) considered the processes that existed in the manufacturing of vehicles, along the entire length of the transformation chain, from design to customers. The demonstrated success of this manufacturing process formed what is now widely recognised as the Lean system. The adoption of such approaches, which may be markedly different to the existing practices within an organisation, are a positive step towards performance improving change. A detailed understanding of oneself, be that an individual, team or business is a crucial step in this process. By accurately determining where something presently is, efforts to identify performance-enhancing solutions, be that technical solutions, manufacturing processes or perhaps ways of working, can be focused and potentially more effective.
Looking at Others
“What are others doing?”
Having determined where you currently are at a point in time through the analysis of the masses of business intelligence that can be generated in order to identify where delays and vulnerabilities exist within systems, opportunities for improvement will be identified. It is at this phase of the journey towards an innovative culture and business structure that the adoption of the approaches and systems designed and used by others might be considered.
The determination of the evolving market can still be achieved through customer market research and competitor analysis, but recent years have seen a growth in the number of organisations willing and actively seeking to collaborate. Given the links between businesses in the modern workplace, be that through shared supply chains or service partnerships, collaboration between designers has become increasingly common. Internal project managers and developers have identified the benefits of engaging third party designers, particularly in the technology sector. Shared spaces, popularly referred to as innovation hubs have been designed to accommodate a number of companies and to act as a breeding ground for new developments. An aim of such locations is to provide external organisations with direct access to cutting edge technologies and new ways of working. In addition, they provide an environment for design team from large businesses to engage with each other and other external partners, and can subsequently offer opportunities to progress ideas that might not otherwise exist within a business as usual environment. Acknowledging the risk that asking the same questions of the same people, will result in the same answers, engaging with external partners can facilitate on-going learning. The external innovation hubs encourage this learning to take place, while the detachment from central organisations can provide safety nets, which can encourage a fail fast culture.
Engagement with industry peers and third parties can offer opportunities for the sharing of technologies and practices and the development of new ones. What is crucial though is that the teams responsible for introducing and delivering innovative designs into organisations do not become regarded as purely research teams. They exist to seed and cultivate change, which can transform organisations into industry leaders and potentially to create new markets themselves.
Leading the Way
“Lead and they will follow”
The time it takes to get an innovation adopted within an organisation can be lengthy, with the period it takes to scale up a development so that it is ready for the wider market, often measured in years rather than months. Barriers to the successful adoption and implementation of new solutions can be both internally and externally driven, with the financial and labour costs influencing the time it takes to create the environment required for testing and housing new systems, internal compliance and external regulatory requirements sometimes slowing progress and the cultural challenges that are ever present being amplified during periods of change. Chesbrough suggests in his book Open Innovation (2003) that rather than focus time and resources upon traditional internal research and development models which may not be conducive to the effective spread of innovative ideas, given a range of challenges, organisations should look at others and seek collaboration opportunities, in order to work together in the design of new technologies or systems. Rather than adopting the practices and ideas generated by external stakeholders, as proposed in the third phase of this model, this phase of innovation involves the design and development of new ideas by an organisation itself.
In addition to providing autonomy and purpose to innovation teams within organisations to consider an array of possible solutions, this approach empowers teams with the opportunities to encourage multiple flows of information and technology, both into and out of an organisation. Alongside adding greater value to designs, this approach improves the ability of organisations to generate a return of investment on the innovations, given the multiple routes to market that are opened through such a flexible approach. This tangible return to an organisation or an internal department can in itself act as an enabler in terms of gaining support for research and the pursuit of innovative designs. This may consequently encourage stakeholders to consider further opportunities.
Fundamentally the fourth stage of the model is about creating something new; a new technology, a new technique, a different way of working or a different way of thinking. By this stage an organisation has developed a system for developing, trialling and implementing innovations. Progressing from improving existing systems or collaborating with external stakeholders to develop and incorporate new technologies within exiting systems , organisations at the fourth phase of the model more clearly display a traditional view of innovation, in leading the way in terms of developing and ‘introducing something new’ (www.merriamwebster.com. Accessed 28.04.19). These are the disruptive developments, which change industry standards, customer expectations and create new markets (Christenssen , 1995).
The Innovation Journey
By determining what value an organisation intends on generating through new developments, strategies and processes can be created to determine how innovation will be pursued. This model provides a roadmap to becoming an organisation that is ground breaking but it is important to highlight that organisations do not have to be constrained by the parameters of each phase. It is quite possible for new systems to be developed internally without any external collaboration, internal innovation hubs or even full-time development teams. What is a determining factor however in terms of how successful an innovative design is adopted across an organisation and potentially sold to external customers, is the degree of internal stakeholder support for innovation. The support of senior stakeholders is crucial; the cultural environment that senior leaders cultivate will determine the support that innovation teams will receive across a business and subsequently the way that new developments will be adopted and embraced. It is clear that organisations regardless of industry, need to ceaselessly change, to innovate and to disrupt, in order to lead and possibly to survive. It is the responsibility of leaders to determine the viability of new opportunities, to set an organisation on its course and to steer it through markets full of consumers who seek instant gratification and seamless transactions, and whose expectations are relentlessly adjusting. As those responsible for setting strategic objectives, business leaders should consider what their innovation strategy is and frequently ask themselves a number of questions; “how does it create value for internal and external customers?”, “how can we best deliver it?”, and “what support do our innovators need?”. The answers to these questions will change as rapidly as markets evolve and so leaders and organisations that effectively leverage networks and horizon scan can be best prepared to act and to lead the way.
References
Chesborough, H. W. (2006). Open Innovation. Harvard Business Press: Brighton, MA, USA.
Christensen, J.F. (1995). Asset profiles for technological innovation. Research Policy, 24(5), 727–745.
Lieberman, M.B. and Montgomery, D.B. (1988). First‐mover advantages. Strategic Management Journal, 9(S1), 41–58.
Merriam Webster Dictionary (2019). Innovation.
Available at: https://www.merriamwebster.com/dictionary/innovation).
Accessed 24.04.19
Porter, M.E. (1979). How competitive forces shape strategy. Harvard Business Review 57, 137–145.
