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SUMESH ARORA: 10 ways to understand innovation

SUMESH ARORA

SUMESH ARORA

We hear a lot about innovation these days and terms such as the “innovation economy” or the “new economy” are frequently used interchangeably, along with the “21st century economy.”  This raises the following three questions:

1. What is considered innovative?

2. Why is it important?

3. How can you spot it?

The simple definition of innovation according to the Merriam-Webster’s Learner’s Dictionary, is “a new idea, device, or method” or “the act or process of introducing new ideas, devices, or methods.”  The simplicity behind these definitions masks the effort in developing innovations and bringing them to light.

While innovation has the power to transform lives, it is not cheap, it is not for everyone, it is not easy and it does not happen overnight; or in other words, innovation is hard, it takes a long time, it is often expensive, and above all, it is risky! However, these risks are worth taking.  A. G. Lafley (former CEO of Procter and Gamble) and Ram Charan wrote in their book The Game Changer (Published by Crown Business 2008), “Innovation is the key idea that is shaping corporate life, helping leaders conceive previously unimagined strategic options. Innovation also provides an edge in being able to enter new markets faster and deeper. The company that builds a culture of innovation is on the path to growth. The company that fails to innovate is on the road to obsolescence.”

Innovations usually come about from the efforts of a few individuals and then spread among many through the efforts of effective change agents, champions and knowledge brokers.  Converting innovative ideas into practical and usable products and processes requires significant effort, resources and collaboration.

With these thoughts in mind, I offer you the following mnemonic for innovation:

1. Intense

2. Novel

3. Narrow or wide

4. Observable

5. Value-added

6. Adaptable

7. Transformational/Timely

8. Incremental

9. Operability

10. No Guarantees (Risky)

Intense: Innovating requires intense efforts, whether one is trying to change the world or simply trying to improve existing products or services.  An organization-wide commitment to innovating is needed that sets measurable goals and targets over a given time-frame.  Higher management has the task of creating a culture that encourages innovation and empower employees to individually and collectively seek ways to advance the firm’s offerings.

Novel: The newness of the idea, product or service is a basic tenet of innovation and can be incorporated into both the internal business and technical processes of a company as well apply to bringing new and improved products to existing and new clients.

Narrow or Wide: Some innovations may be narrowly focused on improving a specific service or introducing a product that has a limited market such as developing drugs for certain rare diseases.  On the other hand some innovations have broad ranging impacts, which change the nature of entire industries over time.  The evolution of music recording medium from vinyl discs → to eight-tracks → to cassette tapes → to compact discs → to DVD’s → to MP3 players → to online streaming services is an example of innovations that have changed how music is recorded, sold and accessed.

Observable: According to the “Diffusion of Innovation” theory the potential adopters, or your target customers, have to be able to observe and perceive the benefits of the innovation.  Innovations which are more obvious than others have the potential to be adopted quicker, although that is also a factor of how the benefits of an innovation are presented to the adopter and by whom.  Going back to the previous example of recording media, we see that each subsequent innovation was adopted more quickly than the previous one.  Portability, durability and ease of storage and access were obvious benefits perceived by many listeners, which led to the exponential rise in popularity of cloud storage and streaming services within the last 10 years.

Value-added: When your current and potential customers realize there is additional value for them, they are more likely to adopt an innovation.  The value-added benefits could be time savings, safety improvements or energy efficiency.  A lean manufacturing exercise called “value stream mapping” is commonly used in the manufacturing sector to identify value-added versus non-value added processes.  You may be surprised to learn that research has shown that only 5 percent of the activities in manufacturing may be considered as adding value to your customers’ bottom line!

Adaptable: The “Diffusion of Innovation” theory also discusses the ability of an innovation to build upon existing platforms and provide some levels of backward compatibility has a significant impact on the adoption rate.  We can now buy LED (light emitting diode) bulbs that fit in the standard light fixture, but it was not long ago when LED bulbs were a specialty product costing hundreds of dollars per lamp.  Data from the United States Department of Energy show that the number of LED A-type lamps (similar to form factor of a typical incandescent light bulb) in use went from about 1 million in 2010 to nearly 80 million in 2014!

Transformational and Timely: Some innovations are transformational and have radically altered the way we live.  Over the centuries these examples include the steam engine, internal combustion engine, jet engines, petroleum refining, color television, refrigerator, microwave ovens, computing devices, x-rays, the telephone, smart phones and any number of ‘scopes and ‘graphs (tele, micro, endo and the list goes on).  Conventional wisdom claims that “timing is everything,” and history shows that many innovations languished for several years before they were fully adopted.  The perceived need and benefit versus the cost of a given innovation will influence its adoption.

Incremental: We often associate innovation as having wide ranging impacts, but incremental improvements have made big differences as well. Think about the air bags in passenger vehicles as the wide and radical change that made driving safer, but other small and steady improvements such as pre-tensioners or five-point harnesses, along the way have also improved the functionality of seatbelts.  A renowned scholar, author, business consultant, and professor at the Harvard Business School, Dr. Clayton Christensen calls such innovations “sustaining innovations” and contrasts them to “disruptive innovations.”  Stay tuned for more on that in another column.

Operability: For innovations to stick over a long period of time, they have to establish a strong record of operability.  They have to be relatively easy to use and should first and foremost meet the basic needs of the intended customers.  A Rube Goldberg device is an intricate and creative way to solve a simple problem such as frying an egg or launching a toy rocket, but it is highly impractical by design.  Innovations can sometimes seem boring or mundane, but they may in reality be an elegant and simplistic solution to a complex problem that allows them to operate safely and reliably.

No Guarantees: Some level of risk is inherent in every venture and technology and the more disruptive or radical the innovation, the greater the risk.  Incremental and sustaining innovations have much lower risk of failure.  The key to managing the process of innovation is to first analyze your unique competencies and core resources and then inspire your workforce to engage in the creative process.  You have to overcome the fear of failure and not punish the innovators for trying to push the envelope.

To summarize, I present another quote from The Game Changer: “When innovation is at the center of a company’s way of doing things, it finds ways to innovate not just in products, but also in functions, logistics, business models, and processes.  To succeed, companies need to see innovation not as something special that only special people can do, but as something that can become routine and methodical, taking advantage of the capabilities of ordinary people, especially those deemed by Peter Drucker as knowledge workers.”

» Dr. Sumesh Arora is Vice President at Innovate Mississippi, a non-profit organization with a mission to drive innovative business growth in Mississippi.  His doctoral research was focused on how new ideas spread and its applications to business, economic and policy development.  Follow him on Twitter @DrSumeshArora or contact via email at sarora@innovate.ms with questions about developing innovation strategy for your company or organization.

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