Innovation has become an indispensible part of modern-day business practice. Every company and organization has the word ‘innovation’ somewhere in its mission, vision or values statement. Even so, many of these
companies and organizations still struggle to give concrete expression to innovation. They struggle even more to implement it successfully. This is a serious problem, because innovation is important—nay, crucial—for every enterprise, whether large or small, young or old. Part of the problem is that innovation has become a catch-all concept that means (too) many different things to (too) many different people. So how should we properly define concrete innovation? And why is it so important?
Innovation: What and Why?
Innovation is the process of continually seeking to find more effective ways to carry out the functions we want to employ. As a consequence, it is important to think in terms of functions, not solutions. Consider, for example, the function of ‘communicating’. People have always wanted to communicate with each other and will continue to do so in the future. But the solutions that make this possible have evolved over time: smoke signals, drums, telegrams, fixed-line telephones, etc. Nowadays, we fulfil many of our communication needs through mobile telephony. But even this solution will eventually change—and perhaps much sooner than we think. But whatever solution technology develops, the basic function—communication—will remain constant. You can easily think of many other examples. What about transport? Yesterday, the horse and cart; today, cars; tomorrow, drones?
The companies who think in terms of functions rather than the solutions are the companies that survive. And that is precisely why innovation is so vitally necessary: it ensures the future of the organization in the long term. Look at the detergent sector: are companies like Procter & Gamble and Unilever in the business of ‘selling detergents’ (solutions) or in the business of ‘cleaning clothes’ (functions)? We are already seeing electronics giants like LG, Sanyo and others bring washing machines to market that no longer require detergent. Technologies like electrolysis and acoustic cavitation are taking over the cleaning function, so the need for detergent will soon become obsolete.
An efficient innovation process consists of three phases: anticipation, creation and implementation.
Anticipation: The Need for an Innovation Strategy
In order to innovate efficiently,
it is necessary to have a sound innovation policy. This must maximize the return on innovation and help the company to renew and improve. In the first place, an innovation strategy is the translation of corporate strategy into a concrete plan. This plan sets out clear actions which will make the most efficient use of scarce resources, time and budget. These actions, in turn, must make it possible to effectively carry out the organization’s general business strategy throughout the short, medium and long term.
In addition to corporate strategy, a second important source of input for an innovation strategy is your knowledge of your own playing field, the sphere in which you operate. Who are the different players in your market? What are the most recent developments and trends? Who are the experts? And what new technologies are about to break through? Before an organization can renew itself (i.e. innovate), it first needs to know where it currently stands and what potential solutions already exist. This is a logical and crucial step, but one that is frequently overlooked. Why is it so important? Firstly, because we need to understand that innovation does not mean that we need to reinvent the wheel—although, sadly, this is what all too often happens. A second important reason is that companies need to try and differentiate themselves from their ‘competing colleagues’, and this is only possible if you know what other people in your sector are doing and investigate where potential points of differentiation might be found. This brings us to the third important input element for your innovation strategy: your company’s specific ‘core competencies’. A firm’s core competencies are difficult for its competitors to mimic, allowing the company to differentiate itself.
Creation: Concrete Innovation Projects
Once you have an innovation strategy, it must be translated into concrete innovation projects. In this respect, there are three possible directions you can take: product innovation, process innovation and/or market innovation. Product innovation places the focus on the development of new products and technologies for existing markets. In process innovation, existing processes are refined and improved, so that the provision of products or services become more efficient and cost less. Market innovation involves seeking new markets and applications for existing knowledge, products and processes. It is possible to combine all three of these possibilities, or to have them running alongside each other.
Implementation: Getting Things Done
Finally, it is necessary to draw up concrete plans for the implementation of your innovation projects. This is where the main difference is to be found between creativity and innovation. Successful renewal, whether of products, processes or markets, must be carried through in practical terms so that the necessary return can be generated as quickly as possible. The translation of concepts and ideas into workable products and services for the ‘real world’ can be a serious challenge. Technical, economic and consumer perspectives must all be considered and confirmed. It is only when the implementation has taken place and the new business configuration begins to yield a good return that we can speak of successful innovation.
Existing Knowledge as a Source of Concrete Innovation
A recent study into the future of innovation management concluded that knowledge management and ‘high speed/low risk innovation’ play an extremely important role in achieving efficient innovation. Nowadays, everything is evolving at lightning speed. This makes it a real challenge for companies to gain the key insights that they need, even in their own sector and industry. What’s more, these insights need to be constantly monitored and updated. Today, we live in a soffcalled knowledge economy. Knowledge is present in abundance and is freely and easily available to all. As a result, the wheel continues to be reinvented—and that is an unnecessary waste of precious and limited resources.
If we want to innovate quickly and efficiently, we need to exploit this situation by matching external knowledge with internal expertise. It is important to stay aware that relevant and interesting knowledge is not only to be found in your own sector and industry, but in other sectors and industries as well. Most problems have already been solved somewhere. We therefore need to avoid the mistake of developing solutions and ideas that already exist. Instead, we should be exploiting existing ideas and solutions. Consider the following simple example. Imagine that we want to remove some water from a glass without touching it. This is a specific problem. However, we can translate this problem into the question ‘how can we set a fluid in motion?’ In other words, we can transform a specific problem into an abstract problem. If we then examine existing knowledge in this area—for example, patents, the professional literature, the internet, etc.—you will likely soon discover that there are already more than 50 solutions to this particular conundrum.
In the field of hair coloring shampoos, color fastness is the main challenge. But once again, this problem is not confined to a single sector. It is also important that clothes keep their color and that photographic paper does not fade. Different domains face the same challenges and have probably developed solutions. And there is a good chance that these solutions are transferable from one sector to another: this is what we mean by technology transfer. After all, hair fibers, textile fibers and paper fibers all have similar characteristics. Another example: one of the irritating things about cutting cheese is that it always sticks to the knife. Food companies face this challenge on an industrial scale. In reality, however, cheese is an elastomeric material that is very much like rubber. As a result, research has shown that existing technology from the tyre sector for the cutting of rubber also offers an ideal solution for the more efficient cutting of cheese.
Everyone can and must Innovate
Many publications on innovation point to the examples of the Apples and Googles of this world. This does not always encourage the idea that everyone should modernize and improve. Quite the reverse; it actually frightens people off. This is not good. Every company and every organization can and must innovate.
Not new, but new for you. That is what it amounts to.
By recycling existing knowledge and transferring it between domains and industries we can innovate in a much more efficient manner. More efficient means better targeted, faster and with more limited risk. What’s more, we have little choice in the matter, certainly not in the current economic climate. Budgets are under pressure and are being cut everywhere. At the same time, the need for renewal and improvement has never been greater. If we do not innovate, there is a danger that we will miss the boat of economic progress. The solution to this contradiction lies in the reuse of existing knowledge. This stops us from trying to reinvent the wheel, reduces the level of risk and allows better use of the scarce resources that are still available.