Most business leaders recognize the value of innovation. In a study from consulting firm Accenture, 96 percent of executives surveyed said that their organization’s long-term success depends on developing new ideas. In addition, 87 percent of leaders believed their companies’ innovation resulted in a good return on investment; however, 82 percent of respondents didn’t make a meaningful distinction between significant innovation and achieving incremental performance gains.
Why are businesses unsuccessful with innovation? Accenture notes that 72 percent of companies allow innovations to languish because there is no formalized process or organizational home for such initiatives. And according to an exploratory study of more than 30 companies in the United States and Europe, researchers found that companies generally lack a process to guide innovation.
“In too many organizations, innovation occurs by serendipity rather than by deliberate management. Without a process to understand, stimulate, and analyze innovation and an organization’s strengths and weaknesses around innovation, most companies rely upon serendipity.”
Innovation: Management, Policy & Practice
Backed by an effective innovation process, managers can advocate for and help create what researchers in the Innovation: Management, Policy & Practice study call robust organizations. These companies “have found a recipe for sustainable innovation programs rather than mere spurts of innovation,” and the study defines specific stages that are most common to sustained, successful innovation.
1. Idea Generation and Mobilization
New ideas are created during idea generation. Mobilization occurs when the idea is moved to a different physical or logical location, such as an outside firm or another department.
Inspiration for a new idea can originate from an improvement of an existing idea, or something from scratch. The Atlantic explains how Apple waited three years after MP3 players were introduced to create the iPod, which was attractive, intuitive and offered capacity for up to 1,000 songs. Conversely, the invention of Scotch tape was a brand new idea. Priceonomics tells the story of Richard Drew, a college dropout who joined 3M, saw a need for a type of tape that wouldn’t ruin paint on cars and overcame hurdles to complete his invention.
As a result of Drew’s work ethic, 3M provides employees with time (15 percent of their workday) to explore ideas outside of their work assignments. Other organizations have followed this model, and robust organizations in general provide employees with the time and resources to innovate. According to Innovation: Management, Policy & Practice, managers must emphasize innovation to the right extent — “overemphasizing need will cause some employees to leave for more stable jobs,” while “not emphasizing it enough will decrease urgency and idea generation across the board.”
2. Advocacy and Screening
Not all ideas are worth implementing. Advocacy and screening help evaluate an idea and measure its potential benefits and problems. From there, a decision can be made about an idea’s future.
One of the biggest advantages for the joint processes of advocacy and screening is refinement. If the idea has potential, discussions and arguments help enhance it. The study in Innovation: Management, Policy & Practice mentions how this stage prepares an idea for upper management, which can call for a different approach. Because idea generators don’t always have the skills to advocate for their ideas, managers working with the idea generator can facilitate, encourage and support the person.
Companies looking to build a robust culture can establish a few best practices for this step. First, employees should have plenty of avenues to receive advocacy and feedback. Second, organizations must understand the difficulties involved with evaluating truly innovative ideas. Third, organizations need to build transparent evaluation and screening protocols.
The experimentation stage tests an idea, such as with a prototype or pilot test. Researchers in Innovation: Management, Policy & Practice carefully note that “Experimentation does not test an idea’s objective merits, but the suitability for a particular organization at a particular time.” Some ideas “might be ahead of their time or beyond the present capacity of the company … [they] may be set aside into an idea bank or idea library for development at a later time.”
Experimentation can remain continuous or exist in spurts, as advocates and screeners reevaluate an idea. Sometimes, experimentation leads to new ideas due to information that is gathered on the results and the overall feasibility of the original idea. Time is crucial in this process; individuals must be given adequate time to run the experiments. As refinements and evaluations occur, they must be given enough time to reflect on the experiments.
Many businesses experiment with new products and services, such as grocery stores. One innovation came in 2007, when Amazon tested its grocery delivery service in certain Seattle suburbs. After this successful experiment, Amazon Fresh expanded to Los Angeles, San Diego and New York City; New Jersey and the United Kingdom are the latest locations Amazon has targeted.
Commercialization aims to create market value for an idea by focusing on its potential impact. This step makes the idea appealing to the audience, such as by packaging an idea with other ideas, clarifying how and when the idea can be used, and using data or prototypes from experiments to demonstrate benefits.
An important part of commercialization is establishing the specifications of any given idea. “The promises and potentials of the earlier stages of innovation must be discarded so that the actual benefits of the new innovation can be perceived and communicated,” researchers wrote in Innovation: Management, Policy & Practice. Once an idea is refined, it can appropriately target and meet the needs of the audience.
Commercialization is the stage of the innovation process when the focus shifts from development to persuasion. After the idea is clarified and a business plan is created, it will be ready for diffusion and implementation.
5. Diffusion and Implementation
“Diffusion and implementation are two sides of the same coin,” researchers wrote in Innovation: Management, Policy & Practice. Diffusion is the companywide acceptance of an innovative idea, and implementation sets up everything needed to develop and utilize or produce the innovation.
Diffusion happens at all levels of an organization. This process is often aided by knowledge brokers, who are effective at presenting an innovation by using their awareness of “the specific content and application into which an idea, product or service can be inserted.” As a result, knowledge brokers are able to assist with rapid implementation.
The use or application of the innovation should be demonstrated by the end of this stage, along with acceptance of the innovation. For the innovation to succeed, it will need the proper resources, a marketing plan for customers and an open culture with strong advocacy. Also important to diffusion and implementation is the opportunity for future ideas; this final stage allows the organization to determine the next set of needs for customers. Receiving feedback, in addition to indicators for success metrics and other benchmarks, enables the organization to stimulate the innovation process once again.
Innovation and Business
Innovation poses challenges. If one step of the process is weak or if a company lacks a systematic process for accepting and nurturing innovative ideas, the organization will rely on serendipity. But with the right approach, mindset and resources, a company can reap the strategic benefits of growth.
Managers play a vital role in an organization that meets the challenges of innovation. In Innovation: Management, Policy & Practice, the study outlines key areas where managers can assist with the process of innovation.
- Managers need to pay constant attention to operational details of innovation projects. Managers should keep an eye on how their projects are doing, and, to ease the burden of this task, they can establish a learning-focused environment that encourages employees to explore and generate new ideas.
- Managers need to be clear about how ideas are selected and evaluated. Clear-cut protocols are a feature of robust organizations, and these protocols help managers keep their focus on the processes of robust innovation.
- Managers must quickly respond to external constituents and provide their opinions for experimentation. The right questions can help guide this process to make it effective and relevant.
- Managers need to pay attention to customer desires and perceptions. Creative use of technology, such as data mining and pervasive computing infrastructure, is important.
Managers can help establish a culture of innovation. An open and supportive environment can lead to organizational success, as well as recognition and professional growth for employees who offer contributions. Aside from building an innovative culture, managers can help an organization and its employees in other areas. At Rivier University, the online MBA program allows students to expand their knowledge of core business concepts — such as project management, organizational dynamics, accounting and more — to develop a better understanding of the industry and how to be successful.