Computerworld - "Managing the Mandate to Innovate: A Step-by-Step Guide"
How to create, evaluate and implement ideas that drive revenue
Computerworld - 27 June 2005
Innovation is the new watchword for today's business. Top executives constantly emphasize the importance of building innovative products, offering innovative services and being more innovative thinkers in order to stay competitive. In a recent Bain & Co. survey, nine out of 10 senior managers saw innovation as a critical source of future competitive advantage. The ability to consistently capture, build and develop new ideas has a direct effect on revenue growth. Yet while all businesses want to be labeled innovation leaders, most don't have any real plan to foster innovation.
One of the first lessons that companies learn is that innovation isn't just the domain of the executive suite or business development group. Everyone has a role to play in innovation, from call center and production workers to field sales and overseas staffers. Successful innovation clearly needs strong leadership and guidance. However, it's only when an organization establishes a culture of innovation and a process to help individuals and teams develop new products, services and business methods that they truly see the benefits of innovation. So, here is some time-proven advice for those charged with managing the innovation mandate. The roadblocks to successful innovation result from two common misconceptions: 1) Innovation is a matter of guesswork and serendipity; and 2) innovation relates only to research and product development.
The truth is that successful innovation in the best companies touches all aspects of a business. Improving business processes, identifying new ways to reduce costs, improving existing business models and creating new ways to market products are just a few examples of innovation that can effect a company's bottom line.
Achieving consistent innovation relies on a process that must be formalized within a business. Companies must foster a culture of innovation that encourages people across the organization to share their ideas and insights. They must create a series of processes that guarantee success. There are seven key components to creating an innovative culture:
Managing ideas. Although to some this may seem strange, businesses need an idea management process in order to scale innovation in a networked, distributed organization. Otherwise, organizations "invent" the same ideas over and over again and foster idea silos where people share ideas only within a specific group. Idea collection is only part of the problem. The top firms devote 60% of their attention to structuring ideas, the evaluation process and making sure that ideas are implemented.
Focusing. Old-fashioned suggestion programs encouraged any idea, anytime. Random idea-sharing has some intellectual merit, but unfortunately it tends to disrupt management and business processes. The most successful systems for idea-sharing use short-term, focused business challenges to encourage employees to solve specific problems quickly. This is the basis of the event-based approach (short business-focused ideation) in use in over 75% of companies doing idea management. Focused ideas are significantly likely to be implemented 30 times more often than the suggestion-box approach.
Being aware. Part of the problem is that managers don't know that good ideas exist and are sometimes afraid to ask. Businesses need to create hubs for idea sharing, both physical and virtual, that get people talking and creating a dialogue about what they know.
Fostering innovation skills. Successful companies train their workforce on foundations of creative thinking and train their management to lead the innovation process. If employees and management are more skilled at developing ideas, they will create more ideas, and as a result, create solutions to problems. More innovation skills mean higher-quality ideas and more creative solutions.
Establishing dedicated innovation resources. Innovation is so important to companies that many of them have established roles such as director of innovation and are in the process of setting up dedicated innovation or concept-development teams. Applying dedicated resources is a commitment point for management; if they aren't willing to assign quality people to work full-time on the innovation process and specific projects, they aren't fully supportive of the initiative.
Knowing the value of ideas and how to protect them. Ensure that employees know the legal rights around ideas so that they don't accidentally accept ideas from outside the firm with unsure legal provenance and that they share ideas appropriately inside the firm to protect trade secrets and to ensure proper patent protection if appropriate.
Managing expectations. Most ideas won't be adopted by an organization, and few that are adopted will be implemented. Therefore, it's vital to set people's expectations so employees don't get frustrated and disenchanted with the program. This can be managed through good internal marketing, a good selection of business-focused topics and a thoughtful reward and recognition approach.
Companies that use these building blocks to successfully create an innovation culture consistently reap the return-on-investment rewards. For example, after creating a formal process to manage innovation, chemical manufacturer WR Grace engaged thousands of employees in developing and sharing new ideas. The company has run more than 34 campaigns that collected 2,685 ideas yielding 76 new products and 67 business process improvements that cut costs.
WR Grace employees participating in an event titled "Customers Do the Darndest Things" reported on unexpected uses customers had found for the company's products. As a result, the company found new ways to market existing products that boosted its revenue by as much as $3 million. Another initiative on cost reduction yielded an idea on how to better manage magazine subscriptions across the company that saved an immediate $200,000.
Georgia-Pacific Corp. tapped into the expertise of its 16,000 North American employees to help identify new product ideas and ways to improve efficiency. The paper goods manufacturer saw impressive results once it successfully created a process for innovation.
When Georgia-Pacific ran an ideation event to find ways to streamline the cost of producing its multimillion-dollar line of paper towels, a mill worker had an idea to simplify the way cardboard cores were manufactured, shaving a remarkable 4% off annual production costs.
In another ideation event, the company asked a group of 100 employees from numerous sites and job functions to come up with new product ideas for its wipes market. Employees created 260 ideas, of which 19 were deemed worthy of development and were included in Georgia-Pacific's annual strategic plan. The company posed the same challenge to an outside marketing group at a cost of roughly $250,000 in 12 weeks. The marketing firm submitted just five ideas, all of which were identical to ones created by Georgia-Pacific's own employees.
Employees are an organization's greatest asset. Businesses that engage them and provide them with a process to harness their ideas are true innovators that will thrive in today's global marketplace.