Ideas & Innovation
Innovation is the most important competitive advantage that enables a company to thrive in today's business environment. The secret of innovative companies lies in the capacity to leverage the talent and motivation of their people. Experts and forward-looking companies recognize that Idea Management provides a key capability for exploiting the innovative capacity of organizations.
"Innovation is a top-of-mind issue for business leaders. Enterprises should evaluate current innovation processes to gauge whether idea generation can be formalized and managed. By 2004, 50 percent of enterprises that derive more than 25 percent of their annual revenue from new products will formalize innovation by leveraging their intellectual assets with KM; these enterprises will allocate more than 5 percent of their research and development budgets to support these formal processes (0.7 probability)" - Gartner Group
The Big Picture
In 1999, US organizations spent over $250bn on research and development, according to the US Department of Commerce, and this is growing at over 8% a year. The return on investment for successful R & D is extremely high. Companies generate $18.70 in sales for every dollar of investment in R & D.
Innovative companies, defined by "percentage of revenue generated from products less than 5 years old", experience profit growth at four times the rate of non-innovative organizations (Source: Business Horizons, 1996).
Innovation is a critical issue for senior executives. A survey of 400 companies found that 70% of companies' mission statements and top objectives mentioned innovation (Source: Watson Wyatt Survey, 1998).
And yet, few companies have the processes and infrastructure in place to manage innovation. A survey of 350 organizations found that less than 15% of companies have any IT systems in place to manage innovation, and only 40% have established any formal procedures (Source: CBI and 3M Innovation Survey, 2000)
There is tremendous potential for companies to use innovation as a way of generating additional revenue and reducing costs. Idea Management should be a critical component of any innovation or R & D program.
PricewaterhouseCoopers Innovation Study
In 2000, PricewaterhouseCoopers carried out a major study of innovation. They found that “most companies fail to take advantage of good ideas… the main reason is poor Idea Management”.
Background Reading: Contact us for a copy of the PwC Innovation Survey.
Their Innovation Report identifies three main success factors, illustrated in the diagram below:
- Leadership & Followership
- Climate & Environment
- Structured Idea Management Process - gathering ideas widely from employees, customers and supply chain partners
At Imaginatik Research, we have clearly identified the need to address leadership and culture issues. Software and methods alone cannot make a company innovative - the organization needs to be ready. Yet the PwC study shows that it is mainly their Idea Management activity which sets the most innovative companies apart.
What is the best environment for innovation?
The myths
The facts of successful innovators
"Only small or new companies innovate"
Success is not confined to any specific categories of age, size, sector or geographic region
"One great idea is all we need - don't waste time generating mediocre ones"
Create a climate in which ideas can reach their potential
"Better play safe - stick to what we know"
Actively seek new points of view and give people discretion to take risks
"Innovation is a part-time activity"
Embed innovation into everyday ways of working
Do we really need a process?
The myths
The facts of successful innovators
"Innovation is haphazard - you just need luck"
Use a wide range of mechanisms as part of an overall Idea Management process: the best new ideas may come from surprising sources
"We know what our customers want"
Research customers, non-customers, suppliers and the wider environment rather than make assumptions
"Market knowledge is best held by specialists"
Broaden the scope of innovation to create new possibilities
"We don't need a process - we run idea workshops"
Use a clear and structured idea / innovation management process
Where do ideas come from?
