For example, some people confuse innovation and creativity. Others believe that innovation and cost reduction cannot coexist.

But one of the most frequent misconceptions we see and hear is that “it’s all about the volume of ideas“.

Well, it’s not.

Indeed, in our recent survey of over sixty Australian CEOs and senior executives, only 6% identified ‘lack of good ideas’ as a major barrier to organic growth! That’s telling stuff – especially when compared to other factors such as competing priorities (54%), availability of capital (35%), lack of skills, and the inability to execute (both 26%).

Idea generation is also seen as substantially less important than other key growth competencies – including customer and market insight, sales capability, culture and strategy.

It’s not that these CEOs aren’t recognising innovation as important (on the contrary, it’s clearly seen as an essential) – it’s just that the innovation challenge isn’t primarily one of generating more ideas. Instead, it’s a challenge of strategy, process, culture and execution.

Specifically, it’s a challenge of focusing ideas in the right areas, selecting, developing and resourcing the right ones, and executing quickly (and successfully) – all in an environment of supportive culture and process.

Yet why does this misconception persist?  Why do we see so many innovation ‘experts’ expounding the virtues of one million ideas?

Well, the cynic’s answer might be because it makes for a nice sound-bite, and helps sell creativity training to accessible HR budgets! But a more considered response would be because in some cases this viewpoint is quite legit.

In a brainstorming context, the volume of ideas generated (as well as the initial tolerance of all forms of ideas etc…) can indeed be a key ingredient for success. Similarly, at an individual level, the ability to generate lots of ideas and angles on an issue is an important personal capability (and a key input into bottom-up innovation activity). So in these cases, the ability to generate a large volume of ideas does indeed have a critical role.

It’s just that at an organisational level, the same priority does not necessarily apply. Faced with limited dollars to invest in building innovation capability, companies may be better placed investing in fresh market insight and strategy, the processes and skills for developing real ideas, hothouse teams, and the organisational development programs needed to assist (e.g. leadership, incentives).

It’s this challenge – of identifying which levers to pull and when – that’s at the heart of unleashing innovation (and why we enjoy doing what we do!).

Sometimes the answer might be ‘you just need more ideas’, but many times, it’s not.

Anyway, while there was plenty of food for thought, there was one image that stood out for me among the various presentations – and it came courtesy of David Thomas while he was telling the now familiar story about the emergence of the BRIC economies (Brazil, Russia, India, China).

The image said it all – and while I don’t have the original slide, the wonders of Google allow some quick replication…

Shanghai (Pudong) in 1990…

Shanghai (Pudong) now…

If you look carefully you can even see some of the original buildings! 1990!

Impressive. Staggering. Compelling

However, our recent Growth Insights 09/10 research also suggests that innovation is an area that many companies really struggle with.

Growth Insights 09/10 reveals good news –  in that companies are aware of the need for, and aspiring towards, greater innovation. It also makes clear that innovation will be an essential growth capability in the times ahead:

• Innovation trailed only cost reduction and overarching organic revenue growth as an increasingly relevant issue over the coming 12 months;
• Innovation frequently placed as a ‘top 5′ priority issue, albeit to a lesser extent than costs, growth and demand;
• Over 70% of respondents stated an intention to increase the revenue contribution made by new products and services.

However Growth Insights 09/10 also reveals some troubling disconnect with existing organisational performance.

In particular, companies scored themselves poorly against some vital innovation ingredients. For example, risk taking, processes, idea generation and incubation all scored low as areas of current performance – yet all have a key role to play in supporting a robust innovation capability.

This highlights the distinction between positive recognition of the need for innovation, and the actual positioning needed to succeed.

It also highlights that for many organisations, innovation remains an enigma. They agree that it is important, but also don’t tend to understand it. And while in concept innovation is fairly straightforward, its execution can be considerably more challenging.

It is with this in mind that we thought we’d spend some time exploring 5 practical tips on what companies can do to unleash their innovation potential…

1. Know what you’re trying to achieve

Understanding that innovation comes in different shapes and sizes is essential, because innovation efforts are not ‘one size fits all’ and must be customised to specific needs.

For example, a manufacturing organisation looking to improve operating efficiencies might be well served by a ‘bottom-up’ approach using employee participation and idea suggestion to deliver localised process improvement. This might also deliver on employee engagement objectives and even extend to participation from business partners and customers.

On the other hand, an organisation looking to generate a radical and major new growth platform might instead need to focus on ‘top-down’ strategic innovation, leveraging a strong understanding of the market, existing capabilities, and long-term strategic points of difference.

Organisations need to know what they are trying to achieve through innovation if they are to invest in the right blend of these activities. In practice, this might require a portfolio approach to address a mix of innovation needs – but if companies don’t understand what they are looking for, then chances are they might not find it.

2. Align your innovation efforts with key areas of business value

Successful innovation efforts require a sound understanding of current and future drivers of business value. In other words, strategy is a key innovation ingredient. It’s often no surprise to walk the floors of large companies and ask employees – “what is this company looking to do?” only to find there’s not a clear understanding of the strategy at the employee level.

In the simplest sense, clear business strategy is important because, without it, it can be hard to answer the obvious question “is this idea taking us in the right direction?” (Specifically because people don’t understand what that direction is). Clear strategy also helps identify priorities and challenges for more focussed innovation attention. In other words, it gets everyone in the game.

A good example of this is the different approaches to ideas competitions – a really tangible and tactical component of innovation.

Asking employees to “send us your good ideas” often results in hundreds, if not thousands, of ideas of all shapes and sizes, many of which do not align to the strategy. On the other hand, a fast food retailer looking to compete on the basis of “food in a hurry” might ask “how might we speed up customer service at out tills” – a question more likely to yield meaningful ideas.

I won’t be the first one to say it, but often, it’s the question that you ask which is the real key.

3. Build a supportive organisational culture

Creating an ‘innovation culture’ is one of the trickier challenges of making innovation happen. Staff must be empowered to conceive, develop and collaborate on ideas.

Some required attributes include:

• Trust
• Risk taking and courage
• Constructive debate
• Time and support for ideas
• An element of playfulness

Building such a culture is not easy, and the starting point will differ for all organisations. However, two common elements include:

Leadership behaviour: where senior executives are credible and committed, and managers at all levels are providing staff with incentives and license to innovate. Innovation is often “delegated” down to employees with management “challenging” staff to come up with good ideas. Leaders need to be participative – leading by demonstrating their ideas and the support for the ideas of others;

Incentives and recognition: used to encourage ideas while engaging and empowering staff. Such incentives must focus on recognition rather than rewards or risk being seen as prize driven where there are winners and losers.

4. Establish a backbone of tools, systems & processes

Innovation is about more than just motherhood statements. Behind the soft exterior of employee engagement and culture building must sit a robust backbone of tools, systems and processes.

This backbone includes:

• Tools to support the generation of ideas (e.g. staff training, physical spaces and internal innovation challenges)
• Systems to capture ideas (e.g. from low-tech suggestion boxes to high-tech innovation portals)
• Criteria and processes to screen ideas (e.g. standardised methods and approvals)
• Structures, resources and capabilities to take ideas to market (e.g. appropriate teams, talent, funds and mandates)

The difficulty is to design an infrastructure that is supportive yet not too clinical, as anything too rigid may limit, rather than enable innovation.

5. Focus on tangible opportunities to keep things real

Nothing builds organisational confidence like real-time results.

Building innovation capability requires the right blend of program building, processes and culture change, but when these are supported by real innovation wins, results are accelerated.

Most companies don’t have to look far – day to day there are usually great examples of innovation at all levels of the organisation that are often not recognised. Take time to celeberate simple wins that demonstrate innovation is already happening and support the risk-takers that are delivering better ways of doing things.

In parallel, ensure the focus on innovation is supported tactically and strategically with a series of identified, high-value projects to work on. This may be by the same or a separate incubation team. Such an approach provides visible demonstrations of success as well as a perfect testing ground for newly defined tools and processes to support innovation.

For example, rather than working on processes in isolation, select a real opportunity and use this to build and test your workflows. People are far more likely to discuss funding levers if they can see a new idea that needs immediate testing, than if they’re asked to do so in abstraction.

There’s no better way to measure return on innovation investment than through banked returns from a fast tracked idea.

Done less effectively, and the results may be somewhat, ahem, less spectacular…

But where the notion of crowdsourcing, or harnessing the power of the crowd, gets particularly interesting, is when it is applied towards more than just generating ideas.

And while I could write about professional services, technology and R&D sourcing, or graphic design, I thought the topic of fundraising would make for an interesting example.

Setting aside perhaps the most well-established (yet arguably overlooked!), examples of sharemarkets and charity events, we’re seeing some interesting models start to surface.

Just last year, for example, Ebbsfleet United Football Club was purchased by over 50,000 of its fans via MyFootballClub’s online platform. The result? thousands of committed owners, the opportunity to democratically participate in player transfer, and a format now being replicated in a number of countries around the globe.

Another interesting new example is Kisskissbankbank (hat tip: Springwise) – which lets music fans invest in their favourite bands and share in their success. Fans are able to select their artists via an online browser, and make subsequent micro-investments (e.g. ten euros). This not only provides participating bands with access to capital (and Kisskissbankbank with a handy transactional clip), but provides fans with the opportunity to make money as their band succeeds.

A personal favourite, however is Kiva, and its innovative, socially entrepreneurial approach, to micro-lending and economic development. In short, by harnessing the power of both technology and the crowd, Kiva is able to connect entrepreneurs in the developing world to lenders such as you or I – and vice versa.

How does it work? Feel free to watch the video below, or chart here. But in short, Kiva’s online platform links individual recipients (via a network of vetted microfinance ‘field partners’) with lenders willing to provide the small (think $25) start-up capital they need. For advocates of economic independence, this is a pretty neat idea indeed.

No doubt we’ll see more such models emerge, as online and payment technologies continue to develop, and success stories continue to build.

So next time you’re thinking business model innovation – think crowdfunding. It may not be the solution to your problem, but at the least it’ll energise you about a world of possibility, not to mention some exciting positive change!

.

I’ve always been fascinated by sustainable technology development. From my early introductions to the work of TU Delft, to meetings with Dr Hunter Lovins, to time spent infusing sustainability into NZ ‘s design and economic development agenda, there’s something compelling and exciting about driving positive change through innovation. Both commercially, as well as environmentally.

Yet within this space, one field worth particular attention is that of biomimicry.

Put simply, biomimicry seeks to use nature as the inspiration for design. Not in a fluffy spiritual sense, but in pure engineering form. Examples include geckos as the inspiration for adhesives, or butterflies as the inspiration for illumination.

The philosophy of biomimicry is straightforward, in that if Darwin’s nature has been designing things for millions of years, then it’s probably worked out some pretty innovative solutions. The remarkable strength of spider’s silk is just one of many well known colloquial examples.

Yet as advances in materials and biological science continue, this remains a field that offers so much more. From the fringe of ambitious self-engineering walls and even organisational design, to harder sciences of robotics, bionics and organic chemistry, there remain enormous opportunities to better harness the inspiration of nature.

So next time you’re facing an interesting problem, maybe ask yourself how nature is already tackling the same solution.

Or even better, take a trip to the zoo.

But last week, on Nov 12th, 3M decided to further open the doors on their innovation programs, inviting 7 US ‘influencers’ to come and visit their innovation centre in St. Paul Minnesota and learn more about 3M’s recipe for innovation.

The resulting posts are a great opportunity for followers of the 3M innovation story to gain some more insight on the frontline. So have a read and enjoy…

Jeffrey Phillips – here, here and here
Paul Williams – here
Mike Lippitz – here

Regular readers will know that here at thinkGROWTH we’re big fans of elegant and innovative communication. Take, for example, the work of Toby Ng Kwong To, which we’ve previously highlighted here.

Well, another great example comes to us from the Genetic Science Learning Centre at the University of Utah, with a pretty neat tool for understanding the relative scale of a number of tiny objects, from a coffee bean down to a single carbon atom.

Reminds me a bit of Prezi (a similarly clever tool). Most definitely worth a look. Enjoy!

With its timely commentary on organic growth capabilities and challenges, it’s not surprising that our research is being well-received. But what’s been particularly interesting to note is the positive feedback on how Growth Insights has helped broaden readers’ understanding of what organic growth can actually mean.

More specifically, we’re finding that for a proportion of people, the term ‘organic growth’ has traditionally meant little more than sales alone. This is significant, because while sales capability is obviously an extremely relevant part of organic growth capability – and an area where we’re frequently engaged – it’s nevertheless only one piece of the puzzle.

An organisation can have the most effective salesforce in the world, but without continued insight and innovation, the opportunity ‘well’ will inevitably run dry.

Indeed, comprehensive organic growth capability comprises a number of key inter-related capabilities that include, but are not limited to:

• Having the right strategy, and a clear understanding of strategic differentiation;
• Utilising appropriate processes and structures as a backbone for business growth and development;
• Having a robust customer and market and insights function;
• Skills to not only generate new ideas, but to incubate them, and take them to market;
• A culture and environment conducive to innovation.

And while each of these areas merits its own discussion and focus, even a simple list like this can add sophistication to an organisation’s understanding of current capabilities. This is particularly relevant for those businesses having to re-discover their organic growth potential in a changed economic world.

No doubt we’ll be exploring each of these areas – as well as sales capability – further in the future. So stay tuned, and if you’ve got your own thoughts, let us know.

But in short, there’s more to organic growth capability than meets the eye!

Well, the good folk at TED have posted another thought provoker along the same lines – this time, Dan Pink talking about the science of motivation.

In short, Pink’s talk challenges the established use of performance incentives to drive improved results.
He uses a couple of compelling scientific studies to show how such incentives may work well in simpler mechanistic situations, yet potentially be less conducive to, and actually work against, more ‘right-brained’ conceptual innovation.

While I strongly agree with Pink’s assertion that such ‘right-brained’ conceptual innovation can be better served by providing for time and self-direction (a la Google, 3M, Altassian), this raises some interesting questions about incentives for skunkworks and corporate venturing initiatives.

I was recently fortunate enough, for example, to hear Dr Lars Rasmussen talk about the structural factors contributing to the success of Google Maps (and the incubation of Google Wave). Here, hard entrepreneurial incentives (both good and bad) were clearly seen as a key motivators – perhaps suggesting a distinction between motivation to generate radical new concepts, and motivation to evolve and drive an idea to market.

Anyway, we’re not going to bottom this now, and it’s probably something worth coming back to in future posts. But either way, certainly another great interesting clip.

Back in late June, we kicked off our 2009 Growth Insights survey and over the course of the past few months we had participation from over 60 of Australia’s leading CEOs, Managing Directors and Senior Executives. The report is due for publication in the next few weeks, but if you’re interested in the key findings and recommendations, then click here.

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