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

Swine flu and Y2K are no surprises. But killer wifi?

Paul’s not making a case for social ventures, or not for profits, but rather, a compelling case for why it’s just so important to genuinely put the customer first. He singles out three key ways in which benevolence will help your start-up.

1. It improves morale

In short, if you feel like you’re really helping people, you’re more inclined to work harder during the emotional roller-coaster of new business creation. And any morale advantage you can get is invaluable. Furthermore, citing what he calls the Tamagotchi effect, Paul notes that if you make something that customers rely upon and keep coming back to (because it so effectively meets their needs), you’ll simply be faced with the imperative to perform.

2. It makes others want to help you

Helping ‘the good guys’ is almost an inborn trait. If you’re seen as doing well, and trying to meet a genuine need, you’d be surprised how people will rally around you. This includes customers, investors, and especially, potential employees. And while investors will always have an eye for the bottom line, they’re still very much human. Furthermore, if your customers and employees are compelled to rally around you, then it’s highly likely this will translate to the type of performance  investors want to see.

3. It helps you be decisive

Here, Paul describes customer-centricity is the ultimate business compass. Every day, start-ups face thousands of tasks, with only 2 or 3 people to do them. So how do you decide what to do? Just try and do whatever is best for your customers. Figure out what they want, then do it. And don’t fudge around. Be genuine in your commitment to the customer, and transparent in your efforts.

Notwithstanding video quality, and the occasional bit of reading from his notes, it’s a compelling talk, and one brought to life through some amusing anecdotes, and a colourful Q&A. And while a little web-centric, there are undoubtedly messages in here for all. Enjoy!

As an aside, there’s also a better quality version of this same talk available via Omnisio here. Omnisio itself is a Y-Combinator investee firm (subsequently acquired by Google/Youtube for $15m), which allows speakers to sync video and slides. (hat tip: Pulse2)

Well the latest visual tool that’s caught our eye is this interactive map from the Modern Language Association, illustrating the percentages of the US population speaking various languages. Interesting stuff indeed!

Note: Click on this link or on the image below to go the MLA website for a play

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.

Enjoy!

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!

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In developing practical and useful strategy and business plans for some of the small businesses and start-ups we work with, one question underpins most of the decision making – “why are we here?”

Not in the religious or philosophical sense you understand. But the strategy for a small business has to recognise the more complex and personal issues around why the owners or investors are starting out in the first place. Often it’s passion – a great product or service that is a life calling. Other times, it’s an escape from the constraints of the corporate world. Whatever the emotional or financial drivers, we’re finding it’s useful to think about three basic levels of opportunity from the outset – three fundamental approaches that shape how the business will be driven.

Firstly, there’s a lifestyle business approach. Building a business to generate enough free cash flow to provide the standard of living deemed comfortable by the owner. Long term stability at a low costs base drives the strategy here – not aiming to take over the world, but provide for many years of income.

Secondly, the growth to exit business. We work a lot with companies looking to build a salable business over 3-5 years. Here, investment in intellectual property, systems, tools, brand and marketing take on more significance Avoiding the “key man” risk during sale is critical to stop the company being seen simply as the value in one or two people.

Thirdly, the growth to scale business. Want to become the next Google – from dorm room to dominance in a few years? Not easy, but not impossible as Sergey and Larry proved. In this approach, external investment and an ability to scale quickly become important – the risk is increased and with it the workload, stress and pressure.

We’re finding that this simplistic model is proving very useful in having the first strategy conversation with some of the businesses we work with. Is it exhaustive and complex – no. Does it provide a good framework to make sure the intentions of the owners are clear from day one – absolutely!

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.