This is not the first time I have written about innovation. However, there are still so many misunderstandings about the term that I feel the urge to explain it one more time.
As I mentioned previously, innovation and creativity are two different things, although there are some overlapping aspects. Creativity is about (regularly) developing new ideas or concepts, whereas innovation also involves generating new ideas but those ideas must be “commercialisable”. In other words, having lots of ideas only means that you are being creative — unless you can develop those ideas and sell them to the market, thus improving the bottom line of your organisation.
For example, Apple is famed for being an innovative company. Before it releases any product, thousands of ideas circulate among the research and development team. However, not every idea can be turned into a product. Only the most distinctive and outstanding ideas make the cut. That’s why we have the smartphone — a highly innovative product that originated when someone at Apple started wondering why mobile phones could only be used for making calls but nothing else.
However, it must be noted that being innovative has many levels: from individual innovation to process improvement to continuous innovation and disruptive innovation.
Individual innovation means each employee being innovative in his or her own way. In other words, individual innovation takes place within a corporate culture that encourages anyone to suggest an idea and start their own projects. Google is a great example — it allows its people to spend 20% of their working time on each individual project.
Process improvement or incremental innovation is about releasing “new and improved” versions of products or services to make them better or more inventive. It normally consists of small but meaningful improvements such as new flavours, better packaging, enhanced functions, bigger or smaller sizing, cost reductions, heavier or lighter weight.
Next is continuous innovation which is about creating new elements in the business model. Examples include Coca-Cola developing snack foods that can be distributed through its existing distribution channels, or Disney with its theme parks that also sell stuffed toys and other products from its animated films, and so on.
The final one is disruptive or transformational innovation which is the most difficult to deal with, since it can upset the very foundations of an organisation and threaten the advantages it enjoys by eliminating existing industries or, at a minimum, totally transforming them. Essentially, disruptive innovation is a common method for startups or those who aren’t wedded to an existing infrastructure since they have nothing to lose and everything to win over their competition. Because disruptive innovation is exceedingly rare, those who do manage to pull it off can definitely earn higher rewards than those who cannot.
Examples include Apple with the iPod, iPhone and iPad; Amazon with Amazon Web Services and Kindle; and Samsung with its Galaxy models. According to Steve Blank, the renowned author and entrepreneur, “these companies are extraordinary because, like startups, they create entirely new products and services”.
Nonetheless, there are both benefits and problems that can arise from merely focusing your efforts on just one type of innovation. Undoubtedly, the first two levels might be easier to achieve with less risk as they do not require unique skills. The last two, however, are harder to carry out but their rewards are potentially larger. Hence, for the utmost benefit of the organisation, I highly recommend the portfolio approach to innovation effort, i.e. a combination of two to three levels of innovation in one project. This is because you simply cannot afford to make any one type of innovation the sum total of your innovation strategy.
Now you should have a better and clearer picture of innovation. The next critical point is to be reminded that for innovation to be valuable it must be sustained, and to sustain anything at the organisational level, the culture must embrace it. The problem is that most organisational cultures are built for efficiency, not innovation; therefore, how can we change a corporate culture so that it eventually can become innovative?
Creating a culture that drives and encourages innovation is a complex task that requires leadership skills, organisational structures as well as reward strategies. This is another critical topic that needs to be addressed further in detail, which I will continue in next week’s article.
---------------------------
Arinya Talerngsri is Group Managing Director at APMGroup, Thailand’s leading Organisational and People Development Consultancy. For more information, write an e-mail to arinya_t@apm.co.th or visit www.apm.co.th