Realizing the Value of Innovation called Innovation Management

In a world of evolving customer expectations, disruptive competition and restrictive regulatory requirements, coupled with Wall Street’s unrelenting demand for growth, various organizations have acknowledged the importance of innovation to their success.

Realizing the benefits of innovation, however, requires not only “talking” but “walking the talk.” The “walk” is a systematic approach to the continuous development and implementation of value-adding ideas to increase your competitive advantage. This systematic approach, or “innovation management,” involves the establishment of a cross-enterprise model, championed by senior executive leadership.

What is Innovation Management?

Given the increasing velocity of change and the expanding number of change drivers (e.g., customer expectations, technology, regulation, emerging market growth, political instability, natural resource availability and environmental health), you cannot go far without raising the topic of innovation. Brand agencies, marketers, corporations from all industries, the public sector and academia all bandy the term around, talking about how innovation is essential to the success and sustainability of their institutions. But what does “innovation” really mean? And, more importantly, how is the value of innovation realized?
Innovation is the process by which the value of the creation or idea is realized. For purposes of this article, innovation spans “ideation” to “value realization”; and innovation management is the “cultivation of an environment where lightning can strike twice.”
While realizing the value of an idea, let alone coming up with a continuous pipeline of ideas, is not easy, it is not impossible. Surmounting the challenge requires a systematic, senior executive-sponsored, cross-enterprise approach that incorporates the right processes, people, operating model, tools and culture.

Innovation Culture

At the center of the innovation management “value ring” is culture. Without all employees’ acknowledgment of the importance of innovation to the health of the organization and, ultimately, their livelihoods, all the best innovation management processes and tools in the world will not generate a volume of good ideas or ensure the realization of the value sought.
From a leadership perspective, a commitment to innovation reveals itself in the acceptance of the following:

• Assets of the core business are to be leveraged, not just protected
• Competition to the core business from new revenue streams is not unlikely
• Investment of both time and money in innovation will require a re-direction of investment in the core business
• The detailing and implementation of ideas may require the best / most-experienced personnel from the core business
• Innovation requires more rapid decision-making and a higher risk tolerance
• Risk taking and failure is not necessarily a bad thing - entrepreneurialism should be recognized and rewarded
• Timely and “fact-based” feedback to idea generators is a must
• Innovation is often a cross-enterprise exercise, and, hence, requires working outside a particular “silo”

From an employee perspective, a strong orientation toward innovation is measured by the volume of ideas, as well as the ratio of quality ideas.
A successful organizational change management effort begins with determining where the culture needs to be, assessing where the culture is today, defining the plan to close the gaps and diligently executing the plan.

How is Innovation Managed?

Innovation management is a value ring, i.e., a continuous cycle of strategy setting, ideation, selection, implementation and value realization.
Innovation Strategy and Success Measures Definition: The definition and declaration of the “Innovation Strategy” is the critical first step to value-adding ideation and is the responsibility of the organization’s most senior leadership – the CEO, CIO, COO, CFO, Chief of HR and business unit heads.
Ideation: This involves the following:

• Scanning: Looking outside your organization’s four walls at features like customer needs / dis-satisfiers, competitor moves, new technology and regulatory changes
• Invention: Formulating ideas that potentially add value and create a sustainable competitive advantage
• Collection: Gathering ideas into a single repository

Selection: This phase deals with identifying and approving a select few ideas to enter the implementation phase on the basis of a set criteria.
Implementation: Not all selected ideas are implemented. They are implemented on the basis of their types. This phase could be a “big bang” or in two or more phases.
Value Realization: This involves optimizing an organization’s investment in innovation. It is about ensuring that the ideas being implemented capture the value expected within the estimated timeframe
Innovation management is about continually and optimally capturing value from innovation. It requires executive commitment and alignment, focused governance and a common vision.

In the words of Steve Jobs, “Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it. It comes from saying no to 1,000 things to make sure we don’t get on the wrong track or try to do too much.”