Is innovation only about breakthrough ideas?
Innovation is the buzzword these days which everyone seems to agree is the key to the future. Every other day we discuss how we are going to focus on innovation to drive business growth and increase our bottom-line.
By Dr Elaine Chan and Dr Jaideep Sengupta
Innovation is the buzzword these days which everyone seems to agree is the key to the future. Every other day we discuss how we are going to focus on innovation to drive business growth and increase our bottom-line. We talk about increased investment in R&D, consumer research, market research studies etc. to generate 'breakthrough ideas'. We discuss how, to stay competitive, we have to be innovative and come up with new features, products and business solutions.
However, the fundamental question is – do we really understand innovation correctly? If we do, then do we have an innovation strategy to pursue? Innovate for what problems?
Decoding Innovation
Whenever we think of innovation, we tend to think of an amazing product or something involving the application of science and technology such as unmanned drones, wireless chargers, ultra slim LEDs etc. But innovation is not only about new and improved ideas. It is also about exploiting existing ideas and coming up with novel solutions. Ideas are everywhere – some are new, some are old but the important thing is to recognise the saliency of ideas and to implement them. Kodak and Xerox folded not because that they did not have great ideas but because they failed to realise those ideas and hence never pursued them.
So, what is innovation? Dictionary definitions typically refer to innovation as "a new method, idea or product", and emphasise the novelty aspect. However, equally innovative is the application of existing ideas in new contexts in order to solve unique problems. For example, Emami Limited, which spearheaded the men's grooming market in India, were the first to launch a skin lightening cream that was marketed exclusively for men. The product was hugely successful, and its success led many other companies to enter the market with a greater range of male grooming products. Although the concept of skin whitening cream was not novel (industries had been marketing such products to women for many years), the idea of targeting men was prompted by the available research data that showed that a sizeable number of users of women's skin lightening cream were in fact men. So, the application of available resources in a creative manner can also be termed as innovative.
If we have to define innovation then the following definitions are more inclusive:
- Innovation is turning an idea into a solution that adds value from a customer's perspective.
- Innovation means creating value from ideas.
- Creativity is thinking of something new. Innovation is the implementation of something new.
- Innovation is the fundamental way the company brings constant value to their customers business or life and consequently their shareholders and stakeholders.
One point that the above definitions do make clear is that innovation is not only about an idea. It is about the implementation of that idea and in turn creating a value. An idea that doesn't create a value is not an innovation.
"The application of available resources in a creative manner can also be termed as innovative."
Clayton Christensen, the Harvard Business Professor who promulgated the idea of disruptive innovation, also proposed that disruptive companies are not necessarily characterised by having new or superior ideas. In fact, their ideas or value propositions are often inferior to the market leaders but they are good enough to bring value to a specific set of customers.
Innovation is not always about invention
It is only relatively recently that innovation has pervaded not only boardroom discussions but also our daily lives. A record total of 233,000 patents were filed globally in the year 2016, a growth of 7.3% over the previous year (as per World Intellectual Property Organisation).
Today, innovation is exploding primarily because computers and technology are driving the intersection of different industry domains. This intersection, driven by Artificial Intelligence, Cloud and Mobile Computing, Robotics, and Virtual Reality, is slowly starting to shape our lifestyles. The internet and open source platforms have made it easier for us to share data and build upon each other's ideas. The concepts of venture capital, innovation labs etc have created the resources available to encourage innovation. Companies like Google or 3M are letting employees allocate work time to the pursuance of ideas that have potential to bring about innovation.
However, one has to differentiate between innovation and invention. Invention is the process of 'creation' while innovation is the process of 'implementation'. Invention can lead to innovation but not all innovations require new invention. In fact, inventions that do not lead to innovation (and in turn do not add value) are not useful at all.
One of the best examples of non-novel innovation was the rebranding of Kraft's Diamond Shreddies (a square-shaped breakfast cereal) in 2008. In order to regain consumer interest in the brand in the face of diminishing sales, the brand's creative agency launched a campaign that simply involved reframing the breakfast cereal's square-shape as "diamond-shaped". The campaign revived interest in the brand and increased consumer engagement, which led to 18% uplift in sales while the product itself remained essentially unchanged.
Can we all become innovators?
If innovation is not restricted to the generation of entirely new ideas, can we incorporate the culture of innovation in our daily lives? More importantly, can we train ourselves to become innovators?
In 2000, Harvard Business Review published an article by Clayton Christensen in which he highlighted the five main attributes of being an innovator. Clayton published his findings after studying the habits of 25 innovative entrepreneurs and surveying more than 3,000 executives and 500 individuals who had started innovative companies or invented new products. He highlighted that by cultivating five skills, namely - observation, association, experimentation, questioning and networking, we can train ourselves to become innovators.
If we can combine ideas successfully then we can become innovators. For example - the launch of shampoo in sachets was a big idea when it was first launched in India, as many people, especially in the rural areas, were unable to purchase the prohibitively expensive large bottles of shampoo. Later, that simple idea inspired and revolutionised many industries and gave rise to single serve, ready to consume, economically priced products – leading to the so-called 'sachet economy'.
Work environment and office culture too play an important role in helping companies to become innovative. Google is known for its product innovations which it maintains is due to the culture of innovation instilled at every level of their workforce. In contrast, despite the innovative targeting of skin lightening cream to men, Emami Limited failed to come up with other similar successful innovations, possibly because the company lacked the innovation culture that multinational companies like Google promote.
Companies who are serious about innovation could benefit from following some suggested guidelines:
- Integrating innovation into their processes and daily work routines.
- Spending more time and money experimenting with existing ideas rather than focusing exclusively on generating new ones.
- Promoting open communication and idea sharing across departments.
- Being observant of innovation in other industries.
- Understanding that innovation is not only about idea generation but also about the successful implementation of those ideas.
Having an innovation strategy
Since we can train ourselves to be innovators, we must continuously engage in the process of innovation. However, we must be careful, as the process of innovation is not unique and there is no one process that is common to all problems. Ideas from one industry can definitely be a source of innovation in other industry, but their implementation will inevitably be different. Similarly, a company cannot have just one innovation strategy, as it will have to face different types of challenges during different stages of its lifecycle.
Greg Satell, a popular author, speaker, and innovation advisor, in his book 'Mapping Innovation', mentions that the same innovation strategy does not work on all problems, as different problems require a different kind of innovative thinking. He created a two-dimensional matrix to help companies identify the right type of innovation strategy to solve a problem. The first dimension maps how well the 'business problem' is defined and the second dimension maps how well the 'business domain' is defined. Based on how a particular business problem is stacked up on these two domains, companies can choose to work in one of the four main zones of Innovation – Breakthrough Innovation, Disruptive Innovation, Sustaining Innovation and Basic Research.
In Summary
Innovation provides a formidable competitive advantage. An innovative company finds different ways to engage with its customers. Nevertheless, innovation should by no means be restricted to the generation of novel clever ideas; it must add value to the user – tangible or intangible. Innovation, if promoted as a business discipline does not require a huge investment or capital resources. Companies looking to succeed in today's highly competitive marketplace need to put innovation at the forefront of its thinking.
References
3 https://www.youtube.com/channel/UC-j7LP4at37y3uNTdWLq-vQ
4 http://fameable.com/diamond-shreddies-rebranding-case-study/144/
5 https://hbr.org/2009/12/the-innovators-dna
6 https://hbr.org/2013/07/innovation-isnt-an-idea-proble
7 https://hbr.org/2017/06/the-4-types-of-innovation-and-the-problems-they-solve#comment-section
About the author
Tarun Lakhani is an alumnus of the ACI-NTU Masters of Marketing and Consumer Insight – an Executive Education programme targeting individuals with over 5 years' industry experience and looking to expand their marketing and consumer insight knowledge, particularly with respect to the Asian markets. Tarun has more than 12 years of experience handling brand and product marketing in the consumer goods and service industry.
This commentary was published in e27.com on 23 November 2017 and smeportal.sg on 25 December 2017.
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