Innovation

INNOVATION: HOW IS IT APPROACHED AND DOES YOUR COMPANY EMBRACE IT?

 
I explored innovation and what it is in my recent post “Innovation: Why is it misunderstood and feared by organisations?” and defined innovation as any “activity which adds value”.
 
If you missed my other post, the definition of innovation is derived from the term innovate, meaning “make change in something established, especially by introducing new methods, ideas, or products” (Ref: Oxford Dictionary)
 
If consideration of what a business goes to market with is made, innovation can exist in different forms and I would like to explore two main approaches:
Offensive (or Revolution) Innovation
Defensive (or Evolution )Innovation
 
Offensive Innovation (Revolution Innovation):

 

Offensive has many definitions, but the one relevant for this post is defined as” an organised and forceful campaign to achieve something, typically a political or social end” (Ref: Oxford Dictionary)
 
 
Offensive Innovation (or sometimes referred to a revolution innovation) is essentially a new development, where problems are solved in new, better and more effective ways that replaces the outgoing product and repositions it within the market. The solution is new, novel, unique and can be disruptive in that it is a game changer in the marketplace. This type of activity is the easiest or simplest to comprehend by most, however many organisations explore the least. 
 
The type of organisation which embraces offensive innovation to leverage and maximise opportunities are those which are future focused and not constantly looking over their shoulder. 
 
 
A simple way to understand offensive innovation: A product which is offered today bares no resemblance to previous models and most likely will not even share any common components.
 
 

Defensive Innovation (Evolution Innovation):

Defensive, defined as “used or intended to defend or protect” (Ref: Oxford Dictionary)
 
Defensive innovation, is the practise that takes place when the offering receives minor updates, improvements and cosmetic changes. This occurs during a products life cycle to keep it fresh and relevant within the market place, hence to extend the market life and performance. Defensive innovations are usually employed to keep the market position while the Offensive (or revolution) innovation is being developed, refined and validated for release.
 
 
Many businesses over-use this Defensive innovation approach. This only buys limited time and in general does not provide a long term sustainable solution. Failure to recognise this can have significant and damaging impact on long term performance within the market place. Typically, organisations which employ this approach and over use this approach are those which do not have a clear long term future strategy, they operate from year to year and are more focused on what is over their shoulder. In many cases, the more this is repeated, the higher the tendency to mimic the competition.
 
 

What are some signs that your organisation does not embrace innovation…?

Patent to Commercialisation Ratio: 
Your business may have an active patent function, which indicates it might be good at coming up with ideas (or inventions). But, the commercial conversion of these ideas into a tangible business case is very low. This typically occurs when a business uses patents for the sole purpose of blocking competition from entering the market and does not have the in-house ability or competency to develop the idea into a commercial solution. Having a high number of patent activities to you name or business which are mostly residing in a folder and on an expense line within your P&L does not add value to your business and therefore in my opinion does not demonstrate whether a person or company is innovative.
 
Companies can fail to recognise the amount of ongoing cash needed to maintain the patents on an annual basis. If these patents are there for the sake of being there and no commercialisation of these ideas occurs, then there are less available funds within the business to be used for the benefit of the business. 
 
Patents do serve their purpose and do have their place but are not the answer for every business. Another aspect to be considered is, if you have commercialised your idea ( which is covered by  patent), do you have the funds and resource to defend your patent? 
 
 
Product Life Cycle: 
 
The business typically follows a Cycle-Recycle-Recycle…Recycle pattern. The same product has been in production for more than 10 years and has been through multiple recycle iterations, receiving refresh updates or cosmetic changes. At best, any innovation activities are defensive only.
 
 
 
 
After the first launch, every subsequent recycle experiences a:
 
  • slower launch take-up
  • lower market peak
  • shorter market life
  • quicker market decline

 

 

NPD Process: 
 
The NPD process is designed to be a risk management tool to ensure that all relevant and key aspects have been assessed. The NPD process manages risk by challenging the feasibility of cost, time and performance. Having an NPD process typically goes hand-in-hand with being truly innovative. When a business does’t use a structured product development process, it does not have the tools or mind set to undertake any true or revolution innovation. Projects just happen; they are chaotic, there is little justification, poor project management, costs blow out and decisions on both product and project directions changes constantly.
 
 
 
Mix of resources / talent: 
Most people within the business are long serving, which have positives and negatives. 
 
The positives are associated with the organisational culture and whether it is good and progressive. If the long-term employees have broad industry experience, good work ethic and a collaborative approach then having a mature human capital can be an asset. 
 
 
The negative aspects are when the culture is not good or progressive, and the long-term employees do not collaborate or communicate with others, have poor ethics and are narcissistic.
 
 
 
 
The confusion occurs when a business with a poor organisational culture promotes its low staff turn over as a positive. Other signs from a resource mix which speaks volumes about innovation is whether there is a skills development process, and new recruits either do not stay long due to the poor culture and those who do stay  are in most cases not the innovative type.
 

 

What can happen when an organisation is not innovative (or at best only conducts defensive innovation)?

Case Study:
I know of a business which practises this, and failed to understand the impact on the long term. As their market share contracted, they toyed with the idea of a new development that was to be “ all new ”, hence evolutional innovation. 
 
Unfortunately, the organisational culture wasn’t mature, progressive or open enough to embrace this. Most people (but not all people) in the business from the various functions resisted the idea of exploring something new. 
 
The idea or concept was undermined and eventually axed. The business decided to take an already old and tired product which had been recycled multiple times and put it through the cycle once again. 
 
Why?…Because it seemed familiar! The thought of moving into a new place or a new direction was seen as too risky and too expensive. 
 
What they have failed to recognise was the demise of the existing product in the market place. This product was the “hero” product and had been on the market in various versions for almost two decades and was about to go around again. This “hero” product was 1 of about 15 hardware platforms offered, and in its glory day it generated approximately  half  of the company’s EBIT and accounted for about 20% of the company’s revenue. This had eroded by about two-thirds over a three year period, despite a major upgrade. The market was speaking, but not many in the business were hearing or understood what the market (i.e. consumers) was saying. 
 
So the wise people in the business decided to re-birth an old idea again instead of exploring something new and innovative which would have provided much opportunity to tell a new story, attract new consumers and regain the lost market ground. 
 
 
The downfall here is that although another refresh caries with it a lower implementation cost compared to a new revolutionary product, consideration of the risks to the business by not pursuing new innovation was overlooked. That is, they failed to consider the long term impact on the business by not pursuing new innovation.
 

Why is this allowed to happen? Is it because:

 
 
Fear: 
What if the innovation does not deliver the revenue and profit.?
 
 
Jill Parker wrote an interesting article titled “How Fear Impacts Creativity and Innovation”. In this article, Jill simply articulated the most common barriers to creativity as being:
 
  • Fear of change
  • Fear of making a mistake
  • Fear of failure
  • Fear of the unknown
  • Fear of looking foolish
  • Fear of being different
  • Fear of letting go / losing control
  • Fear of the first step
  • Judging rather than generating ideas
  • Inability to permit new ideas to incubate
  • Tendency towards self-criticism
  • Limiting the possibilities of objects / ideas to their typical use
  • Lack of or too much information

 

 
 
 
Strategic Capability: 
There is no strategic planning or execution capability within the business. Hence, without the strategic planning function, no objective assessment can occur on the business and can not identify how or what is needed for the business to win. The term strategy might be used within the business but is used to describe the short term or immediate plans in the coming year and does not deal with long term future gazing. This is no surprise. I was at a business conference recently, and heard a very interesting and compelling talk from Steve Tighe who explored strategy and innovation and confirmed that only 5%-10% of strategic plans are ever implemented.
 
 
Trust: 
There is poor trust between management and peers within the business. 
I  have never met anyone in my working life who intentionally tries deliver a poor outcome. There are many valid reasons why unfavourable outcomes occur and no-one intentionally strives to deliver unfavourable outcomes. 
 
 
Trust issues quite often arise due to a poor organisational culture. Dealing with facts, using robust processes, communicating clearly, employee or team engagement, collaboration, managing expectations and so on all have a significant impact on the trust between the people in a company. Without these fundamental attributes, it is easy to understand why businesses fail or struggle to be innovative.
 
 
 
 
 
Collaboration: 
Non existent. The concept of collaboration is completely misunderstood and instead of engaging the capabilities within the business for the greater good, dictatorship and micromanagement is used. Collaboration is misused to describe the action of instructing and directing and not seeking the knowledge, experiences and competencies of others within the business.
 
 
 
 
Ego: 
The business is riddled with staff who in most cases are long-term serving employees and have been in the business during times of strong performance. They firmly believe they have "success" all figured out and are close minded to collaboration, team work and new ideas. Their approach is that if it isn’t their idea then it is not a good idea and set out to undermine and find deficiencies in anything put forward from someone else. 
 
 
 
 
False Belief: 
If the business is performing well, there may be a false belief that all is good and resist any change. Investment in anything new and innovative is discouraged because they fail to see the reality of the situation in the market place (just like the elephant in the room); 
 
  • the migration of your consumers to your competitors, 
  • the reduction in B2B interest across your channels, and 
  • the progression of your competition. 

 

 
It is like a gambler who’s lucky streak has ended and blindly continues to play the same game thinking that it will just turn around.
 
 
 
Live in the past: 
People in the business constantly refer back to the same point in time which is mostly likely when success was first experienced. Failure to recognise the ever changing environment and the constant attempts to refer to obsolete or outdated behaviours and practises highlights the weakness and vulnerability of adapting to change.


 
Poor Leadership: 
This is the most fundamental aspect of the business which will clearly highlights why a business is allowed to misunderstand and not embrace innovation. The caliber and style of leadership can either stamp-out good behaviours or cultivate good behaviours within the business. 
 
 
Good leadership fosters and cultivates progressive thinking and attitudes because all actions are based on a forward focused strategy, that is clearly communicated and posses aspects such as:
 
  • vision
  • planning and execution
  • decisiveness
  • integrity
  • motivation
  • planning
  • responsibility
  • influence
  • management
  • investment

 

 

The WRAP-UP.

Irrespective of the message and communication internally or externally, there are a number of significant signs within your business which will give you a clear indication as to whether it embraces innovation or not.
 
Does the message within your business about innovation reflect the behaviours, culture and actions by all employees? Is your business future-focused or does it continually look to the past and look over its shoulder at what the competition is doing?
 
Is fear of failure present in the form of denial and reasons why it won’t work, which in turn close down opportunities for new and creative ideas for growth?
 
Is the leadership style one which discourages trust, discourages collaboration, presents chaos (due to lack of process and structure and lack of accountability)? Is the leadership style one which does not fully understand strategy and the importance of investing in its people, in its infrastructure and in its future?
 
Is your business on the offense or on the defence?
 
 
 

What do you think?

 
 
Andrew Baldacchino
Director - ANBA Pty Ltd
www.anbasolutions.com

LinkedIn
 
Andrew Baldacchino, applies his 20 years of industry experience and world class practises in simple, logical and effective ways to help businesses and their people to develop innovative solutions and implement strategies to improve sustainability and brand value in the market place.
 

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