I was just out in Silicon Valley on a panel on intrapreneurship. As prep, I read that over the last 50 years the average lifespan of a company on the S&P 500 has dropped from 61 years to 18 years (and is forecast to grow even shorter in the future).
Most of the articles said the failures were due to companies not keeping their innovative cultures. In fact, Brandon Kelly, stated that 90% of organizations have no sustained commitment to innovation.
A great counter example to this is Telsa who today is opening its patents up to the industry to accelerate electric vehicle development. Innovation accelerates forward.
What is Innovation? The classic definitions of innovation include:
- the act of introducing something new: something newly introduced (The American Heritage Dictionary).
- the introduction of something new. (Merriam-Webster Online)
- a new idea, method or device. (Merriam-Webster Online)
- the successful exploitation of new ideas (Department of Trade and Industry, UK).
- change that creates a new dimension of performance Peter Drucker (Hesselbein)
So how can we embed innovation into a company’s culture?
Innovation is strongly correlated with value creation and is a key factor in financial outperformance. However, only 25% of organizations are good at generating and converting innovations. These companies align innovation goals with business strategy.
Their efforts support the appropriate mix of product, operational and business model innovation that enables them to effectively grow and compete. And, their innovation activities are managed in a transparent program.
Organizations that strategize and manage innovation in a collaborative, open and continuous manner create a source of competitive advantage and economic benefit. Collaboration includes seamlessly engaging all employees in the innovation process and securely including external business partners and customers.
The top ten most innovative companies had two-year compound annual growth rates of 60 percent more than the overall Standard and Poors Global 1200. For these companies, innovation is much more than a “big idea.”
Innovation is an ongoing process of creating value from something new, such as new ideas, new technologies, new products or new processes. For example, 75 percent of successful companies rely on social networks to vet new ideas for success.
They use them for:
Openly communicating strategy
Openly generating and prioritizing non-traditional ideas for new products and services
Innovating operations by teaming with external specialists & business partner
Innovating business models by combining emerging technologies with biz imperatives to redefine value
Future innovation will be conducted in more open environments and CEOs interviewed for the IBM Global CEO study supported this point. The Innovation Social Business Pattern is designed to increase innovation by providing a wider reach of ideas and to help organizations increase the success and speed of bringing innovation to market.
Primary business processes
The primary business processes for this pattern include research and development, product and service management, business strategy and operations transformation.
The key stakeholders are research and development, product development, line of business executives, CMOs, CIOs and CTOs.
Some specific actions are:
Deploy collaboration tools for more open communication and to guide innovation toward delivering the type of value desired, such as product versus business model
- Engage the crowd both internal and external to vet new ideas.
Deploy a portal that combines content, social and advanced mobile features to provide an exceptional digital experience for customers, partners, and employees while managing access by role.
Deploy social gamification and social influence reward techniques
How does your company drive Innovation?