Some thoughts about making innovation work in your organization

Last week there was an IT innovation day at my workplace where final 4 of the many innovative ideas were displayed by their respective developers. All of these ideas or innovations were technical and capability enhancing in nature. One of the idea was about improving the operational efficiency of the search technology by using a different search indexing tool. The other three ideas were related to introducing new ideas which could provide improved features for consumers and customers of my company’s products.

At the end the first idea was awarded as the best idea by most votes although two of the other ideas came very close. In my opinion the reason the first idea won the innovation challenge was because of its immediate impact on increasing the operational efficiency by reducing the time required to update the databases and by reducing the complexity of the process which resulted in major cost savings of time and resources. While the other three ideas were also very good but the reality was that IT alone could not make them a reality. However it does demonstrate the technical capabilities of the organization.

After this event I was talking to my colleague Steve Halloway who suggested that to make this innovation process really tick, marketing will have to be involved with the technical teams (cross functional teams) so that business can sponsor the good ideas and take them to market.  I think Steve is right in his thinking and in order to make innovation work there has to be focused cross functional teams with the right balance of skills to be able to market a new idea. New product development is not an easy job however as research shows that still about more than 70% of new products fail in the market. Therefore these cross functional teams need the right balance of skills in technical knowledge, process,  and market knowledge (which includes delivery channels, consumer and customer knowledge, competition etc) and this is not an easy task.

This is why still many departments focus on innovation in their own respective domains which results in operational efficiency which ultimately improves the EBIT or profit margins of the organization but does not really enable the company to increase the pie of the economic benefits (or in simple words diversify and increase the revenue).

I think when companies focus on implementing an innovation culture, they need to articulate clearly their objectives from the innovation process. It should be clear that their innovation process is targeting at increasing the operational efficiency or new product development or both. In my opinion you need different thinking and processes for these two types of innovations.