For some reason this last month has all been about innovation. It started with chairing a small working party for AWM looking at how we can promote innovation within the Region's ICT companies and ended with a survey from the Marketing Society asking all about innovation - which got me thinking a bit more about the whole innovation process.
First up was the survey's statement that “Understanding consumers is the most important aspect of a successful innovation programme.” On the face of it this seems reasonable. Understand consumers, get to know their wants and needs, and then develop products to fulfil them. But do consumers know that they need truly innovative products? Isn't there an element of second-guessing the consumer, or even luck? Was text messaging something that emerged out of years of focus group research, or a clever way to use some spare capacity in a new telephone system?
This is picked up in a second statement - “Changes in technology and distribution have greater impact than changes in consumer attitude.” The miniaturisation of technology has opened up many new product opportunities. Typically these innovations have been driving consumer demand by attracting early adopters and the “crossing the chasm” into the mass market. A couple of years ago I bought both my first MP3 player and about my third PDA. Today PDAs are still struggling to get wide acceptance, whereas MP3 players, iPod or otherwise, are the “must have” item. Both innovations were technically driven – but their social impact (or lack of it) was consumer driven.
Next we have “The greatest innovations are about incremental changes to existing offers”. Was the Internet an incremental advance on the telephone? Where incremental change can be significant is when it comes to increasing adoption – by reducing price or increasing ease of use. Think of video cameras – they've been around for ages using a variety of technologies, but now the core components are so cheap that they can be embedded in mobile phones.
Another statement looked more at the internal style of a company. “The physical environment in which we work is conducive to having innovative ideas”. I've always been a great fan of offices that provide something other than cubicles and bland meeting rooms. In my last company we invested in different artwork and creating a “blue room” furnished with Ikea sofas and low tables, and a current client has gone for the “pavement cafe” approach. There is no doubt in my mind that there are a lot of simple steps that businesses can take to make their offices a better breeding ground for innovation.
The crux though was the statement that “This business is more focussed on the next set of financial results than long term growth”. To an extent nothing else matters if the Board is focussed purely on the short term. This can lead to endless debates about how you value innovation, but to my mind the better way is to encourage a balanced scorecard approach to business targets – measuring innovation alongside financial returns – and making sure that your stakeholders understand the approach. To me a balanced scorecard in an annual report speaks far more about a company than reams of financial data.
In the past I'm sure we've all paid lip-service to the importance of innovation. But as we in the West increasingly have to face up to being knowledge economies, or forgotten economies, innovation will become more important than ever, and we all need to do everything that we can to foster it.
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