Innovation and process in companies

Quick definition of innovation

First of all, there are multiple definitions of innovation and I want to address this. Here’s a (longer) definition:

Innovation is the economically successful introduction of a new technology or new combination of existing technologies in order to create a stepwise improvement in the value (compared to the resources invested) created for the client.

The problem here is with one word: stepwise. Some people and companies think this must be a massive step; others believe that fairly small step changes can still be considered innovations. In my opinion, this difference in understanding is why the word “innovation” has become the buzzword it has.

Innovation and tools in modern corporations

I’m interested in the intersection between organisational groups and innovation. Specifically, how can new technology help?

In a previous post I discussed the various idea management software packages available to businesses and organisations to help them innovate. But what continues to bother me about all of the software packages I’ve seen is that they seem to pass on responsibility. New ideas and innovations have to go through a process of review, which raises them to increasingly higher levels of management for further review. Employees themselves don’t keep the responsibility for success. They can help forecast and vote for an idea, but that’s it.

Perhaps my military background is showing a bit, but I think much more responsibility can be pushed down to the employees themselves. When I was in the Navy, there were clear rules under which we had to operate. But within those rules, we were very free to experiment and find the best solution for our watchteam/boat/squadron. This extended down to each individual watchstation; even the most junior enlisted man on board had room in which to learn and innovate. (This doesn’t mean that the Navy is an all-innovating organisation; just that there wasn’t needless process and structure for it.)

I personally believe that each additional step of process and each additional rule limits the boundaries of innovation in an organisation. Companies must operate with rules: spending limits are musts, managers must approve formal product introductions, etc. But these are rules for the firm, not for innovation. If you start putting rules and structure around innovation, (such as each project must have a sponsor, projects must have certain approvals before they begin, etc.) a company starts down the slippery slope to irrelevance.

What matters with innovative ideas is that they get implemented. (Or at least implemented enough to “fail fast”.) Does it really matter how if they comply with the main rules in the firm? What matters is results.

Bob Sutton is a very well-known management thinker and professor at Stanford. He writes here:

innovation often happens despite rather than because of senior management, and oddly enough, the best leaders often realize that their very presence can sometimes stifle innovation.

and a fantastic story (confirmed to be true) from HP:

Some years ago, at an HP laboratory in Colorado Springs devoted to oscilloscope technology, one of our bright, energetic engineers, Chuck House, was advised to abandon a display monitor he was developing. Instead he embarked on a vacation to California — stopping along the way to show potential customers a prototype of the monitor. He wanted to find out what they thought, specifically what they wanted the product to do and what its limitations were. Their positive reaction spurred him to continue with the project, even though on his return to Colorado, he found that I, among others, had requested it be discontinued. He persuaded his R&D manager to rush the monitor into production, and as it turned out, HP sold more than 17,000 display monitors representing sales revenue of $35 million for the company.

What to do?

Fundamentally, there is a difference between coming up with the ideas and innovations and formally developing them. At what point do you make what’s really an entrepreneurial-type activity a big-company project management process? Do you do it while it’s still just an idea, or later in its life? I know where I personally come down on this question… what about you?

Future prediction markets news

I’ve been working with a media company in London to develop a public prediction market for their (industry vertical) network. It’s still softly launching, and I don’t want to steal any thunder until they’ve had a chance to fully promote it. But I look forward to discussing it in the future here.

One last note…

As I mentioned before, this blog recently achieved a Google PageRank of 6/10. Because of this I’ve been getting a LOT more spam in the comments, and have made the comments section completely moderated. But please comment below; I will approve it (hopefully) shortly thereafter.