For many organizations, innovation is one of the central business functions guiding their future growth.
Today, to remain stagnant with product offerings in the marketplace is an inadvisable tactic. Evolution is the only viable option for sustaining a competitive business advantage.
Productive teams argue that innovation is all about vision and execution; organizations must focus carefully on the strategic process of innovation management, such as using idea management software to solicit feedback from both internal and external stakeholders and develop ideas around focus areas.
However, while around 84% of CEOs believe innovation is critical to growth, a large majority of companies only focus on making incremental changes to their offerings and admit they are at significant risk of disruptive innovation from competitors.
To help break down the innovation management process, we put together a comprehensive guide on the mechanisms involved in executing a powerful innovation program.
Innovation management is a systematic technique to develop, evaluate, and prioritize new ideas to ultimately put the best ones into action for the overall growth of the business or organization.
In the innovation sphere, it is well-established that innovation can be broadly categorized into four types: sustaining, disruptive, incremental, and radical. To effectively manage an innovation program, it's important to understand under which category your initiative fits.
Sustaining innovation is about gradually improving a product, service, or process. This form of innovation is fundamental to keeping businesses afloat and accounts for most of a company's budget allocated to innovation spending.
Disruptive innovation takes it up a notch. Disruption is usually a word thrown around in association with the word innovation. Think of companies like Uber or Airbnb, which have created business models that disrupted or created new markets and acknowledged consumer demands which previously weren't addressed.
It is a process of continuously improving or changing a business's existing products and services. It takes on the lesser risk and most often requires less capital. It is essential for all companies as it helps differentiate them from the competition while building on present offerings and raising brand value.
This is the game-changer. It's the ultimate goal innovation visionaries dream about; this kind of innovation is about creating solutions to needs consumers were not even aware existed. Radical innovations have the power to completely change how the world functions and significantly impact people's daily lives. Take, for example, the creation of Facebook, which pioneered digital communication channels as we know it.
Innovation is an incredibly collaborative exercise that requires the right kind of culture to succeed. For effective management of innovation programs, it is a fundamental requirement that the organizational environment sets parameters that foster a culture of innovation:
“Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it.”
Steve Jobs
Steve Jobs,Cofounder & CEO, Apple
The tactic an organization employs to develop innovation can vary; they may build it, partner with providers to develop it, or buy it from a third party. Broadly speaking, sources of innovation can be defined as either internal, external, or startup innovation.
As the name would suggest, internal innovation comes from within an organization. This is not just limited to an innovation or R&D department; internal innovation can come from any department within an organization. At large multinational companies, encouraging innovation across the board can often be challenging because of barriers such as proximity to innovation departments, language, and even timezone issues.
Internal innovation is where fostering a culture of innovation really counts. Ensuring that management is on-board and that the organizational environment encourages free-thinking and innovative behavior is key to overcoming internal innovation challenges and differentiating your product.
External sources of innovation can come from anywhere outside the walls of an organization. Sources can include third-party consultants, vendors, academic partners, accelerators, and incubators, as well as innovation communities. A popular tactic employed by innovative companies is to launch an open call for innovation, utilizing a platform facilitated by an innovation management software provider to incentivize external communities to contribute ideas. Open calls are one of the most effective means of sourcing innovation today.
While technically falling under the category of external innovation, startup innovation really deserves its own heading. Today, startups are leading the way in disruptive innovation. As much as the word innovation gets thrown around corporate boardrooms, the application of innovation strategy can often prove difficult in these organizations because of outdated corporate structures.
Startups are different—they work on agile and lean methodologies that create environments more likely to foster innovation. For this reason, organizations look to partner with and acquire startups as one of the central focuses of their innovation strategy. Rightfully so, given startups’ dominance of the innovation space.
For effective management of innovation programs, it is important that ideas are gathered and then taken through a systematic process of development. The innovation funnel is a mechanism employed by innovation teams to conceptualize the process of idea generation to solution output. The model centers around:
You can’t just sit back and let innovation come to you—make it happen with a clear, goal-oriented innovation strategy that aligns with your business strategy and is guided by consumer needs. To create an effective strategy you will need to:
A strategy is critical to management activity. Before executing an innovation program, businesses need to understand how their innovation process fits into their overarching organizational goals. However, many companies still grapple with the challenge of aligning their innovation strategy with their business strategy. Sixty-five percent of companies investing 15% or more of their revenue in innovation state that this alignment is one of their top strategic challenges. To ensure alignment with business strategy, innovation managers need to refine each strategic step of their program carefully.
As with any good strategy plan, an innovation management strategy needs to begin with defining the goals of the program. Goals set within an innovation program should reflect business strategy goals. The goals of the innovation program can vary greatly—from objectives set to generate revenue by improving or creating products to designs initiated to improve customer experience and satisfaction or business operations.
At its core, innovation is about addressing the ever-changing and evolving needs of the consumer. Innovation departments need to employ insights from their internal teams as well as third-party consultants who have experience in different organizations and sectors, to develop a broad and holistic understanding of consumer behaviour. Within consumer research, what's most important to consider is that consumers don't always know what they need. This is the space that disruptive and radical innovation fills.
Take, for example, Ford Motors. Henry Ford revolutionized the transportation industry by creating a new process of mass production for the car at a time when the transportation needs of the consumers were focused on faster horses and bigger chariots. Through the innovation of mass production, Henry Ford created a need that consumers did not know they had. To establish a serious competitive foothold in the market, creating consumer needs is crucial.
The technological innovations that advanced in the 20th century were made possible by growth in fundamental knowledge and scientific innovation in the 19th century. Back then, product evolution that took centuries was hailed as rapid innovation. Today, however, innovation moves at unprecedented speeds, taking much shorter spans of time to advance from idea to solution. This rate of movement puts significant pressure on organizations to be innovative in order to remain competitive and relevant.
Innovation is a clear priority for many companies; however, it's no easy task. For an organization to ensure they are on the right track, they need to understand the innovation they want to develop, create an organizational environment that fosters innovation, and engage in a systematic and strategic process of innovation management.
Using strategy and innovation road mapping tools, record and evaluate ideas most effectively and cement your business in the global market.
This article was originally published in 2019. It has been updated with new information and examples.
Lead your organization into a new era of innovation by gathering and developing concepts using trending idea management software.
Marija Marovic is the Digital Marketing Manager at SkipsoLabs, an innovation and idea management platform utilized by leading corporations to power their innovation initiatives.
Lead your organization into a new era of innovation by gathering and developing concepts using trending idea management software.
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