On innovation culture and the value chain
We’ve had a very persistent lunch topic for the last few weeks. It’s about what makes some companies absolute champions in innovation, while others fall behind. Despite all the efforts companies put into innovation, it seems some companies are naturally better at innovation than others.
But is this really true? Is it the same as for creativity? Some people are more creative than others, and it’s as simple as that. Or is it? We certainly don’t believe this to be true. It takes the right mindset and an open attitude, but apart from that it is a transparent process that can be taught. Creativity is a skill that can be applied by anyone. It’s hard to believe then that innovation would be any different.
What started these discussions was a brilliant article by Hansen and Birkinshaw in HBR (The Innovation Value Chain) that sheds light on the innovation process. Its main argument holds that innovation as a core competence consists of three sub-competences: (1) Idea Generation, (2) Idea Conversion and (3) Idea Diffusion. An idea first comes up or is generated and then it needs to be developed before it is ready to be implemented. Finally the rest of the organization needs to accept and execute the new initiative in order for it to take effect. This is a textbook example of how innovation should work. Nothing new there, you might say.
However, there is a natural tendency for companies to excel in or focus on just one or two of these competences, i.e. Idea Generation. And this, according to the article, is what hampers innovation. And we tend to agree.
It makes sense, too. Some companies are very creative and come up with hundreds of ideas a year, but lack the ability to carefully select the right ideas using intelligent criteria in a proven process framework. This leads to a large number of unused ideas because there is no sense of direction in their development.
They lack focus in their selection and development process. Employees will often feel frustrated to see that good ideas are not acted upon. Other companies (e.g. in financial services) are masters of project management and execution, yet they lack the creative focus to come up with ideas of their own. Also, they do not fully use the potential of crowdsourcing or expert sourcing to in-source new ideas into the organization.
The paradox that is presented in the article, and that we experience in our daily practice, is that companies tend to focus on what they are already very good at. Idea-focused organizations simply aim to generate more ideas, because the existing ideas are ‘apparently not good enough to develop further’. The companies that are adept at implementation will reconsider their innovation model and put more emphasis on the development of the few innovationprojects that they run. Both companies feel perfectly comfortable optimizing what they have already mastered.
Looking at innovation as a value chain, it is easy (or at least easier) to understand that it is an integral and interconnected process that is only as strong as the weakest link.
So, what do you excel in? And which competence should you be developing in your organization? We’d love to share insights with you on this topic, please be in touch!