Operational EssentialsWe know the hype, management gurus dish it up daily. Ever shorter shelf lives, fickle consumers, and copycat competitors mean that to stay in front long-term needs innovation now. So, what is involved in innovation, and does your organisation have what it takes?

Innovation or creative destruction?

The aim of innovation is surely to improve products and processes, not to mention a company’s profits; but to paraphrase economist Adam Smith, “it takes a lot of ruin to make the wealth of a great company”.

Does innovation always equal improvement? True innovations (electricity) are worth their salt; others are just product enhancements (electric car windows).

Still others can be a source of trouble:

Voice mail arrives to take messages 24 hours a day- and puts pressure on the recipients

Boeing opts for some innovative software to allow it to move straight from design to production, cutting out many sequential steps in the design cycle – and many jobs?

Intel brings out the 386, then 486, then Pentium chips; football teams keep bringing out new strips – and the customer can hardly keep up with the demands of the offspring. Apple produce the new iPhoneX – a real step forward or just a bit more of the same?

Constraints on innovation

The ability to innovate is not a tap that can be turned on at will. It’s a climate, a skill that needs to be encouraged and supported. Factors which can influence a firm’s level of innovative activity include:

Take nothing for granted

To Gillette, shaving is almost a science:

  • At any time, the company has at least twenty shaving products planned
  • Each day some 200 employees personally test new shaving technology
  • They also study facial hair, skin chemistry and skin follicles
  • The firm commits $ hundreds of millions to R&D each year

Level of investment in R&D

Innovation should not be a suck-it-and-see exercise; extensive research (and therefore investment) is needed

Culture of the company

At the risk of stating the obvious, large, bureaucratic organisations haven’t much of a chance – too much procedure and paperwork to foster a creative mindset

Fear of cannibalising established products

Taking the ‘when-in-doubt-do-nothing’ approach for fear of scoring an own goal; but isn’t it better to rob a little from yourself than to let a competitor steal the lot?

Lack of tools to support the process for example, the innovation process itself may require an entrepreneurial team structure, entirely new quality standards, state-of-the-art technology

Firing people: Set the structures, invest in the research, but if you don’t have the right people, your innovations will be few and far between. Some pointers for encouraging innovation among staff:

From the top

To show their commitment to developing new products and strategies, Pepsi have revived the post of Director of Innovation for Europe

Instead of settling down to enjoy the fruits of his entrepreneurial success from re-vamping the vacuum cleaner market, James Dyson of Dyson Appliances set his sights on new fields – a new type of washing machine; to support him in the move, he has surrounded himself with a team of mostly young, curious researchers. They continue to innovate, and, he (allegedly) woks in the lab.

Give people freedom: within reason, but they need the freedom to think, to try new things, and freedom and security to fail

Lead by example: to show you’re seriously committed to innovation; entrepreneurial, visionary leaders rather than the staid stalwarts of tradition

‘Celerating’ failure

Coca Cola celebrated the 10th anniversary of the launch of the doomed New Coke – the failure was celebrated because it led to fundamental learning and showed that it’s OK to fail. The company, however, does not reward failure – participants in each failed project are debriefed to learn from each mistake so that it is never repeated. The goal is to make only new mistakes.

Strike the right balance of control

Too much, and creativity will be constrained; too little, and creative energy will be dissipated

Allow mistakes

Don’t expect people to take risks if they get hammered for the ones that go wrong

Align rewards

Back up ‘innovation-is-in’ lip service with real rewards e.g.:

‘Phantom stocks’ – where the team involved in the product innovation invest personally in the new product’s development costs, and then share in a % of the profits

‘Profit-on-return’ bonus – which is paid after the product has proved itself e.g. in the third/fourth year of the lifecycle

Characteristics of innovative companies

A study of 11 leading innovative companies in the US, Japan and Europe revealed:

  • Exploring new ventures and sources of new value is practically part of their ‘corporate DNA’
  • The climate of innovation is supported by relaying stories and anecdotes about innovations past, to fuel the imagination of employees present
  • Everyone is in some way involved in the innovation process
  • A central role of leadership is to continually affirm the vital importance of innovation to the company

Creatives come in from the cold

Ad agencies are bringing their creatives in from their splendid isolation. Agency GGT has moved its planning department to the same floor as the creatives. This way problem solvers are all together, and planners can keep a check on creatives’ ‘arty’ ideas.

Involve creative people: in most firms the ‘creatives’ are kept quite separate from the conventionalists; bring them in, get some interaction going

Encourage other interests: remember that all work and no play makes Jack a poor generator of ideas

Cultivate curiosity

How hobbies help hallmark

The stimulation of wide-ranging interests is the key to creativity at Hallmark Cards:

Art study programmes in Europe and mountain top retreats are examples of creativity programmes

In the Creativity Strategies Group, 3-4 people rotate twice yearly to probe a topic identified by Hallmark trend watchers – research into the growing popularity of Latin America resulted in a new card line

The creators of hallmark’s ‘Shoebox’ cards receive free cinema passes and daily screenings of ‘hot’ TV shows; sounds like fun, but there is still a production schedule to meet – Shoebox cards is expected to create 70 cards per week

Why does Hallmark do this? They say payback is like scattering feathers – you don’t know where, but you know they land.

Encourage people to use the ‘why’ word, and not to take info at face value

Innovation ‘primers’

Would-be innovators the world over have a wealth of inspiring ideas which will never see the light of day. But to pass from reverie to reality requires the drive and ability to act.

Ideas on how to improve your innovation hit rate:

Find the cracks in your current offering

Pinpoint those areas where there’s a mismatch between your actual and aimed for performance; this requires analysis of the market and customers’ expectations and can also highlight unforeseen opportunities

Create a sense of urgency

Stress the need for the innovation; more easily done when your business is in dire straits, but the best innovators sustain and create a sense of urgency even when things are going well

Take risks

Be quite prepared to make mistakes – some of the best inventions are accidents

Managing innovation at Ciba Vision

At Ciba Vision the CEO created entrepreneurial teams to run the break-through areas of the firm at the same time as promoting more efficiency oriented, cost-focused managers to run mature parts of the business.

Cultivate creativity

Encourage people to take initiative; try some creativity techniques; other examples are storyboarding, jamming

Act quickly

Before the accountants decide you can’t afford it, or the doubters start to drag their feet; try applying the ‘30-days-to-market’ approach – i.e. how would you approach it if you had only 30 days to implement the idea?

Choose leaders carefully

The creative climate questionnaire

Another tool for measuring the innovation climate of a company is the CCQ, a questionnaire covering 10 factors which influence creativity:

Challenge:  the level of purpose and energy in the job

Freedom:  level of independence vs control

Idea support:  how new ideas are treated

Trust/openness:  the safety to put forward ideas

Dynamism: the pace of the organisation

Fun: the level of ease and spontaneity

Debates: how accustomed and keen people are to put forward their ideas

Conflicts: the presence of personal tensions

Risk taking: the tolerance of uncertainty in the organisation

Idea time: literally the amount of time people can legitimately devote to elaborating new ideas

Look for people with imagination, independence and ‘political’ skills to be able to rally the disparate troops (e.g. suppliers, peers, customers, senior managers)

Embrace contradictions: you cannot manage innovation as you would a mature business; one requires investment, the other may call for cost control

Understand technology cycles

Look to capitalise on breakthrough technologies; every part of a process or product is at a stage in its technology cycle – e.g. between 1970 and 1985, every subsystem of a watch, from energy source to face, went through its own tech cycle

References and further reading

  • K Klein, JS Sorra The Challenge of Innovation Implementation, Academy of Management Review, September 1996
  • G Dutton, Enhancing Creativity, Management Review, November 1996
  • J Whatmore, Managing Creative Groups, Roffey Park Management Institute Report,1996
  • G Ekvall, Organisational Climate for Creativity and Innovation, European Journal of Work and Organisational Psychology, March 1996
  • KA Zien, The Spirituality of Innovation: Learning From Stories SA Buckler, Journal of Product Innovation Management, September 1996
  • ML Tushman, CA O’Reilly III Winning Through Innovation, Harvard Business School Press, 1997

Innovation self-test

Innovation cannot be seen or touched and is therefore difficult to pin down. There are, however, numerous hints and tell-tale signs in organisations which can indicate the level of innovation and creativity. The following is a generic self-test for companies or teams looking to assess how innovative they actually are:

Area                                                    Assessment                                                                 Score


support upper management has the desire to try new things                                     1 – 2 – 3 – 4 – 5

upper management has the skill base to implement new ideas                                 1 – 2 – 3 – 4 – 5

the creative process is tightly controlled                                                                     1 – 2 – 3 – 4 – 5

management truly understands and accepts that innovation is necessary               1 – 2 – 3 – 4 – 5


we have systems in place to regularly obtain input from customers                           1 – 2 – 3 – 4 – 5

we always research and track competitor activities                                                    1 – 2 – 3 – 4 – 5

we regularly measure return on innovation                                                                 1 – 2 – 3 – 4 – 5

Support structures         

our reward system encourages innovation                                                                 1 – 2 – 3 – 4 – 5

we are committed to investing in R&D                                                                        1 – 2 – 3 – 4 – 5

employees are allowed creativity or idea time                                                            1 – 2 – 3 – 4 – 5

we have a system for considering employee suggestions                                          1 – 2 – 3 – 4 – 5

we develop innovation in employees through creativity workshops                           1 – 2 – 3 – 4 – 5

Organisation climate

innovation is viewed as an investment not a cost                                                      1 – 2 – 3 – 4 – 5

this organisation is not afraid to fail                                                                                      1 – 2 – 3 – 4 – 5

how would you rank the organisation’s rate of innovation in the past year?               1 – 2 – 3 – 4 – 5

this organisation is lively and energetic                                                                      1 – 2 – 3 – 4 – 5

team meetings are a place for debate and discussion rather than dictatorship          1 – 2 – 3 – 4 – 5


our team leaders are creative people                                                                         1 – 2 – 3 – 4 – 5

employees have the freedom to be creative                                                               1 – 2 – 3 – 4 – 5

we recruit curious, entrepreneurial people                                                                  1 – 2 – 3 – 4 – 5