Tim and I had a conversation in my office the other day about the importance of fundamental innovation messages and how we really can’t repeat them enough in seminars, conversations and on this blog. I suppose that we don’t want to become repetitive but occasionally we still get reminders of how important it is to get a few key ideas across.
Many of you would have heard of the 80/20 rule. If you haven’t, its a rule of thumb that most of the outcomes in any situation can be attributed to 20% of the factors. For example, 20% of a sales force may account for 80% of the sales. In terms of ideas about managing innovation there is also an uneven distribution of importance. In fact, there are probably three big myths that do more than any others to stop us being innovative. I really think that if we can dispel these myths then we can really get moving on better innovation processes that help businesses and economies. So… time for a little “myth-busting”.
Myth 1. Innovation is the domain of “high-tech’ business.
We see this myth in action when governments try to develop ‘sexy’ industries like biotechnology or computer games by granting subsidies and other incentives in the hope that they can create new growth sectors in the economy. The problem is that there is really no evidence that these hi-tech sectors are important creators of wealth and jobs, in even the most advanced economies. If you want to see the evidence, Google Alan Hughes (Cambridge) and Andy Cosh (MIT) for their work on innovation and productivity.
About ten years ago, I remember hearing a talk by Keith Smith who is a economist with the OECD in Paris. Keith’s studies of national economies in the EU have shown that the fastest growing sectors are often more ‘boring’ industries such as heavy transport, food processing and financial services. He also showed that these industries were innovative and often used other technologies from other sectors to drive innovation. The thing is that they don’t make a big issue of innovation and sometimes it is hidden in processes and services. I remember Keith giving the example of automated fish-feeding systems that used lasers and fuzzy logic to reduce the loss of food. This is high-tech stuff, but we are talking about fish farming! The distinction between high-tech and low-tech is artificial and we need to get away from the ‘high-tech’ sector myth because it also sends the message that innovation matters to some firms and not others. The truth is that all organizations can benefit from innovation!
Myth 2. Heroic Individuals Are The Main Cause of Innovation
This might be true in some cases and we tend to fall in love with the story of the person who spent nights and weekends on a project without the permission of their supervisor. Why is this such and important myth to bust? Well, the answer is that it’s just not sustainable. Organizations that rely on individuals like this might succeed in a few cases, but what happens if that person leaves (and with this kind of support- I wouldn’t blame them!).
Innovation is a manageable process of idea generation, project selection and execution. It needs to be core to a company’s processes and strategy if the business is going to stay ahead of the competition. Tim and I had a really interesting conversation with a GM of a food processing business. One of his objectives for embedding innovation was that it should be part of the everyday business of the company and not dependent on a few key people. That’s a great measure of success and I wonder how many businesses can say that they have reached this stage of development?
Myth 3. The most valuable ideas come from inside our company and we have to protect them with patents
I’ve just finished a survey with some partners from government and industry and our results are totally consistent with many other surveys from the US and Europe. Ideas within companies are still the number one source of innovation but external sources such as buyers, suppliers, trade fairs, professional associations and universities are not far behind. In fact, if we tally up all of the external sources of ideas, they are greater than the internal source.
The best sources of innovative ideas often come from outside the organization and if you spend time trying to protect your ideas you might achieve that protection, but lose far more by not being open to the outside world. In fact, in our survey, it was the minority of innovating firms that used patents and trademarks to protect their intellectual property. Most favored the more flexible and cheaper informal mechanisms such as secrecy agreements, when IP protection was needed.
So, there you have it. I’m sort of hoping that we can stop talking about these core issues so we can move onto other things. However, as Tim reminded me yesterday, the innovation message walks on two feet and we change thinking in one person at a time.