Thinking About Innovation

If you are starting out with no innovation capability, what is the first step that you should take to get better at innovating? The most common first step that I see from firms is an increase in their Innovation Commitment. However, there is often a lag between this increase in commitment, and the desired increase in Innovation Competence.

Firms in this position are Thinking About Innovation.

Characteristics

The most common move for firms in this square is to come from a postion of not innovating very much. Someone in management decides that they need to innovate more. Consequently, they start building things to support innovation. Often, the first step is symbolic, and Innovation is added as one of the firm’s core values (or, if these aren’t published, the high-level managers start talking about it a lot more). It’s rare for firms in this category to take the next step and embed innovation into their strategy.

Firms here will also usually put in some sort of process in place to spur innovation. This is most frequently something based on idea generation or idea capture – things like brainstorming, asking employees for ideas, or even buying some idea management software.

These firms are also often lacking some of the other components of Innovation Commitment. The number of active resources (time and money) devoted to executing ideas is often very small. If there are any innovation metrics in place, they usually only track the number of ideas generated or collected. Top level management participation in the actual process of innovation is often limited.

One of the key features of firms that are thinking about innovation is that they often conflate generating ideas with innovation. So all of their Innovation Commitment goes into generating more ideas. This is what leads to the other key feature of firms in this category: their Innovation Competence is low.

They’re not very good at actually executing ideas and getting them to spread.

Examples

Ending up in this square is the outcome of a process. Consequently, there aren’t many broad classes of firms that all tend to fall into this category, unlike firms that are Not Innovating Very Much or Accidental Innovators.

So the key criteria that lead to examples are those based on the path firms take to end up here – these include:

• Established firms in industries with changing environments: as environments change, the need to innovate increases. Many of the firms that we see here are in industries like electricity. This industry has been stable for a long time, but as we start to see more changes in their environment such as increasing use of clean energy, increasing power generation by customers, and the development of smart-grid based distribution networks, the future is now starting to look much more uncertain than it has in the past. Other industries like this are health care, universities, newspapers, etc.
• Firms reacting change but without a strong incentive to change themselves: these are firms that lack a “burning platform.” They want to change, but they don’t really have to. This is part of what makes public sector innovation so challenging.
• Established firms trying to remember how to innovate: often there is overlap between this group and firms with changing environments, but not always. Kodak is a great example of a firm that has probably in this category for a while. They have seen a need to innovate, but they have underestimated the speed with which their industry was being disrupted.

Innovation Strategies

Obviously, the ideal evolutionary path through the innovation matrix is to move up the diagonal – as you increase your Innovation Commitment, your Innovation Competence should also increase. So being in this box is not ideal. And the danger is that many of the mistakes that lead to ending up here can be amplified. If this happens, you can end up Bewildered – the most dysfunctional category.

That said, increasing your Innovation Commitment is a very logical first step in trying to improve your innovation capability. So you might just be here temporarily, and when your Innovation Competence improves you move up to be Fit For Purpose.

Consequently, the strategies that you want to pursue are those that will increase your Innovation Competence. These include:

• Start managing innovation as a process: like I said, the one big mistake that can put you in this box is to mistake generating ideas for innovation. Idea generation is just one part of innovation as the process of idea management. To innovate, you need to generate ideas, select the best ones, execute these, and then get the ideas to spread. As you build support for innovation, concentrate on the last three. Only working on idea generation is a classic symptom of firms that are just thinking about innovation, but who are not innovating.
• Get rid of the air sandwich: firms in this category have what Nilofer Merchant calls an Air Sandwich:
  

  An Air Sandwich is a strategy that has clear vision and future direction on the top layer, day-to-day action on the bottom, and virtually nothing in the middle—no meaty key decisions that connect the two layers, no rich chewy filling to align the new direction with new actions within the company.

  She’s written an entire book devoted to solving this problem – The New How: Creating Business Solutions Through Collaborative Strategy, so if you are in this category or Bewildered, that is definitely worth checking out.

• Devote resources to idea execution and diffusion: another way to address the “innovation = idea generation” mistake is to allocate resources and effort to actually executing ideas. If you’re collecting ideas from employees, there is nothing more demotivating to them than seeing nothing happen with their great ideas after they’ve submitted them. The best way to start building an innovation culture is to act on these ideas – make them real! The more you do this, the more your Innovation Competence increases.

This is a tricky state to be in. It might be the first step in the right direction, but it is also the first step towards being Bewildered, which is the worst state to be in. You have to proceed carefully.

The most important thing to do is to ensure that you’re not making the “innovation = idea generation” mistake. Avoiding that error is the best way to make this a positive first step rather than a misstep as you start your innovation journey.