Note: This is part of a series of posts explaining the individual parts of The Innovation Matrix. See this post for a description of the full model and what can be done with it.
Innovation Competence is the second axis of The Innovation Matrix.
One of the key insights from The Innovation Matrix is that Innovation Commitment and Innovation Competence do not increase together in lockstep. It is possible for firms to improve along one dimension without seeing any difference in the other.
At its simplest, Innovation Competence measures how good a firm is at executing ideas and getting them to spread. This is something that is supported by the culture of the organisation. Consequently, it is harder to manage this element directly than it is to manage Innovation Commitment.
Elements of Innovation Competence
As is the case with Innovation Commitment, we don’t have a system yet for quantifying Innovation Competence. While the core metric should be something like how many new ideas you execute and diffuse successfully, here are some questions you can ask to assess where you currently are along this dimension:
- How many new ideas do you successfully execute and diffuse? All the other measures should be supporting this. If you’re executing ideas, and getting them to spread, then that is the main component of Innovation Competence.
- Are you good at all the components of the idea management process? Innovation is the process of idea management. To innovate effectively, you must be able to: generate great news ideas, select the ones that are most likely to work, implement these ideas, and then get these new ideas to spread. Morten Hansen and Julien Birkinshaw have developed a good survey that you can use to assess this. Building skill in all of these areas is essential to building innovation competence.
- Do you practice different forms of innovation? Joseph Schumpeter identified five forms of innovation:
- New product or service
- New method of production
- New source of supply
- New market or application
- New method of organising your firm or industry
Research has shown that firms that innovate across more than one of these categories are more successful at innovation in general, and more profitable. In fact, the more areas that you innovate in, the better your overall outcomes are.
- Do you practice both small and large innovation? One way to develop an effective innovation program is to encourage both smaller incremental innovation, and larger, more disruptive innovation. You can do this by using the Three Horizons approach. This is also referred to as ambidextrous innovation.
- Do you have an innovation portfolio? An innovation portfolio allows you to look at both innovations that extend your competence in your core markets, as well as working on ideas that extend you into new markets. Here is one way to picture this, based on the example of how Google allocates resources across their portfolio:
- Does your firm have a culture of systematic experimentation? One of the best ways of figuring out which ideas are good, and whether or not they will work is to experiment constantly.
- Does your firm learn from failure? This is also a critical part of building an innovation culture.
As is the case with the questions for assessing your Innovation Commitment, these are a mix of questions that are yes/no and questions that are answered along a spectrum. By looking at your answers, it will give you a bit of an idea of the level of Innovation Competence within your firm.
Unlike Innovation Commitment, it is unambiguously good to be higher on this scale. The whole point of trying to manage innovation is to make your firm more effective at actually executing ideas. The danger in increasing your Innovation Competence without also increasing Innovation Commitment is that both are needed to be sustainably successful at innovation.
Higher levels of Innovation Competence combined with lower levels of Innovation Commitment mean that you are at risk of losing your skill at innovation – it is the commitment that makes your success repeatable.
When you combine higher levels of both, then you are on your way to successful innovation.