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Saturday, September 14, 2013

What’s the Status of Your Relationship With Innovation? 09-14


What’s the Status of Your Relationship With Innovation?

How important is innovation these days? Increasingly important, if one goes by the frequency of the word appearing during earnings calls that publicly traded companies have with investment analysts. In 2008, the word appeared 1,733 times in earnings calls for 435 large publicly traded companies. That’s an average of about four mentions per company (Starbucks topped the list with 139 mentions). In the last four quarters where full data are available, the total was 3,299, or about 7.5 mentions per company (Nike, recently named the world’s most innovative company, topped the list with 239 mentions).

But just talking about innovation doesn’t mean a company is really serious about it, or is approaching it in a way that has as a reasonable chance of success.
Innovation — particularly that which pushes a company into new markets or new businesses — requires a serious ongoing commitment. But what we’ve found in our work with companies across a wide spectrum of industries over the past few years is that many corporate leaders who think they are seriously committed to innovation are really just flirting with it. There’s nothing wrong with flirting, or even taking the next step and having an innovation fling, as long as leaders recognize that they aren’t likely to get significant returns without making serious commitments.
Unfortunately, because innovation so frequently is confused with creativity or the generation of ideas, many companies dramatically overestimate their commitment to innovation. That leads to corporate disappointment when creative ideas don’t translate into substantial growth businesses. As we described in Building a Growth Factory  , a serious commitment typically requires (among other things) dedicated resources, a disciplined approach, and serious executive involvement. These kinds of commitments help to overcome some of the most common execution challenges companies face:
  • Moving at a glacial pace because over-stretched managers are trying to fit efforts into small cracks in their calendars
  • Unintentionally force-fitting a disruptive idea into the company’s current business model, blunting its long-term potential
  • Playing it overly safe because employees know that the rewards for success are miniscule but the penalties for taking even well thought out risks that don’t pan out are prohibitive
So how can you tell how truly committed your organization is? Inspired by the somewhat tongue-in-cheek quizzes that populate fashion magazines, we created a short quiz. Find a colleague, and see how you fall on the following seven questions.
1. Who is working on innovation?
a) What’s innovation? (You might want to stop the quiz now.)
b) Some people spend bounded time on innovation (e.g., “Free Thinking Fridays”)
c) We have dedicated resources who eat, breathe, and sleep innovation
2. What’s in it for them?
a) Suffering — it’s their job. If they screw up, they’ll feel it
b) Glory — the spotlight shines bright when they succeed
c) Riches — we have specific incentive programs for innovation
3. What is the background of the people working on it?
a) Some of our best performers
b) Internal talent that has a demonstrated history of successful innovation
c) Blend of internal talent and external hires with a proven track record
4. What are they working on?
a) Nothing specific — it takes 1,000 flowers, right?
b) All hands are on deck for a single make-or-break “bet the company” initiative
c) We have identified a handful of strategic opportunity areas we are exploring
5. Where does the money come from?
a) Our budget is focused on operating priorities, so there isn’t any money for it
b) We don’t have a budget for innovation, but we find money when we need it
c) We have a dedicated budget for innovation
6. What is leadership’s role? 
a) Get out of the way — we don’t want to constrain it
b) We have a special quarterly meeting where senior leaders talk about it
c) We have a member of the executive committee or board who owns it
7. Word association — innovation is…
a) Random! We just hope for the best
b) Fun! We support it but don’t constrain it.
c) A discipline! We approach it systematically.
Give yourself one point for every “A” answer, three points for every “B” answer, and five for every “C” answer in the right column.
If you scored:
  • Fewer than 10 points: You tease! You are still just flirting with innovation.
  • Between 10 and 25 points: All right, you’ve had your innovation fling. Are you ready to get serious?
  • More than 26 points: Congratulations! You have made the life-long commitment to innovation
Ask colleagues to take the version of the quiz that we have posted at  . Once we get enough data we’ll summarize the results to see what patterns emerge.
Innovation has its moments of fun, no doubt, but success requires discipline and hard work. Just like many other areas of life, real results don’t come without real commitment.


Executing on Innovation
An HBR Insight Center

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