At organizational level, in order the innovation to become reality the focused effort of two decisive contributors is required:
1. The innovator – who originates an insight through persistence to solve the problem, and
2. The sponsor – who foresees the value before it is realised and persists in bringing out change.
From the interaction of these two actors results an innovation framework. This is most of the time offered as a mean to deliniate phases and requirements and to reveal how innovation can be fostered.
The language of innovation
Depending on the area it is applied, innovation is subject to a range of declinations on two levels:
A) Macro-level – with the following thinking lines:
1. Environmentalist line, e.g. eco-innovation, sustainable innovation, green economy
2. Technological line, e.g. disruptive innovation, radical breakthrough, significant technical change
3. Economical line, e.g. radical product innovation, product innovativeness, open innovation
4. Social line, e.g. participatory innovation, social innovation, crowdsourcing
B) Micro-level – within an organization:
For example: discontinuity in R&D strategy, discontinuity in marketing, discontinuity in technology.
At the macro-level, innovation is measured by how a characteristc of the output (i.e. product, service) is new to the world, the market or the industry, while at the micro-level it is measured by how new is the product/service to the firm or the customer. In the first case, it is about exogenous factors such as familiarity of the innovation to the world and industry. In the second case the innovation is product-centered newness related to the company and firm’s customers.
In macro-level innovation, discontinuities that result are not dependent upon a company’s strategy or structure, its knowledge base or availability of resources (e.g. the World Wide Web).
In micro-level innovation, discontinuties can occur in a firm’s marketing or R&D strategy, in a firm’s supplier and distribution chains or in its sales approach (e.g. IBM manufacturing market electric automobiles would be disruptive and discontinous over General Motor’s doing the same thing).
The following drivers are considered essential to generate innovation: competitive advantage, change management, change in behavioral patterns, technical uncertainty, technnology cost, customer benefits.
Multicultural - cross functional teams and innovation
In 2012, EY launched the Socializing Ideas concept. Its power lies in sharing and combining ideas from a diverse range of sources. Internally, ideas can be captured from anywhere in the organization, across function, differing levels of seniority and geographies. Externally, ideas can come from nontraditional sources such as government, customers and competitors. When combined, these diverse perspectives help to form new and innovative solutions to existing problems or unmet customer needs. Put in the perspective of the advantages and disadvantages brought by multicultural, multilingual and cross functional team aspects related to innovation, we indentified the following:
I. Advantages:
1. Sharing insights generates more valuable and creative output
2. Integrating of differences and harness the power of diversity in the deliverables
3. Setting a collaborative and more interactive organizational approach of innovation
4. Versatility of the product/service development approach
Diversity is a recognizable source of creativity and innovation that can provide a basis for competitive advantage. Teams characterized by diversity have different ways of seeing problems and will use different routes to arrive at possible solutions. Multicultural organizations have an increased innovation index. According to a Forbes survey, of 321 companies with more than $500 million in revenue, 85% of the respondents agreed or strongly agreed that diversity is key to driving innovation in the workplace.
II. Drawbacks:
1. Communication barriers
2. Lack of cohesition based on values
3. Exhibit insecurities in interactions
4. Conflict incidence
Many developed attempts to increase diversity in the workplace backfired, sometimes even heightened tensions among employees and hindered a company’s performance (e.g. diversity of perspectives based on cultural heritage could lead to a lack of cohesiveness). Some argue that diversity is also a cause of misunderstanding, suspicion and conflict in the workplace that can result in absenteeism, poor quality, low morale and loss of competitiveness.
From the above results that companies seeking competitive advantage face a paradoxical situation. If they adopted diversity, they would risk workplace conflict and if they avoided diversity they would risk loss of competitive advantage. Therefore, we share the view that a combustible cocktail of creative tension is inherent in diverse organizations. Suitable conditions to promote creativity and innovation in diverse contexts should be associated with the management of work routines, and the creation of appropriate teams. To reconcile differences of perspectives, it is the main challenge, in order to support a functional organizational behaviour practices and still benefit of the innovative solutions thus created.
Managers can frame the organizational culture to drive innovation
In order to tailor and support an organizational culture open to innovation, managers should:
• Encourage innovation as part of organization’s role.
• Harness the ideas of their own workforce (through encouraged intuition and socialization).
• Have an open mindset to collaboration and stay close to their customer base, so as to be better placed and be able to achieve sustainable competitive advantage.
• Foster the socialization of ideas includes ideas captured from anywhere in the business, which combined can form new solutions to existing problems or unmet customer needs.
• Advance economic progress by collaborating with a broader group
of peers, including academics, governments, consumers, suppliers and competitors.
• Be promoters of intensive learning processes; enrich internal R&D input with consumer data, social media analysis and customer insight.
• Change traditional, product-focused R&D, so it is aligned to business models based on customer experience, value generation and problem-solving.
• Use iterative innovation to achieve the socialization of ideas; increase the speed at which innovation can be developed; and embed failure, or learning, as part of the process.
• Capture a variety of ideas and different ways of thinking from as many different sources as possible in order to enrich the DNA of the organization.
• Break down the hierarchical barriers, so as to make any employee take career risks and important decisions accepted by those implementing change.
• Implement a different evaluation program of the employees by using different performance indicators that reflect long-term strategic objectives, including on innovation.
• Reward any big deal is won as a result of any innovative contribution and communicating it extensively internally so that employees understand the impact of strategic innovation can have on their company and their career alike.
Breakthrough innovation vs disruptive innovation
We invent words and we comply with their meaning as if it goes without saying. For instance it is a fine line between breakthrough innovation and disruptive innovation. There are some that use these two terms indistinctly considering them as one and the same thing, while others are confiscated by innovation’s positive resonance and they consider any endeavor to make a distinction between these two is a waste of time. Breakthrough innovation is often linked to the cause, to the scientific research that has end-results which break with the past discoveries and extend a present knowledge area. On the other side, disruptive innovation deals with the effect the researches produce, with multidimensional impact they have (e.g. economically, socially, etc).
The importance of the research in the knowledge development is vital, as we cannot reach far without it. However, in the business environment, disruptive innovation should have a preferred usage and should be linked basically to the new technologies. They disrupt the status-quo, alter the way people live and work, rearrange value pools and lead to entirely new products and services. Business leaders need to understand how competitive advantages on which they have based their strategy might erode or be enhanced five years from now by these emerging technologies. Today we see many rapidly evolving and potentially transformative technologies from spanning information technologies and energy to biological and material technologies. Therefore based on the following criteria:
? Technology advancing speed
? Impact width
? Economic impact
? Disruptive effect we identify these top 5 disruptive technologies
1. Cloud technology – a model of computing which enables on-demand network access to a shared pool of resource. Statistics: it takes 18 months to double server performance per dollar. According to latest data available, the cost of owning a server is 3 times compared to renting in cloud. It will impact 2 billion global users of cloud-based email services and $1.7 trillion GDP related to the Internet.
2. Advanced robotics – increasingly capable robots with enhanced senses, dexterity and intelligence used to automate tasks or augment humans. Statistics: 75%-80% reducing costs, Between 2009 and 2011, a 170% industrial robots sales increase, impact on 320 million manufacturing workers.
3. 3D printing – process of making a three-dimensional solid object of virtually any shape from a digital model. Statistics: 90% lower price for a home 3D printer, 12% of global workforce will be impacted and $11 trillion in global manufacturing GDP.
4. Renewable energy – generation of electricity from renewable sources with reduced harmful climate impact. Statistics: 85% lower price for a solar photovoltaic cell per watt since 2000, 19 times growth of solar photovoltaic capacity since 2000, $3.5 trillion value of global energy consumption.
5. Mobile Internet – inexpensive and capable mobile devices and Internet connectivity (the fastest supercomputer in 1975 is equal in performance to an iPhone4, although the price is $5 million vs. $400). Statistics: sales of smart phones and tablets since the launch of iPhone in 2007 have grown by 6 times. Some 4.3 billion people, of which 1 billion transaction and interaction workers, could be impacted by mobile Internet. $1.7 trillion GDP related to the internet and 70% of the global employment cost will be internet usage related.
Measuring innovation process How can you quantify it and build on it?
Innovation process success definition is a long debate dating back in the eighties. There are a myriad of opinions and studies on the topic making innovation process success definition a never-ending story. Some say that GDP and different growth accounting metrics could indicate the success of an innovation process; some support the productivity index as prevalent to it. Others use alternative metrics to estimate the success of innovation process by computing economic savings and estimating what would a company cost to accomplish a task in the same way that it did before an innovation was adopted.
Any of these approaches proved not to be answer-all theories by missing other connected factors. Yet, despite the increasingly notable presence of innovation in our world, the ability to fully measure its success remains limited. The present state of affairs seems to lead to an integrative approach of these thinking lines to better define the success of innovation process. Therefore, in defining and measuring the success of an innovation process we consider the technology example based on three categories of arguments:
? Impact areas
? Metric systems/approaches of the results
? Collaborative ecosystems they build
Impact areas
Economic impact – At country level, it is measured by the amount of GDP generated by the production and consumption of a new technology in sectors where there is a clear and direct impact. There are statistics which struggle to fully account even for the improved quality of output, which is often realized as consumer surplus knowledge, and can take many years to show up in the numbers. As part of economic impact, at organizational level, new technologies impose redesigning the work process and reorganization of long-standing business practices. These processes require the practical managerial skills of a very high order of sophistication in determining how the patterns of work might be optimally redesigned in order to exploit the vastly expanded capabilities of the latest innovations.
Social impact – Effects of new technologies rapidly change our work routines, the way we spend our leisure time, or the products and services we use. The pace and direction of technological progress increasingly determines who gets hired, how our children are educated, how we find information and entertainment. There are ongoing disruptions to established norms and broad societal challenges.
Political impact – Political decision-makers will be confronted with a new reality which requests new regulation framework. Lawmakers and regulators will be challenged to learn how to manage new biological capabilities and protect the rights and privacy of citizens. Governments will need to create an environment in which citizens continue to prosper while emerging technologies disrupt their lives.
Metrics/approaches of the results
Revenue, profit, ROI, ROE, in many cases, these metrics can indicate financial success. Still, an innovation can generate high revenue in euro per year, yet lose huge amounts of net cash flow. If these cash flows are well and brutally estimated before any cash is committed to an innovation, and tracked and estimated during the process, analyzed as they unfold, and tracked after market introduction and buyer adoption, they are cruel and unyielding. Then, a “loser” cannot look like a “winner”.
Collaborative ecosystems
In advanced economies, the creation of “innovation ecosystems” or platforms dedicated to facilitating the cooperation between different players along the value chain, including intermediaries and Open Innovation Accelerators is ongoing. Other approaches include the promotion and creation of innovation clusters, university-industry technology transfer schemes that aim to foster the commercialization and marketability of the results of research.
