Innovation is the new Competitive Advantage

By: Adam J. Bock

The accelerating pace of technological change, and the availability of inexpensive technological tools (such as big data, artificial intelligence, and machine learning) have opened markets and industries to new competitors. Customers and markets can shift in months instead of decades. A kid with a good idea in Asia can raise millions of dollars and reach millions of customers in weeks.1

Being innovative is no longer a “nice-to-have” or just for startups. Roughly 85% of executives, in the US and worldwide, state that innovation is critical to the success of their organization as well as their long-term growth strategies.2 More and more companies have recognized that innovation isn’t a function limited to a research and development group or an isolated “skunk works” project. The most successful companies are building innovation into every aspect of their organizations.

Innovation is much more than just the ability to generate novel product features. An organization’s innovation engine should explore novel solutions to every challenge, at every level of the organization. That includes the firms’ core offerings, of course. But it also requires exploring innovation opportunities around customers (experience, platform), presence (supply chain, networking), and processes (value capture, organizational structure). Companies that innovate across the organization’s value chain will generate significant, cumulative advantages over companies that only innovate in products or services.

Companies that innovate across the organization’s value chain will generate significant, cumulative advantages over companies that only innovate in products or services.

Adam J. Bock

Most organizations labor under a critical myth about innovation—that it relies on a few creative people and unpredictable “eureka” moments of inspiration. The truth couldn’t be more different. Organizational innovation must be a managed process. So, organizations must establish policies and structures that support innovative thinking as a ground state, not something to be called up in emergencies. And creativity is difficult to motivate; financial incentives actually decrease creativity! Innovation needs to be the status quo, not the exception.

Innovation is a mindset that can be taught, not a rare talent. At organizations, innovation can be facilitated with specific tools and techniques that can be used across functions and groups.

As just one example, employees are often asked to think “out of the box.” Anyone who studies creativity or observes human behavior can tell you how silly this is. People can’t simply stop being who they are! Instead, innovation processes can help employees “shift the box” just enough to see problems from a different perspective. The tools and techniques are incremental, not radical, and facilitate validated learning toward solving all types of organization problems: from finance and accounting to operational processes and even customer interactions.

For decades, innovation was the purview of large technology companies, usually via patent portfolios, and start-up ventures powered by passionate entrepreneurs. Today, medium and large companies are harnessing the capacities of intrapreneurs, managers and leaders inside the organization who drive change and strategic renewal. Intrapreneurship is a mindset, closely linked to innovation, that helps medium and large organizations identify and exploit new opportunities that might otherwise be ignored. Leading-edge organizations, like Google and SpaceX, have established structures and policies to encourage intrapreneurs to explore new business opportunities and new technological solutions to problems.

Intrapreneurship is a mindset, closely linked to innovation, that helps medium and large organizations identify and exploit new opportunities that might otherwise be ignored.

Adam J. Bock

Think about your own organization for a moment. Have you been asking some or all of the following questions:

– Why does it take us so long to launch new products and services?

– Why do our most creative people burn out or leave?

– Why do our development teams seem to argue so much with marketing and sales?

– Why do our customers keep telling us about new features and capabilities of our competitors?

– Why do we seem to be limited to a couple new initiatives at a time? And why are they so expensive and high-risk?

To help you determine the state of innovation at your organization, we encourage you to download the Organizational Innovation Self-Assessment. This tool will help you quickly identify where you may have pain points within your current innovation strategy. If you are interested in learning more about how you can build a better innovation engine at your organization, our Solutions Advisors can help you get started.

Download the Assessment

Citations

[1] Pokemon Go reached 50 million users in 19 days.

[1] McKinsey Global Innovation Survey, Accenture Innovation Survey


About the Author

Adam J. Bock is an award-winning academic, serial entrepreneur, and experienced strategy consultant. He has co-authored three books on business models and entrepreneurship and has published more than 20 peer-reviewed articles and book chapters. Adam provides executive education and coaching in strategy, entrepreneurship, and innovation through CPED. His CPED clients include international pharmaceutical companies, global consumer packaged goods businesses, regional and national technology companies, and state government entities.