Innovation Perspectives - Paint by Numbers
This is the fourth of several 'Innovation Perspectives' articles we will publish this week from multiple authors to get different perspectives on 'What is the most dangerous current misconception in innovation?'. Now, here is Mark Turrell's perspective:
by Mark Turrell
Current Misconceptions of Innovation: Time to Paint by the Numbers
Innovation is such a broad term, and can be used in so many ways, that it is hard to pick out the top five misconceptions, let alone focus on the biggest one. Is it the battle between the innovation process people and the innovation creativity people? Is it the use of consultants to support one-off innovation projects rather than investing in organization-wide innovation capacity? Is it the impending IT stampede towards innovation software tools, with the likely neglect of the human beings needed to support the process? Or is it the persistent view that companies are 'close to the customer' when in fact they are about as close as a Hollywood star to a burning car on a movie set?
No, to be controversial, I'll go for the big one. Innovation is about numbers. And the numbers people need to track is money. Innovators who forget this, particularly leaders of innovation groups, do not deserve to be in their positions.
Innovation is really the process of doing new things that delivers value. Innovation is not just about having ideas, even if they are an important feedstock to the process. Innovation activities need to deliver on corporate objectives, and many of these are driven by profitability and revenue growth.
In 2000, Procter & Gamble became one of the first companies to calculate its Innovation Growth Gap. This method took apart the company's growth forecast, and assessed the firm's ability to reach these targets with known activities, the classic 'business-as-usual' approach. That left a gap - a gap that had to be filled by products and techniques as yet unknown or untested. That was the innovation gap.
Moreover, the gap had to be filled with a pipeline of project candidates, not just one or two stellar 'Hail Mary' product plays. Today companies aim for a 2 - 3 times coverage for their innovation pipeline. That translates to a $600 - 900 million pipeline of innovation project candidates to close a $300 million growth gap.
P & G's relentless focus on innovation stems largely from the initial focus on the numbers, with a good measure of support from a super-engaged CEO, A. G. Lafley. The numbers provided a rational method for assessing how much effort needed to be put into innovation, how many full-time people would be required, how much training would be needed, what consultants to hire, what processes to implement and optimize. Without the numbers, P & G is likely to have followed the path its competitors took, innovating by happy accident.
It is still surprising how reluctant senior managers and sponsors of innovation are to identifying the innovation gap, and then being held accountable for closing the gap. Without numbers it is almost impossible to know how much you need to innovate and how much to invest. Not tracking outcomes makes it impossible to know how well one is doing.
The innovation community can no longer afford to drive innovation without metrics and return on investment. It is in everyone's interest that firms assess their Financial Impact of Innovation, and then use this information to develop a more realistic view as to how much they need to invest in innovation capacity. The rally cry of 'Innovation' and 'Creativity' is great to get people energized, but we now need to backed the up with a commitment to financial targets - and that is the misconception that we need to overcome today.
You can check out all of the 'Innovation Perspectives' articles from the different contributing authors on 'What is the most dangerous current misconception in innovation?' by clicking the link in this sentence.
Mark Turrell is the CEO and co-founder of Imaginatik plc. Imaginatik provides services and technology for Collaborative Innovation and Collective Intelligence. Imaginatik is a pioneer of innovation and idea management methods and features, with over 50 multinational clients.
by Mark Turrell
Current Misconceptions of Innovation: Time to Paint by the Numbers Innovation is such a broad term, and can be used in so many ways, that it is hard to pick out the top five misconceptions, let alone focus on the biggest one. Is it the battle between the innovation process people and the innovation creativity people? Is it the use of consultants to support one-off innovation projects rather than investing in organization-wide innovation capacity? Is it the impending IT stampede towards innovation software tools, with the likely neglect of the human beings needed to support the process? Or is it the persistent view that companies are 'close to the customer' when in fact they are about as close as a Hollywood star to a burning car on a movie set?
No, to be controversial, I'll go for the big one. Innovation is about numbers. And the numbers people need to track is money. Innovators who forget this, particularly leaders of innovation groups, do not deserve to be in their positions.
Innovation is really the process of doing new things that delivers value. Innovation is not just about having ideas, even if they are an important feedstock to the process. Innovation activities need to deliver on corporate objectives, and many of these are driven by profitability and revenue growth.
In 2000, Procter & Gamble became one of the first companies to calculate its Innovation Growth Gap. This method took apart the company's growth forecast, and assessed the firm's ability to reach these targets with known activities, the classic 'business-as-usual' approach. That left a gap - a gap that had to be filled by products and techniques as yet unknown or untested. That was the innovation gap.
Moreover, the gap had to be filled with a pipeline of project candidates, not just one or two stellar 'Hail Mary' product plays. Today companies aim for a 2 - 3 times coverage for their innovation pipeline. That translates to a $600 - 900 million pipeline of innovation project candidates to close a $300 million growth gap.
P & G's relentless focus on innovation stems largely from the initial focus on the numbers, with a good measure of support from a super-engaged CEO, A. G. Lafley. The numbers provided a rational method for assessing how much effort needed to be put into innovation, how many full-time people would be required, how much training would be needed, what consultants to hire, what processes to implement and optimize. Without the numbers, P & G is likely to have followed the path its competitors took, innovating by happy accident.
It is still surprising how reluctant senior managers and sponsors of innovation are to identifying the innovation gap, and then being held accountable for closing the gap. Without numbers it is almost impossible to know how much you need to innovate and how much to invest. Not tracking outcomes makes it impossible to know how well one is doing.
The innovation community can no longer afford to drive innovation without metrics and return on investment. It is in everyone's interest that firms assess their Financial Impact of Innovation, and then use this information to develop a more realistic view as to how much they need to invest in innovation capacity. The rally cry of 'Innovation' and 'Creativity' is great to get people energized, but we now need to backed the up with a commitment to financial targets - and that is the misconception that we need to overcome today.
You can check out all of the 'Innovation Perspectives' articles from the different contributing authors on 'What is the most dangerous current misconception in innovation?' by clicking the link in this sentence.
Mark Turrell is the CEO and co-founder of Imaginatik plc. Imaginatik provides services and technology for Collaborative Innovation and Collective Intelligence. Imaginatik is a pioneer of innovation and idea management methods and features, with over 50 multinational clients.Labels: Innovation, Innovation Perspectives, Mark Turrell
posted by Blogging Innovation at 12:01 AM
2 Comments:
Bearing in mind Mark runs a competing company to ours, it pains me to say this. But this is one of the most intelligently written articles I've read on innovation recently.
Too many practitioners seem to confuse innovation and creativity and so focus on idea generation as innovation. But in the corporate world, ideas aren't worth diddly-poop unless they can be translated into innovations that add value firm. Typically, that will be in the form of increased profitability through added income, reduced process costs or both. Indeed, this is what corporate innovation is all about!
Well done, Mark. But don't feel obliged to keep up the good work! ;-)
Jeffrey Baumgartner
Now I would never be pained to say a fellow in the industry was doing good work (ok, maybe sometimes ;)
I believe the state of 'innovation' is at a pivotal moment in its progression to mainstream industry... or dying a death as a cottage consulting / software play. It is therefore important for people with knowledge and experience to be clear and forthright in sharing experiences and insights derived from real, hard-nosed, practical work and high quality research.
We can ill-afford to allow innovation to be carried off down the rat-hole of tech start-ups with wizzy technology, offering just enough to keep IT people happy, but not enough to get the job done right.
Thanks for your comments, Jeffrey. And hopefully you forgive me if I try to keep the pace on the good work. And hey, you've even inspired me to up it a good few notches :)
All the best,
Mark Turrell
CEO, Imaginatik plc
www.imaginatik.com
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