Businesses Require Innovation for Optimal Performance

December, 2007

“Innovation” is the business topic du jour, but what does it really mean to be an “innovative company” and how does an organization know if it is innovative?
“The factors that must be in place to support innovation are not a mystery. Companies that rely on ‘innovative thought’ to advance their product development, sales and customer service processes must be sure that they close any gaps in their capacity to encourage and support this breakthrough thinking,” said Andrew Graham, CEO of Kepner-Tregoe Inc., an international consulting and training services firm.
According to Graham, companies can perform their own “innovation health check” by looking closely at some of the key variables that affect innovation:
• Does your organization have a clear strategy? Strategy defines the field in which an organization operates and involves questions such as “what products will the firm offer and how much will the firm invest in each?”
• Do your company’s business processes measure up? Business processes are the workflows through which business is conducted. Consider: “How can we do this better” or “How would we do this if we had no constraints?” Ask: “Do we have methods in place for addressing innovation issues?”
• Does your organization have clear goals and do you measure results? In order to be innovative, organizations must have clear, strategy-driven expectations for innovation. Goals must be defined and measured, and results must be reported.
• Do employees have the inherent skills or the tools necessary to learn to be innovative? Hiring innovative people is one way to foster innovation, but innovation skills and knowledge can also be taught and creativity nurtured.
• Leadership – This is the overarching factor that affects all the other variables of innovation. Leaders must establish an organization’s strategy and ensure that innovation goals are being met, successes and failures measured, and innovative people developed and supported.
Other factors that can make or break an organization’s ability to innovate are structural and cultural. Do information systems enable people to share ideas and learn from the past? Are structures and roles impeding innovation or enabling it to blossom? Does the culture – including the reward system –encourage innovation?
According to Graham, “the pursuits of ‘Total Quality’ in the 1980s, ‘reengineering’ in the 1990s, and ‘Six Sigma’ in the 2000s have, in many cases, yielded impressive cost reductions, cycle-time reductions and quality improvements.
“However, executives today realize that they can’t streamline their way to growth. They understand that continuous gains in ‘how’ an organization does business must be dovetailed with expanding the horizon of ‘what’ business they are in.
“By looking at this handful of key variables, organizations can pinpoint the roadblocks that are inhibiting robust, profitable, breakthrough thinking,” Graham says.