12 June 2008

Three keys to Innovation

By Jim Pinto

In today’s fast-paced business environment, innovation is the key element that helps a company not only to thrive but also to survive.

Success comes from new products with innovative differentiation, agile business processes, expanding markets, and sales channels, all of which are vital for achieving competitive advantage.

Innovation has been viewed as a creative process that leaps from the minds of a few imaginative people. However, in today’s global business environment, innovation must be a reliable, measurable process that yields consistent, positive results.

Here are three keys:

• Start at the top. The “innovation champion” must be the chief executive, demanding new thinking and measurable results. Every senior manager must be committed.
• Incentives: Implement incentives to adopt innovative behaviors, and disincentives for lack of results.
• Companywide: Innovation is a process that must involve the whole company.

The global market has become so competitive that U.S. companies cannot compete with expected margins against local competitors that have huge advantages, including lower labor costs and government subsidies. They must compete on value through technology and innovation. Furthermore, innovations must have a sustainable advantage because the best ideas and technologies spread rapidly around the world. Only a consistent and predictable innovation process enables companies to succeed. Investments in innovation are now as important as sales and marketing.

In the past when quality and cost were limiting factors, innovation was about developing new products and then putting them through production improvement processes to reduce costs and ensure quality.

Today, innovation is much more than just products. It is about taking corporate organizations built for efficiency and rewiring them for creativity and success in fast-moving business environments. It is about reinventing business processes, building entirely new markets, and generating new supply chains that meet global customer needs. More important, as the Internet and globalization widen the pool of possibilities, it is about selecting and executing the right ideas and bringing them to market quickly and effectively.

Related links:

• Management of Innovation:
  http://r.listpilot.net/c/isa/2lixnos/1g8ls
• Pursuit of Innovation:
  http://r.listpilot.net/c/isa/2mk73vm/1gjez
• Innovation key to success:
  http://listpilot.net/c/ISA/2iwcU/w/isa.org/intechnews.cfm?id=7036
• What are the most effective approaches to drive an innovation pipeline?
  http://www.innovationtools.com/Community/PanelDetails.asp?a=319

Behind the byline

Jim Pinto is an industry analyst and founder of Action Instruments. You can e-mail him at jim@jimpinto.com or view his writings at www.JimPinto.com. Read the Table of Contents of his book, Pinto’s Points, at www.jimpinto.com/writings/points.html.