No doubt some firms are more innovative than others. They successfully exploit emerging technologies, create new markets and consistently turn good ideas into good business. It’s not a coincidence that Apple repeatedly rates as a top innovator in surveys. Nor is it surprising to find that firms operating in innovative national or regional economies or in highly competitive industries have developed a stronger capacity to innovate than others or that a deliberate effort to manage the innovation process pays off in performance.
Small nations in developed economies often rate high in studies of innovation capacity. In a recent study by the European Business School in Germany, the following were rated as the top five innovative nations: Sweden, Finland, United States, Switzerland and the Netherlands.
In fact, there is hardly a developed nation that doesn’t have some kind of innovation policy as part of its approach to sustaining economic growth - or recovering from a recession - and there is clear evidence that firms in rapidly developing economies are also becoming increasingly innovative or at least strive towards such an objective.
It may be less clear though what exactly the traits of highly innovative firms are. Innovation processes, practices and tools certainly play important roles in building capacity for innovation. Other factors such as access to funds, risk tolerance and management support also create conditions favorable to innovation, but highly innovative firms seem to have something more.
One could define an innovative, or highly innovative, firm as one that generates, controls and maintains a strong market performance primarily through innovation. Not surprisingly, studies confirm that innovative firms generally do better in their markets than non-innovative firms. Obviously, the mere wish to be innovative is not enough. Firms have to be relentless in their pursuit of market opportunities. They also have to be deliberate about building and sustaining their capacity to innovate.
Peter Drucker frequently asked executives to define their business. He was often surprised, and sometimes disappointed, to hear the answers. Many firms simply have not defined their business on a fundamental level or recognized their own core expertise.
Highly innovative firms on the other hand seem to have a better idea of not only who they are and what they are doing, but of who they could be and what they could be doing.
Not only do they see innovation as a core business process and innovation management as a key discipline. They also seem to be particularly good at combining foresight with the orchestration of a productive interplay between creativity, expertise and management.
Apple’s CEO Steve Jobs once said “I want to make a ding in the universe.” Not a particularly humble wish, but almost typical of Apple’s approach to doing business. They claim they don’t do it by traditional market research, but by immersing themselves in user issues, wants and needs and ideas to the extent that they can say “if we like it, others will too”. Apple is not just obsessed with innovation, but they are quite deliberate in the way they go about being innovative. The end result - as can be seen at their product launches - is almost as if they don’t go to market with a new product, but the market comes to them.
When a motor vehicle firm recognizes its own core expertise as that of engineering and building not just motor bikes but combustion engines and power trains - as Honda did a long time ago - new opportunities emerge. Today, Honda is not only a large and successful motorcycle and car maker, but also a manufacturer of lawn mowers, tractors and other power equipment and a world leader in advanced robotics.
When Ericsson, a large telecommunications company, once stated that “it’s about communication, the rest is technology” they were trying to look at themselves and their business from a broader perspective than simply being an equipment maker.
Over the last decade, cellular phone makers have deliberately evolved their products from being wireless telephones to mobile lifestyle devices.
IBM became famous a few years ago for their online innovation jam reaching out across the entire organization and generating many thousands of ideas in a short period of time. Even though most of these ended up not being pursued, some actually were and the company demonstrated that it’s possible to create returns on creativity by being massively inclusive.
Open innovation may not be for everyone, but firms that succeed with external sourcing of ideas or with co-development of products can certainly gain a considerable advantage, like, for example, Proctor & Gamble’s connect & develop approach to innovation.
When Google encourages people to spend part of their time on ideas and projects of their own choice, not only are they introducing and exploiting organizational slack, they are also sending a strong message that innovation matters. And they accelerate the development of future innovation leaders.
Fundamentally, the following traits seem to be present in highly innovative firms, driving their creative effort and underpinning their overall approach to new product and service development:
- Being passionate about innovation
- Being widely inclusive and allowing dissident voices to be heard
- Being good at catching and screening ideas coming from the “left field”
- Being deeply aware of the fundamental nature of the business and being able to leverage core expertise towards new business opportunities
- Being able to continuously stimulate, direct and guide the creative effort towards outcomes beneficial to the business
- Being good at integrating the front end of innovation with the rest of the business
- Being particularly good at making connections and orchestrating productive interplays between individuals and parties involved in ideation and new product development
- Being willing and able to reach out beyond the boundaries of the firm
- Being serious about creating and maintaining sufficient organizational slack
- Being curious and concerned about the future
Research on creativity has shown that creative contributions in organizations are positively correlated with people’s trust in their leadership and enterprise strategies.
Thus, when companies look forward, they not only try to imagine the possibilities of the future, but they also build confidence in the face of uncertainty and stimulate more creative contributions.
When companies look around themselves, they may discover ways to reuse and recombine technologies to create new or improved products.
When companies look deeply at themselves, they may find new ways of being innovative and create high returns on creativity.
In conclusion, successful companies don’t just innovate - they innovate better. Such companies demonstrate not only the ability to manage the innovation process but to manage it exceptionally well. They may seek market dominance but also effective and productive ways to express the curiosity and creativity of their people. If they succeed with both, they have certainly demonstrated a strong capacity for innovation. If they succeed particularly well, they could even be called super innovators.
About the Author
Mr. Anders Hemre is the Founder of Interknowledge Technologies and the former Chief Knowledge Officer at Ericsson Canada. With an international background in the telecommunications industry, he now specializes in the organizational practice of innovation and knowledge management. He can be reached at firstname.lastname@example.org.