Why then are so many companies falling behind the innovation curve? There are three reasons: (1) The term innovation is frequently misused and true innovation gets lost in innovation-speak – leaders say one thing but then act differently; (2) Companies often want innovation to be one-size-fits-all, but innovation processes that provide measurement and predictable outcomes are counter-intuitive; (3) Risk is inherent in innovation, but when failure is not an option, people find all kinds of ways to avoid liability.
Innovations can be found in all aspects of a company, as long as they are unique; they bring real value to customers; and they are commercially viable. Companies should break down innovations into four types:
1. Transformational Innovations: These rarely come along, but are so disruptive that they change society and lives – the automobile, the incandescent light bulb, and the Internet. Pursuing transformational innovation may not provide a reliable pipeline, but innovators need to be aware of breakthroughs around them. P&G did this by introducing anti-aging science into its Olay skincare line.
2. Category Innovations: These evolve at the industry level and build on proven transformational innovations, such as the Internet. They have a valid business case, and are driven by anticipated customer needs. Animal health company Merial did this by turning a newly discovered molecule into a product (Frontline) that revolutionised the pet industry.
3. Marketplace Innovations: Driven by competitive market needs that creates new ways to delight customers. They keep category innovations fresh and are generally defined by new features or benefits. Emirates Airlines did this by introducing on-board showers.
4. Operational Innovations: These enable companies to do things faster, cheaper, and better. US department store Nordstrom created an operational innovation by blending its web site and store inventory into one transparent shopping experience. This resulted in an 8% increase in same-store sales in 2010 versus an 11.9% decrease in 2009.
Action Point
Action Point: Evaluate how leadership in your company supports innovation and sustainable growth:
1. How strong is your company’s talent pipeline to support innovation? What HRM strategies and techniques support the best innovators and teams in your company?
2. How does your company innovate in the supply chain to bring value to customers and end-consumers?
3. How does your company manage innovation risks?
Source: Stevenson, J. E. (2012) Breaking Away, Employment Relations Today, pp. 17-25