Innovation and CreativityR&D Management
Introduction
“Making Innovation Work: How to Manage It, Measure It, and Profit from It” (2013) by Tony Davila, Marc J. Epstein, and Robert Shelton is a comprehensive guide on fostering innovation within an organization. The book dives into the intricacies of managing, measuring, and profiting from innovative efforts. It stresses the importance of innovation as a driver of success and provides actionable strategies for harnessing its power. The authors draw upon numerous real-world examples and case studies to illustrate their points, offering readers a well-rounded toolkit for applying the principles in their own companies.
1. Defining Innovation
Major Points:
- Types of Innovation: The book categorizes innovation into several types such as product, process, and business model innovations.
- Importance of Context: Innovation efforts need to be aligned with the strategic goals of the company.
Actionable Steps:
- Map Innovation Types to Strategy: Assess your company’s strategic objectives and determine which types of innovation align best with these goals. For example, if customer satisfaction is a priority, focus on product innovation.
Example:
- Example: 3M’s emphasis on product innovation has led to the creation of numerous new products and enhancements, directly aligning with their commitment to solving real-world problems through innovative solutions.
2. Innovation Strategy
Major Points:
- Balanced Innovation Portfolio: Companies need a mix of incremental and radical innovations.
- Alignment with Corporate Strategy: Innovations should not be isolated efforts but should be tightly integrated with the overall corporate strategy.
Actionable Steps:
- Develop an Innovation Portfolio: Create a balanced portfolio that includes various types of innovation projects. Monitor this portfolio to ensure alignment with strategic goals.
Example:
- Example: Apple maintains a balanced portfolio by continuously improving existing products like the iPhone while also investing in radical innovations such as the Apple Watch.
3. Organizational Culture
Major Points:
- Culture of Innovation: A culture that rewards risk-taking and nurtures creativity is crucial.
- Leadership Support: Leadership must support and champion innovation efforts.
Actionable Steps:
- Foster a Culture of Innovation: Encourage a culture where experimentation is rewarded, and failures are treated as learning experiences. Provide platforms for employees to share ideas.
Example:
- Example: Google’s 20% time policy allows employees to spend 20% of their time on projects of their choosing, fostering an environment where innovation can thrive.
4. Structure and Resources
Major Points:
- Dedicated Resources: Allocate dedicated resources to innovation initiatives.
- Cross-Functional Teams: Utilizing cross-functional teams can spur creativity and lead to more robust solutions.
Actionable Steps:
- Form Cross-Functional Teams: Establish teams composed of members from diverse departments to work on innovation projects. Provide these teams with the necessary resources and autonomy.
Example:
- Example: Procter & Gamble’s Connect + Develop program taps into external resources and expertise, facilitating cross-functional collaboration and resource allocation to drive innovation.
5. Process Management
Major Points:
- Stage-Gate Process: Utilize structured processes like the Stage-Gate model to manage innovation.
- Iterative Testing: Continual testing and iteration are critical to refining innovations.
Actionable Steps:
- Implement a Stage-Gate Process: Adopt a structured process for innovation projects to ensure they are systematically evaluated and refined through successive stages.
Example:
- Example: The Stage-Gate process has been successfully implemented by companies like Johnson & Johnson to manage the complex development of new pharmaceutical products.
6. Measuring Innovation
Major Points:
- Metrics and KPIs: Develop metrics to measure the success of innovation initiatives.
- Balanced Scorecard: Use tools like the Balanced Scorecard to provide a comprehensive view of innovation performance.
Actionable Steps:
- Define Innovation Metrics: Identify key performance indicators (KPIs) such as the number of new products launched, revenue from new products, and R&D efficiency to track innovation success.
Example:
- Example: IBM uses innovation metrics extensively to measure the impact of its numerous R&D projects on company performance.
7. Managing Risk
Major Points:
- Risk Assessment and Mitigation: Properly assess and mitigate risks associated with innovation.
- Fail Small, Learn Fast: Adopt an approach that encourages quick, small-scale failures from which the organization can rapidly learn.
Actionable Steps:
- Conduct Risk Analysis: Perform a comprehensive risk assessment for each innovation project and develop strategies to mitigate identified risks.
Example:
- Example: Eli Lilly employs a rigorous risk management process for drug development projects, ensuring high-risk factors are identified and managed proactively.
8. Leveraging Networks and Ecosystems
Major Points:
- Innovation Networks: Leveraging internal and external networks can enhance innovation.
- Partner Collaboration: Form strategic alliances to pool resources and expertise.
Actionable Steps:
- Build Innovation Networks: Actively engage with innovation networks, including partnerships with research institutions, suppliers, and even competitors where appropriate.
Example:
- Example: Cisco’s acquisition strategy is a key part of its innovation network, enabling the company to incorporate cutting-edge technologies and expertise into its product offerings.
9. Sustainability and Long-term Growth
Major Points:
- Sustainable Innovation: Innovation should not be a one-off event but a continuous, sustainable process.
- Long-term Vision: Develop a long-term vision for innovation that aligns with the company’s growth aspirations.
Actionable Steps:
- Create a Continuous Innovation Framework: Establish processes and systems that support ongoing innovation efforts, ensuring they are sustainable in the long term.
Example:
- Example: Tesla’s long-term vision of sustainable energy drives its continuous innovation in electric vehicles and renewable energy solutions.
10. Scaling Innovation
Major Points:
- Scaling Successful Innovations: Once an innovation is proven, rapidly scale it to realize its full potential.
- Global Perspective: Consider the global market when scaling innovations to maximize reach and impact.
Actionable Steps:
- Develop a Scaling Plan: For successful innovations, create a detailed plan that outlines the steps required to scale the product or process across different markets and regions.
Example:
- Example: Starbucks effectively scaled its innovative coffee shop concept globally, maintaining consistency while adapting to local tastes and preferences.
Conclusion
“Making Innovation Work” offers a detailed exploration of how organizations can strategically manage and profit from innovation. By understanding the types of innovation, fostering a supportive culture, implementing structured processes, measuring performance, managing risk, and leveraging networks, companies can turn innovative ideas into substantial business growth. Through real-world examples and actionable steps, Davila, Epstein, and Shelton provide a robust framework for making innovation a core part of organizational strategy.