Innovation: Back to the Basics

By: Jeffrey Baumgartner

With everyone and her aunt now involved in innovation and a never ending stream of articles, blog posts and books being published on the topic, we need to be sure we are clear on the basics of innovation, particularly corporate or organizational innovation.

Before we continue, I should point out that my professional interest is in organizational innovation. In other words, I am not very interested in how individuals innovate, rather I am interested in how populations, such as the employees of a company, the public or other defined group innovates. It is also important to bear in mind that at least 99.9% of corporate innovation is organizational in nature. Innovation is almost never the result of a single scientist having a eureka moment and single-handedly implementing it.

Rather, innovation is the result of collaborative creativity in terms of devising and developing an idea into a viable concept, followed by a collaborative effort to turn that concept into reality and implement it as a product, service or process improvement.

The profitable implementation of creative ideas

But we are getting ahead of ourselves. First let us define innovation. In the corporate context, innovation can be defined as the profitable implementation of creative ideas.

Profitable implementation means that the ideas, once implemented, have to deliver value to the organization. For instance, a new product will generate additional income for the company, a process improvement will reduce operational costs and therefore increase profitability.

Although non-profit organizations and governments are, by definition, non-profit, the same notion holds true. A charity can be innovative – for example – by devising ways to deliver food aid to people more cost effectively. This increases its profitability. However, because it is a charity, that profit is returned to the organization and enables it to help more people.

In some cases, innovation does not provide a clear and direct path to profitability. However, it will add value to the organization or its customers and that indirectly profits the organization. For instance, an improved method of providing customer service may not reduce costs, but may make customers happier. Hence, value is realized. Moreover, happier customers are likely to buy more often and recommend your firm to others. This, of course, is beneficial to profitability.

Creativity is combining two or more concepts in new ways

At this stage, we should also define creativity, which is essentially combining two or more existing concepts in new ways. In this definition, “new” is from the perspective of the individual or the group that is developing creative ideas. Because creative ideas are based on existing concepts, multiple people and groups who don’t know each other often come up with similar and even identical ideas, often simultaneously. Provided those ideas were generated by combining concepts – rather than stealing developed ideas – they should be considered creative irrespective of whether or not they are new to the world.

Innovation, on the other hand, generally needs to be new at the global level – or at least within the marketplace of the company that is implementing the innovation.

A lot of corporate innovation is really creativity

Only when those ideas are profitably implemented might they be considered innovations.

What is immediately clear here is that a lot of activities that are described as being innovation are in fact creativity. Idea, generation, for instance, is a creative process. Only when those ideas are profitably implemented might they be considered innovations. Nevertheless, creative idea generation is part of the overall innovation process, hence many experts who specialize in supporting ideation describe themselves as “innovation coaches” or consultants. And who can blame them. “Innovation” is a tremendously sexy business term these days. “Creativity” is still considered a rather arty-farty activity normally performed by advertising people and designers, but not proper business people.

This is too bad. Creativity is a critical component of the innovation process and if clients can better understand what creativity is and how it fits the innovation process, they can be better served by innovation.

Nevertheless, the difference between creativity and innovation is an important distinction to make. A firm can be thick with creative thinkers who generate lots of highly creative ideas. Yet, if those ideas are not implemented, the firm will never be innovative. Indeed, many advertising agencies can be perceived as highly creative: constantly generating creative advertising ideas for their clients. But they may well not be at all innovative.

It is also important to bear this in mind when shopping for innovation consultants and innovation tools. Consultants who support ideation may well help you generate great ideas, but if you do not have the processes for implementing highly creative ideas – which often need different processes than less creative ideas – you will be wasting your money on such consultants.

Likewise, so called “Idea management” software products that focus on facilitating the generation of ideas but do not support the evaluation and implementation of the ideas should be considered creativity tools rather than innovation tools.

This is not to say that these tools or people are in any way flawed. Only that managers need to be aware of what they are purchasing and what more they will need to turn creative ideas into innovation.

Innovation is problem oriented

It is also important to bear in mind that innovation is almost always problem oriented. Ideas seldom fly into the windows of your office, presenting themselves for easy implementation. Rather, they are the result of generating creative ideas that solve problems or help achieve set goals.

The Apple iPod, which is considered a very innovative new product, was not suddenly devised by Steve Jobs while he was sitting in a hot bath. Rather it was the result of a concerted effort by creative teams at Apple who had very clear goals in terms of devising and developing an easy to use portable music player.

The Google search engine was not the result of a sudden aha inspiration by Sergey Brin and Larry Page. Rather it was the result of trying to solve a very specific problem: how to build a search engine that delivers relevant results. And anyone who used search engines in the mid 1990s will appreciate what a relevant problem that was!

Once Sergey and Larry realized they could use the concept of citations in research papers and apply it to the importance and relevance of web pages, they had a creative idea. But no innovation.

They then had to work out a way to apply their idea technically and then build it. Only when they had created the first instance of their search engine, which came to be known as Google, could their creative thinking be considered innovation.

A great idea is only the beginning

Thus a great business idea is only the first step in the long path to innovation. But it is a critical first step!

By Jeffrey Baumgartner