To innovate or not to innovate?

Companies of all sizes and activities advertise their innovativeness. However, it seems that not all of them are aware of how to create and manage the inherent uncertainty of the innovation process, and even fewer allow themselves to practically introduce non-standard approaches or products into their work.

Innovation is not a fad, but a necessity. It should be organized into a well-thought-out, purposeful, and systematic activity with measurable results. The success of such activity is determined by how well it aligns with the industry, the market, and the company itself, as well as with societal trends.

The annual survey by the consulting company Booz&Co. (2012 Global Innovation 1000) once again shows that large investments in the traditional R&D model are no guarantee of increased sales and profits for “spending” companies. However, this fact in no way diminishes the need for a clearly defined and individual innovation strategy. The rise of new economic powers such as China and India, combined with the recession in the Western world, is confronting mainly European, but also American companies with global competition, often operating under far more favorable business conditions.

The business environment and markets are characterized by an increasingly high degree of dynamism and uncertainty, and customers are becoming increasingly informed and demanding. It is no coincidence that analyses of the future development of Western economies often point to the ability of businesses to successfully introduce innovations as a key prerequisite for growth (see McKinsey&Co.[1]). Again in this spirit, the EU strategy for smart, sustainable and inclusive economic growth by 2020 explicitly emphasizes the role of innovation in leading Europe out of one of the most severe economic crises since the 1930s.

Innovation is not always an expensive pleasure, in fact, it should be the opposite. Creativity in a company is not directly proportional to investments in R&D. It turns out that the traditional R&D model often even poses obstacles to the marketing of the newly created product or the application of a new technology. On the one hand, this is due to the remoteness of the creators of the products/technologies from the market, and on the other hand, the passion of the inventor often goes off the rails of the company's strategic direction. There is even evidence of an inverse relationship between large investments in R&D and realized profits. At the same time, the traditional R&D approach does not guarantee a return on investment. Moreover, the companies that spend the most intensively on R&D often lag behind their competitors in the same or similar industries in terms of revenue.

Booz&Co. also makes an explicit distinction between the 10 largest investors and the 10 most innovative companies.

The message is clear - large investments, besides often being beyond the budget of some businesses, do not always guarantee success.

A very small percentage of companies manage to be a constant generator of ideas, and even fewer manage to put them into practice. How do the winners of the innovation race - Apple, Google and 3M - succeed?

Attention has already been drawn to the fact that innovations, whether they are new business processes, new products or even a generally different way of doing business, should be organized into a systematic and purposeful activity, with the appropriate traceability of the results and tailored to the stage of development of the company and its specific needs and goals. It is worth mentioning here that a well-defined innovation strategy does not necessarily imply a technological breakthrough or radical change. Again, according to the needs of the respective business, such a strategy could be focused on smaller projects (recommended approach) that significantly improve the processes in the company, the products, the way the company communicates with its customers, etc.

The “innovation portfolio” requires a constant balance between larger radical projects and smaller ones that build on the existing way of doing business. For an innovation strategy to be targeted, it should be aligned with the state of the industry, competition, and consumer trends. At the same time, it is subject to constant and coordinated evolution with business goals.

In a general sense, we could summarize several basic prerequisites for a successful innovation process: a clear, properly communicated vision for the business that provides focus and purpose for the process (where do you want to be in the next 3-5 years, what are the company's ambitions?), an appropriate environment and corporate culture (employees are the most valuable source of applicable ideas - use them!), as well as a concept of "failure".

The latter is of particular importance and is often overlooked, but the fear of failure is one of the most serious pitfalls facing the innovation process and those involved in it. Of course, with skillful management, unsuccessful attempts can be reduced to a small number, but they are still inevitable. It is for this reason that it is of particular importance to define the “educational” perspective in the assessment of failure, which should be shared by both management and employees.

Every company has the potential to be innovative and different in what it does or how it does it, you don't need to wait for something to break to fix it. "He who has never tried anything new has never made a mistake." (Einstein)

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