Leadership and consumer relevance are the top drivers of innovation

There are two essential ingredients for successful innovation: Leadership and Consumer Relevance. Innovative processes do not begin in the R&D laboratory. They are initiated with a mandate from the highest level of the corporation. Identifying the consumer’s needs is an equally integral part of the innovation process. Ensuring employee participation in planning and a complete buy-in into innovative strategy is critical. At Unilever, top management strongly believes that innovation has to be closely linked to the business strategy.

The mind is the greatest resource needed for innovation

With mental capability, there are few limitations. Overload a machine and it can break down. Even computer chips have their speed limits. Resources can run dry. However, if we can help people make better use of their minds, the returns are immeasurable. The mind computer has the capacity to store an equivalent of 7550 volumes of the Encyclopedia Britannica.

The process of managing innovation ties in closely with organizational freedom

Managing innovation is not an oxymoron. Highly innovative companies manage the actual process of generating, developing and implementing innovative ideas better than their competitors do. This process involves a lot of deliberate duplication and redundancy in order to foster knowledge sharing and communication. There are a million garage start-ups in IT. In rural India, cowshed innovation is common. But in every case, it has blossomed in an atmosphere of organizational freedom. Microsoft says that their only factory asset is human imagination.

The Six Rules for Innovation

Rule 1: Thinking is something that can be learnt Rule 2: Thinking is a progression, a process Rule 3: Listen to others Rule 4: Involve everyday Rule 5: Invest and understand Rule 6: Patience is key

Actions that Encourage a Culture of Innovation

• Doing things right • Doing the right things • Do away with unnecessary tasks • Improve existing tasks • Replicating best practices • Doing things not done by others • Breakthrough ideas must be welcomed • Appropriately disseminating knowledge and information • Encouraging cross-functional team work • Rewarding and recognizing efficiency • Providing constructive performance feedback • Appreciating gender, race and diversity • Investing in new technologies • Communicating directly and consistently with customers • Rewarding risk taking • Investing a lot of energy on creativity

Critical Success Factors for Stars

o Improving efficiency o Training programs o Rewarding individual and team creativity o Pathbreaking activities o Reporting on what is happening

Factors that Drive Innovation

• An over-emphasis on doing things right the first time inhibits innovation. • The way creative individuals are treated has a major impact on organizational innovation. Organizations must reward successes produced by innovations and keep encouraging people in the face of so-called failures. Rewards nurture creativity through affirming its value to the organization. While most Aspirants and Non-Starters had no reward for individual creativity, all Stars did. • Turf protection and barriers between different functional areas are major obstacles to innovation. Encouraging cultural, racial and gender diversity helps reduce these barriers. • Non-Starters choose to spend most of their time on making small improvements to existing products, while devoting very little attention to new product development. They need to focus more on breakthroughs and radical changes. • All employees should be involved in innovation by learning the tools of creativity and providing a positive, enabling field. Stars make use of a strategic planning approach that involves the whole team in not just executing strategies, but actually planning them. This approach creates buy-in from team members. • Top management should drive the process by providing a personal example. Management needs to talk less about innovation and do more on the ground. • Most Stars have an idea generation process, but not all of them use it. This shows that having information is different from using it. People may know a process theoretically; organizations alone can ensure that it is used. Top management commitment is critical to universal understanding and sharing of thinking tools. • Time and resources need to be allocated for learning innovation tools and processes. Stars studied more books on innovation than Aspirants or Non-Starters. Additionally, Stars attended more training programs on innovation. • Stars spend much less time in meetings. Additionally, the productivity of meetings for Stars was higher.

Scouting other industries

Studying the methods used in other industries is a method of importing ideas from a totally different field. To proactively network with totally different industries can spark off extremely innovative ideas. In a very successful turnaround, an Indian scooter company borrowed ideas for its dealer outlets from high fashion retailers in Paris.

Benchmarking competitors

New ideas come to those who carefully and systematically study the methods of competitors. Opportunities for improvement can be identified by benchmarking against industry leaders. Stars are systematic in their methods of looking outside their companies, and of scanning their environment regularly for collaborative opportunities. For example, many Indian companies use ideas from foreign competitors, who then become collaborators.

Idea generation

Stars make extensive use of brainstorming to generate ideas. Idea generation is most productive when it is used to tackle a specific business problem. The rules for a successful idea generation are: suspend judgment, postpone reaction and extend effort. In addition to brainstorming, Stars make use of many other tools for the generation of ideas.

Marketing practices

The marketing and sales departments are the eyes and ears of the company in the marketplace. They are part of the market intelligence system that keeps company officials informed about the rapidly changing conditions in the micro and macro environment. The gathering of this information is usually casual, depending on the individual’s own interest. This may consist of market gossip, newspaper and trade reports, clues from the field force and information from outside sources. The information is often random and sketchy. The company may learn too late about a dealer’s need or a customer’s changing aspirations or a competitor’s aggressive move, to respond effectively. Stars are able to excel due to their practice of the following: • Training sales staff in the process and systems of collecting information • Using the internet, media and contacts to gather all available information • Buying information from specialized market research companies

Listening to the customer

Stars made regular use of market research to source new product ideas. Market research enables the company to understand a marketing problem better because customers spark off innovative ideas faster than any other resource. New product ideas are likely to emerge from the marketplace during research. This is because changing fashions and improved communication networks are creating new aspirations among customers. This information has to be solicited, as it will not flow or be recognized in the hustle and bustle of chasing bottomlines. Careful observation, interpretation of information, and recognition of opportunities is the key to success. Stars alone had a method of systematically measuring the levels of customer satisfaction and incorporating the customer’s voice into product development. In addition to market research, Stars also utilize methods like Tapping Customer Creativity (TCC). Understanding customers and measuring customer satisfaction levels are extremely important for success in the market place. When we study innovation across the globe, we find that rich countries are on top of the list. But poor countries need innovation for their survival. Innovation is crucial to Indian companies because of the chronic lack of resources. Unctad’s Innovation Capability Index puts China at 72 and India at 83. The World Bank has India at 26 and China at 57.

Impact of Innovation on the bottom line

The profits of Stars grew faster than the profits of Aspirants and Non-starters. Stars also reported higher levels of employee satisfaction, lower levels of employee turnover. Additionally, employees of Stars had great faith in the quality of their products. Innovation Stars are on a positive cycle in which increasing profits and high employee morale reinforce each other.

Factors That Differentiate Stars

Stars were very positive about their company and its future. They believed that the quality of their products was higher, and that their market share was increasing. Employee satisfaction levels were high because people were committed and engaged. Some of the other factors that differentiated Stars from Aspirants and Non-Starters were: • Stars had a greater belief in the need for creativity in the organization. • Innovation was clearly mentioned in their mission statement. • They systematically measured customer satisfaction, and used this information to make course corrections. • They spoke directly to their customers. • New ideas were often obtained through market research. • They made use of outside consultants. • They used cutting-edge technologies to impact bottom lines. • They were able to ensure that different departments worked together. • They excelled in environmental scouting for ideas. • They had a shared process of idea generation.

Aspirants and Non-starters

Aspirants: These companies recognize that innovation is integral to success in the marketplace, but have not put in place, systems to drive innovation. These companies want to be innovative, but don’t know how. Many of the companies surveyed fell into this category. These companies have the potential to be much more successful. Non-Starters: These companies do not recognize the importance of innovation.

Innovation Stars

Employees at a number of India’s top companies responded to a survey that gauged the innovativeness of their organizations. Based upon the responses to the survey, companies were classified as Innovation Stars, Aspirants and Non-starters. Innovation Stars were found to be more profitable, to have more satisfied employees and to have much lower employee turnover. Innovation Stars: These companies excel in all areas, tangible and intangible. Such companies are characterized by high profits, superior quality of products and services, high levels of creativity, brilliant marketing practices, strong brand equity and image, wide market presence and low employee turnover. The Star is an extremely innovative company, which has succeeded in maximizing innovation in all areas of its operations. The climate of such a company is extremely nurturing and rewards creativity while being supportive of experimentation. People working there are excited about going to work; they are thrilled about their company’s future.

The 10 Commandments of Innovative Thinkers

• The capacity to truly respect another’s ability to think. • To create a positive field where others can think • The capacity to explore alternatives rather than supporting existing facts. • Never to hold non-negotiable opinions • The capacity to see the useable parts of the most radical ideas • Becoming aware of your prejudices and assumptions and eliminating them • Create movement in a situation like throwing a pebble into a pond • Love, respect, appreciate yourself • Learn the mathematics, the tools of innovation. • Involve all through, participation and commitment