A Systematic Approach to Innovation is Possible

What is innovation?

There are many definitions of this concept, but I would like to start reviewing the one that the OECD (Organisation for Economic Co-operation and Development) established:

Innovation is the implementation of a new or significantly improved product, good, service, or process, workplace organization or external relations. The minimum requirement for an innovation is that must be new or significantly improved to the company.

Next, another definition taken from the business dictionary:

Innovation is the process through which an idea becomes a service or good that creates value or for which customers will pay. Ideas must satisfy a need and also be replicable in economical cost in order to be called innovation.

Innovations are categorized into two main groups:

Evolutionary that involves many incremental improvements in processes or technology

Revolutionary, the ones that are new and sometimes also disruptive.

Why does is it so hard to think about innovation?

According to the Harvard Business Review (HBR) article Innovation Isn’t an Idea Problem by David Burkus, when companies start thinking about innovation they always assume that they need new ideas in order to create or develop something innovative. In other words, they think that the problem is the lack of new ideas.

The HBR article also mentions the conclusions of a study done by a group of researchers at Wharton University. In it, when people are challenged to innovate but uncertainty exists, it produces a negative bias against creativity. This bias could explain why too many innovations are dismissed at the beginning.

One suggestion proposed by the author in order to avoid the negative bias is to encourage approval across the entire company instead of using the traditional vertical approval model.

By doing things in this way, companies will:

1. Win with the immediate revenue
2. Have an excellent driver for their organic growth
3. Create an innovation culture, where any employee can present and develop new ideas that are supported by both, their co-workers and the management team
4. Gain one positive side effect, employee recognition

What do innovative thinkers suggest?

Two Wharton University professors, Martin Ihrig and Ian MacMillan, designed a process to help companies think about innovation. The process was designed to help pharmaceutical companies, but later, they realized that it could be used in other industries.

The process is divided into six steps, and it requires a group of about 20 people from different areas of the company, working in six sessions:

Step 1: Identify key stakeholders and their most pressing needs

Team members come to the first session with a list of stakeholders and their expectations of each area, as well as some identified market trends. Then, the group has to classify the list of stakeholders according to the level of relevance and then list the pressing needs for them.

Step 2: Outline the stakeholder’s consumption chains

In the second session, participants have to create the consumption chain specifying the needs of each selected stakeholder regarding the existing service or product.

This consumption chain has to be created with a stakeholders perspective which could be different from the company point of view.

After that, people in the session have to start reviewing this chain in order to identify some link to be added, deleted or changed for another one. From these changes, the innovations that we mentioned before as revolutionary are usually born.

Step 3: Categorize features of the current offer and build offer profiles

The third session is where the team has to classify the features currently offered into three categories:

Non-negotiables: These are the performance features that make an offer minimally acceptable

Differentiators: These are the features that positively distinguish an own offering from the competitor’s ones

Dissatisfiers: Stakeholders are not happy about these attributes but may be willing to endure them for a time if compensating differentiators exist. The result of this step has to be a table for each stakeholder listing the most valuable product features along the consumption chain.

Step 4: Use the offer profile to design growth opportunity profiles

In this step, participants have to look for a differentiator that can be added at each link of the chain and for each of the stakeholders. They can use the removal of a dissatisfier feature in order to create a differentiator.

This produces, as a result, a way to figure out which improvements can give to the company where have to focus on, in order to implement innovation as a growth opportunity.

Step 5: Map stakeholders tensions

Once team members discover new ways of differentiation to satisfy a specific need, they have to identify how they could affect other stakeholders and create tensions among them.

Step 6: Choose your best opportunity

In the last session, participants must determine which tensions can be overcome and how and identify which of potential innovations will generate the most value.

The team has now the chance to identify the innovative growth opportunities and which ones that have the most impact on stakeholders primary needs.

By following these suggestions, companies could get the below advantages:

1. Identify growth opportunities through innovation and select the most convenient ones
2. Be responsive to the stakeholders pressing needs and the other stakeholder worries
3. Use this process as a tool when top management is evaluating innovative changes in any company area

So, after all, innovation seems to doesn’t be a problem, so instead to call Houston, maybe we can change our mindset and start thinking incredibly 😉