Most people understand intuitively the value of bringing new ideas to life in an organization. New ideas can lead to better products, services, and ways of doing business. In turn, this drives better organizational performance. Not surprisingly, this pushes many people to focus a lot of time and attention on generating new and exciting ideas within their organization.
The trouble is that most organizations don’t have a great way of processing these ideas in a systematic and repeatable way. In fact, my experience is that many organizations already have great ideas. Having the ideas isn’t the problem.
The problem most firms have is capturing the ideas that are already there, evaluating them, exploring them, and implementing them in a smart way. I recently heard an interesting story on the Everyday Innovator Podcast of a factory floor worker who had an idea for a major process improvement for thirty years before it was implemented. This kind of thing happens in every industry and every organization.
Clearly, having good ideas is not the issue. Finding and using those ideas is the problem. And that is the essence of innovation management.
In this post, I’m going to answer the question “What is innovation management?”. I’m also going to explore why it’s important and the issues that organizations face when they don’t have innovation management processes in place.
What Is Innovation Management?
Innovation management is the set of tools, techniques, skills, and processes that are used to generate, collect, evaluate and implement new ideas within an organization.
People are coming up with new ideas every day in your organization. Innovation management is what gets used to process those ideas and turn the best ones into improved business outcomes.
Some examples of innovation management in practice are:
- Running ideation workshops where staff and other stakeholders are invited to come up with new ideas and share old ones
- Launching a website that allows people to submit ideas
- Running contests to try and develop ideas focused on a particular business problem or opportunity
- Prioritizing innovation ideas
- Allocating funding and other resources to promising ideas to explore them further
- Attending technology conferences to generate new ideas and find collaborators and partners
- Intentionally creating intellectual property in support of organizational strategy
- Managing staff and projects related to new products, processes, services and primary research.
Of course, you can’t fully capture what innovation management is in a bulleted list, but this should give you a sense of what an innovation manager would do in her day-to-day work.
Benefits of Innovation Management
A recent study conducted by the American Productivity and Quality Centre indicated that, for the companies studied, an average 27.3% of sales came from products developed in the last three years (Kahn, 2013). The fact that over a quarter of sales can come from newly-developed products is incredible! Imagine the difference between companies that spend a lot of time on new innovations and those that don’t. Companies that actively seek out new ideas and opportunities will always outperform those that don’t.
Innovation management provides value to an organization by helping to capture more ideas, better ideas, and help ensure that innovation initiatives actually result in tangible results. Many, if not most innovations and new products fail to achieve the goals set out for them. If an organization were better able to manage the innovation process, then it could improve the likelihood of success for its innovations. Consequently, this could improve sales and business performance dramatically.
Innovation Management Pro Tips
There are a couple important things to bear in mind with respect to innovation management.
- Ideas can come from anywhere. It’s important not to kid yourself into thinking that all good ideas are held within the walls of your organization. Competitors, clients, academics, other industries, and other sources can all provide great ideas.
- Innovations can help improve anything and everything in your business. Ideas can drive the creation of new products, new services, product improvements, service improvements, process improvements, new business models, and any number of other things. Innovation isn’t just about product development.
- Good ideas are only good if they support the company’s strategy. As an engineer, I’ve been guilty of coming up with what I thought was a fantastic idea, but that had no actual basis with respect to market opportunity or strategic outcome. Be careful not to get too excited about ideas that are exciting for their own sake. Innovation is only useful when it supports strategy.
- Ideas need to refined and explored iteratively. An idea that looks good in the early stages might prove itself to be a dud once you get into it. It’s important not to be afraid to shelve an idea that you once thought promising so that you can move on to find ideas that really do merit investment.
Risks of Poor Innovation Management
For organizations that employ poor innovation management or no innovation management, it should go without saying that company performance will suffer. As I mentioned above, a huge proportion of a company’s sales come from products generated within the last three years. Without innovation management, those new products never get developed in the first place. Those products that do get produced are at much higher risk of missing the mark and failing in the marketplace.
It’s also important to recognize that your competitors likely are investing heavily in innovation and looking for new, promising ideas. This means that if you don’t take innovation management seriously, not only will you be losing out on the potential sales of those new products, you’ll be losing market share to your competitors.
Free Resource: Top Five Innovation Books
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