Innovation Strategy Models Need Innovative Leadership Guides

Innovation strategy models usually follow this uninspired recipe
- let’s encourage employee ideas, throw together a business case,

justify the costs and operating budget, dish-up a marketing
strategy and production project plan, hope for the best.

There are other organizations who believe in innovation
strategies which heavily depend on setting up and managing
arrangements, special relationships or partnerships with their
supplier community. I am not trying to find fault with those
methods, however, my argument is with those who are supposed to
act as the agents of innovative leadership.

What is the purpose of an innovation strategy? We innovate to
take advantage of the opportunities caused by change. For
example, prayer is a strategy we use to cope with our personal
challenges. And “prayer”, as philosopher, Soren Kierkegaard so
aptly observed, “does not change God, but it changes him who
prays.”

Simply stated, it is not the strategy that changes, it is we who
change as we employ our strategy and use it to encourage,
energize, enlighten and engage ourselves to strive for achieving
its objectives. In a word, our innovation strategies can not be
expected to change the world, our strategy must compel us to
change the ways we think about, react to and perform in the
world.

“Without change there is no innovation, creativity, or incentive
for improvement. Those who initiate change will have a better
opportunity to manage the change that is inevitable.”
- William Pollard

Innovative Leadership Guide-1: Thinking through your innovation
strategy model

“Innovation is not the product of logical thought, although the
result is tied to logical structure.”
- Albert Einstein

Your innovation strategy model must enable you to execute four
essential tasks:

It has to help you recognize the components of a changing landscape [explore],
It must expose you to the needs imposed upon your ecosystems by the change [create]
It should usher you through the changes you hope to exploit [ implement],
It must empower you to adapt to the changes in your marketplace and your offering [supervise].

Innovative leadership means finding clearly defined pathways
through the territories you operate within – this includes the
environments of your organization, partners, markets and
end-customers. Innovative leaders channel or direct the shared,
received and transmitted energies found in their ecosystems of
profound knowledge, work processes and social relationships.

Innovation leadership uses the innovation strategy model as a
guide towards:

1) Directing innovative activities; 2) Developing crucial systems, resources and assets; 3) Disciplining the process, purpose and players of innovation

Innovative Leadership Guide-2: Reacting to your innovation
strategy model

Your innovative leadership team uses the innovation strategy
model to tweak, adjust and maintain its course towards
successful outcomes. The most effective strategy models provide
leaders with:

Windows on historical, internal and external circumstance [Realities];
Mechanisms to control and adjust to changes [Dynamic Controls]
Applications of energy to inspire, relieve and educate [ Leadership];
Metrics which expose exchanges, dependencies and transfers [Ecosystem Management];
Revelations of beliefs, meanings and feelings [ Coordinated Communications];
Relationships between the observed, measured and assumed [Progress Dashboards];
Opportunity “areas” where the strategy can be executed [ Organic Leveraging].

“Cast aside those who liken godliness to whimsy and who try to
combine their greed for wealth with their desire for a happy
afterlife.” – Kahlil Gibran

If your innovation strategy model depends on a “kiss from the
muse”, a “bright idea” and some similar “eureka” experience, you’ll
have very few and far between innovations emerging from your
organization.

Innovative Leadership Guide-3: Performing on the promises of an
innovation strategy model

“Never before in history has innovation offered promise of so
much to so many in so short a time.”
- Bill Gates

Back in the Industrial Age, we followed a series of steps, made
use of equipment and mechanized systems and relied on prodigious
amounts of fiscal and human capital to achieve the promises of
success. We may live in a different era, I call it, the
Imagination Economy, yet we need the same amounts of effort and
focus to realize our goals.

A few years ago, our competitive advantages were based upon our
ability to shape raw information into forms of relevant,
applicable knowledge. Today, we compete against the imaginations
of others – we have to slice and dice knowledge and blend it
with universal wisdom, intuitive know-how and meaningful
what-ifs to produce sustainable, profitable, productive
innovations.

In the Imagination Age, innovative leadership will be called
upon to map-out the complexities, model optimal congruencies and
mold evolutionary conceptualizations of our world. Leaders will
meet the many challenges of this new Age by seeing people as
four dimensional beings – that is, as physical, intellectual,
spiritual and developmental entities.

Innovative leadership will use their innovation strategy models
to fully exploit and leverage the many strengths of their
available human capital assets – intellectual and physical assets
[think and do], production and social assets [process and
interact], as well as, innovative and developmental assets [learn and imagine].

“Innovation is the specific instrument of entrepreneurship. The
act that endows resources with a new capacity to create wealth.”
- Peter F. Drucker

A model for your innovation strategies is an essential
ingredient in your organization’s competitive recipe – without
such a model, your business will lack the flavor of innovating.
Your customers, constituents and communities may begin to
perceive the staleness of your old, crumbling offerings and stop
putting your products on their shelves.

You need to mix together all the elements of an innovation
strategy model listed above and use these innovative leadership
guidelines to manage and energize your strategy. Innovation is
industry and it requires persistent, determined effort. And just
like the industries of old, innovation can follow a process, it
can use capital assets, it can be measured or assessed and it
can be led and managed.

“Do not go where the path may lead, go instead were there is no
path and leave a trail.”
- Ralph Waldo Emerson

Rapid Innovation

Introduction

Whilst invention is concerned with the creation of good ideas, innovation involves both the creation of ideas and the transformation of these into economically viable, market focused products and services. Rapid Innovation is the art of delivering new products and services in less time, at less cost and with fewer ‘post implementation’ problems.

Rapid Innovation combines three key concepts;

· Getting to grips with what is going on in the marketplace, what customers really want (and not just what you think they need) and understanding the competition.

· The adoption of ‘Concurrent Design’ concepts to eliminate barriers between teams and avoid sequential development.

And

· The use Rapid Prototyping tools that can quickly create prototypes of products, or simulate new services to help iron out problems and issues.

Innovation is about doing things differently and is therefore fundamentally different to improvement which is concerned with doing the same things ‘better’. This paper explores how organisations can successfully and rapidly introduce viable new products and services.

Top Five Innovation Anchors

The ability of an organisation to successfully innovate can have many benefits. These include cost efficiencies, market leadership, brand development and many more. However, there are anchors that slow down the ability of an organisation to innovate effectively. These anchors can result in lost market share, excessive development costs, unexpected operational problems or damage to the organisation’s brand. The five most important innovation anchors are described below.

Innovation Anchor 1: Failing to understand the market

It is quite easy to generate one hundred ideas before breakfast but……

· Only one in one hundred ideas will result in a product or service that is viable.

· Only one in one hundred of the viable products and services developed will be market leaders.

A process is therefore needed to sort out those ideas that are viable from those that aren’t. Viable products and services are those that meet the stated or unstated needs of customers and therefore are capable of generating an economic return. The sorting process creates an ideas funnel where only viable ideas emerge.

The key to successfully identifying viable ideas is to understand the market place in which you operate. This means meeting with potential customers and discussing what they want and understanding what services or products you will be competing with. Unless you do this you run the risk of wasting a lot of time and a large amount of money.

Innovation Anchor 2: Failing to work collaboratively

One of the biggest problems that occur in the development process is that activities occur sequentially rather than concurrently. This creates a virtual waterfall where activities are ‘thrown over the wall’ from one team to the next in a cascade of activity. The fact that ‘downstream’ considerations are not being considered at each stage results in lots of rework. Teams have to return activities to an earlier stage to correct errors, delaying progress and significantly increasing cost.

Collaborative development, involving multi-disciplinary teams, is a key to the concept of Concurrent Design. Teams involving expertise from across the development pathway considering all aspects of the lifecycle of the product or service being worked on can more than halve the lead-time from concept to implementation and reduce operating problems by 80% or more.

Innovation Anchor 3: Failing to empower teams

Having established a development team there is a need to empower the teams to make decisions. Complex and poorly defined decision making processes contribute directly to increased lead-times. Empowering teams means defining how the boundaries they can work within and then allowing them to get on with it.

Innovation Anchor 4: Failing to provide effective sponsorship

Development teams will encounter a range of problems and issues. The budget allocated to the team will be under threat and in complex organisations the team will have to ‘shout’ for attention and management time. The purpose of sponsorship is to keep the profile of development teams high up the management agenda and to minimise the management burden placed on the teams themselves so that they remain focused on getting to market rather than completing reports.

Innovation Anchor 5: Failing to utilise technology effectively

Technology is an important aspect of development, whether you are developing a new type of product or a service. Of course, there is a need for email communications but the fifth innovation anchor is more concerned with the effective utilisation of technology to reduce time lost and to share knowledge, such as intranets, webinars and video conferencing. It is also concerned with the use of technology required to shorten the overall lead-time such as the use of simulation tools, rapid prototyping and pilot activities to finalise the design of the end product or service.

By failing to address all five innovation anchors your organisation is at risk of increasing lead-times for development by 300%, more than doubling the overall development costs and increasing the number of post-implementation changes that occur by more than five times that of a Rapid Innovation project that has addressed all five issues. The issue of post-implementation changes has a direct impact on the overall cost through the shadow of design that we will cover next.

The Shadow of Design

The Shadow of Design is a concept that explores the increasing cost of changes that occur in the development cycle as time progresses. It can be best understood through the following example;

· A change during the concept/specification stage may cost on £1 to make.

· To make the same change at the point that the team are actively engaged in designing the item or service, it will increase the cost to £10.

· If the change does not occur until prototyping is underway then the overall cost increases to £100.

· If the changes occurs even later during the pre-implementation and testing phase the cost increases to £1,000.

· Finally, if the change is not implemented until after the service or product is ‘released’ then the costs increases again to £10,000.

Poorly organised development processes that do not adopt the principles of Rapid Innovation will incur five times more changes in pre and post implementation stages than Rapid Innovation projects.

Different Types of Innovation

Innovation is the generation and exploitation of ideas for the benefits of customers and the organisation alike. However, we should recognise that there are different types of innovation that organisations engage in. We should also recognise that there is a difference between an innovation that is ‘new to our world’ from ones that are ‘new to our organisation’. For example, you might develop a new service that your organisation has never done before but which is common around the world.

There are two groups of innovative activities.

1. Continuity Innovation- those that do not fundamentally change the market. These are further subdivided into Evolutionary and Revolutionary Innovations

2. Disruptive Innovation- these are innovations that create a new market or so change an existing market as to make it unviable for those competitors operating within it.

We will now explore both of these in more detail.

Innovation Type 1: Continuity Innovation

These are innovations that do not fundamentally change a market and instead evolve existing markets through products and services that offer better value to customers and the organisation itself. Organisations already in the market compete against each other’s continuity innovations. There are two types of Continuity Innovation; Evolutionary & Revolutionary.

Evolutionary Innovation

This type of innovation provides incremental developments in existing products and services. They are typically innovations that are expected by customers, for example faster computers, better fuel injectors or customer services that were previously only operated Monday to Friday but which have been extended to 24/7.

Most innovation activities are focused on evolutionary changes, often driven by a mix of cost efficiency targets, market shifts or the development of new technologies.

Revolutionary Innovation

Also referred to as ‘Discontinuous Innovation’ these are unexpected innovations that do not fundamentally change the market in the short to medium term. For example, the introduction of the first automobiles did not fundamentally change the market for people selling horse drawn carriages because the new automobiles were so expensive that they could only be afforded by a small percentage of the population. Another example is the introduction of sealed double glazed windows to replace ‘secondary double glazing’ and single glazed windows. The introduction of the new type of window offered people the option to buy the more expensive, but more efficient, windows or to stick with the lower cost single glazing windows. It was only slowly over time that the market changed to the extent that no new houses are built without double glazing in the developed world.

Innovation Type 2: Disruptive Innovation

These are innovations that create a new market by applying completely new values or technology which ultimately overtakes an existing market.

We have already mentioned that the introduction of the first automobiles was a revolutionary innovation as the market for horse drawn vehicles did not change substantially. Later, with the introduction of mass produced cars (such as the Ford Model T), the market changed radically and quickly led to the demise of horse drawn vehicles. Therefore, the revolutionary innovation became a disruptive innovation over time.

Other examples of disruptive innovations that have occurred include the introduction of the UK National Health Service, the advent of digital photography (replacing film) and the ubiquitous USB Flash Drives that have replaced ‘floppy drives’.

Prior to World War One much of the ice used in Europe was shipped from Canada. Over the years, the ice-cutters had introduced a number of both innovations and improvements that had the effect of reducing costs. However, there was no way to compete with the introduction of the electric fridge/freezers that could create ice on demand. Irrespective of how many further innovations the ice-cutters applied to their process, the disruption caused by the introduction of the new technology fundamentally changed the market and prevented the existing players in the market (in this case the Canadian ice-cutters) from competing.

Disruptive innovations are normally new to the world and can rapidly create new markets. Since the disruptive introduction of the first fridge/freezer there have been innumerable further evolutionary and revolutionary innovations in that market but overall the market has not shifted.

Defining Rapid Innovation

Rapid Innovation is a term used to describe the rapid generation of ideas, development, testing and introduction of viable products and services. The aim of Rapid Innovation is to achieve the three ‘halves’;

· Halve the lead-time

· Halve the cost

· Halve the number of problems

In most cases the successful application of Rapid Innovation can achieve significantly more than the three halves suggest.

The Eight Aspects of Rapid Innovation

There are eight aspects of Rapid Innovation and these are summarised below;

· Senior Sponsor

· Cross Functional Teams

· Market/Customer Involvement

· Metrics for Success

· Consideration of the entire lifecycle

· An Integrated Plan

· Gateway Reviews

· Technology Mapping

We will describe each of these eight aspects below.

Senior Sponsor

A senior sponsor, ideally at board level, should be allocated to champion the project. The sponsor should be responsible for chairing gateway reviews (see later) and for setting the metrics for success for the project. The sponsor should also represent the project at board level and be actively involved in helping resolve disputes between the team and others and promoting the product/service to the rest of the organisation.

Cross Functional Teams

At the heart of Rapid Innovation is the need for a cross-functional, co-located team. The team structure and operating practices should consist of;

· No more than 10 participants chosen to cover all the required skills for the project

· All volunteers

· Consistency in the process from start to end

· Full time for the majority, and ideally all, of the team

· Co-located

· Empowered to make decisions

· Managed by a single ‘development leader’

· Protected from unnecessary interruptions

For larger projects you may need to consider multiple cross-functional teams working together, with each ‘sub-team’ adhering to these parameters but with the added elements of frequent cross sub-team meetings, joint metrics between teams and with all teams reporting to one overall manager.

Market/Customer Involvement

Clear analysis of the market and direct involvement of customers in the specification of new products and services is vital to Rapid Innovation. This may require NDAs (Non-Disclosure Agreements) to be arranged if a commercially sensitive issue may arise but without understanding of the customer’s needs there is a very high probability that things will be missed.

Metrics for Success

The metrics for the project should include timescales, overall spend, implementation or unit cost, expected volume of sales/activity and lifecycle costs as a minimum. These need to be specified up-front and any other constraints that the team need to work to clearly articulated before they start.

Consideration of the entire lifecycle

Products and services have expected lifecycles that consist of phases such as introduction, delivery, ramp-down and close-down. The start-up aspects will involve investment planning and additional marketing activities, whilst ramp-down and close-down may require you to consider everything from redundancies to recycling. It may seem odd to consider the end of life aspect at the very start of development but many post-implementation changes and costs occur because these issues have not been considered.

An Integrated Plan

The team should create and maintain an integrated plan that considers activities that both need to occur sequentially and those that can occur concurrently. The aim of managing the plan should be to get as much activity occurring concurrently and avoid as many tasks that need to occur sequentially. The plan should also cover the entire development cycle from initial concept through the post-implementation and will therefore be a ‘living document’ that evolves over time as more detail becomes available.

Effective integrated plans will consider;

· Market Analysis

· Sales & Marketing Activities

· Design & Development

· Quality Assurance & Testing

· Pre & Post Production/Implementation

· Risk Management

· Project Close Out Activities

Gateway Reviews

A number of gateway reviews need to be planned as part of the overall plan. These should be chaired by the Senior Sponsor and the aim should be to review progress and ensure that the programme is on-track. Typically a project will consist of a minimum of five gateways;

· Agreement of Specification

· Finalisation of Conceptual Design

· Pre-Implementation ‘Green Light’

· Post Implementation ‘Green Light’

· Programme Close-Out

The criteria for each gateway, meaning the tasks that need to have been completed at the date of the gateway review, should be agreed in advance as part of the integrated plan.

Technology Mapping

The last of the eight aspects of Rapid Innovation is the concept of technology mapping. This is a task undertaken at the start of development to identify the specific technology issues that will affect the success and lead-time of the overall development. Undertaking this activity early on enables the planning of technology procurement or outsourcing to be undertaken in good time. This also allows the team to identify technologies that can be used to reduce lead-time and costs early on, thus allowing them to be planned into the development process.

Are You Ready For Rapid Innovation?

There are a number of enabling factors that will support the adoption of Rapid Innovation concepts. One of the first and most important is the need to acknowledge that switching from sequential development and rapid innovation has a short-term cash-flow impact in bringing together a team from the start of development to work on the innovation. Ultimately this will be resolved through much shorter timescales and lower overall costs but the short-term impact can be a problem for some organisations.

Other factors that determine whether or your adoption of Rapid Innovation will be successful or not are the following;

· A culture that supports collaborative working.

· An understanding of your market and the expected changes within it.

· A management team prepared to empower teams to develop products and services.

· A flexible structure that allows people to move easily between reporting lines.

The Psychology of Innovation

On the practical applications of innovative ideas and the creation of value… and why the 21st century is the century of innovation

Innovation is not just creating something completely new, but creating a product that will be of value, especially commercial, economic, practical or social value. Thus creativity when associated with value and enterprise is innovation and an innovative product is “useful to others”. Innovation could lead to enterprise and commercialization as innovative products are commercially viable. Whereas an invention is creation of something new, innovation is the creation of a product or service that is valuable and useful to consumers. New and innovative products are sometimes radical and revolutionary, although there is incremental innovation that improves systems or products that already exist. Innovation helps in creation of commercial, practical or social value by implementing new ideas.

Innovation is applied invention and helps to create a new product to fill the unmet user needs in the market. An invention is a new product but could be a valued solution to a problem and only by becoming commercially, socially or practically valuable, an invention is transformed to innovation.

This discussion is based on the psychological basis of innovation and although innovation would be associated with creativity, creativity is a trait in humans and innovation is ‘what you do’. Thus innovation is a form of action that requires creativity, enterprise and radical thinking. Thus innovation being focused on creation of a product is action-oriented whereas creativity is thought-oriented. Enterprise is necessary to turn a creative idea into an innovative product that will have significant value in the short or long term. The psychological process of turning an idea into an innovation goes beyond the creative process and involves practical planning of designing and marketing the product to make it commercially viable.

Innovation involves the stages of brainstorming of a creative idea, problem solving, processing or developing it to come up with something radical and different and then developing a business model to help meet market and user needs. Creativity as a thought process is the first step of innovation. Innovation usually involves a new idea, method or product and either the art, technology or business of introducing something new. When ideas are translated to innovation, value is created and this forms the potential for business. Innovation is creation of a product with inherent value and this is done by considering what product will be of value to the user or will be successful in the market. It could be argued that even creativity is responsible for creation of products with aesthetic value or artistic value. Well, that is true but the value created by innovation is probably more objective, because innovation creates economic, commercial and social value.

The psychological processes in innovation differ from creativity as the action-oriented nature of innovation will have to be directed towards fulfilling a user or market or product need. In creativity, the only goal seems to be the creation of the product, although creative products like books can also be market directed. Innovation is specifically focused on meeting user needs, it is action-oriented, so it is based on applications or practical purposes. Whereas creativity being thought-oriented, primarily fulfills the needs of the creative artist and is directed internally, innovation is about the world and fulfills the needs of the user and market and is thus directed externally. Creativity also does not involve a focus on commercialization whereas innovation is about developing the commercial value of a product.

Creativity is the basis of art, architecture, poetry and any artistic or scientific activity for the matter. Innovation is invention with added value, is based on action and is thus more practical in its applications and tangible in its usability. Creativity and creative products are more abstract and not too well defined or tangible as far as their applications are concerned. The only application of creativity seems to be aesthetic pleasure and creativity is the basis of the aesthetic value of any product, including an innovative product. It is when creativity helps make products that are significantly useful to the market that it evolves to an innovation. Thus creativity is the foundation of all innovation, however creativity is not based on innovation. Creativity is the first step towards innovation and innovation is focused on delivering exceptional product or service to the value chain. In innovation, value is added for both user and developer.

The different components of innovation are creativity, radical thinking, business model, user needs, market, design and practical applications. Any new product will have to be well planned in terms of design and application and the business model guides the innovation to market launch and profitability. Thus the ultimate goal of creativity is providing aesthetic pleasure to the users or perceivers and the ultimate goal of innovation is meeting user needs and deriving profitability through commercialization.

Innovation could be about a radically new product or an incremental improvement, so innovation is about improvement whereas creativity is focused on originality. However the most original products are also considered as the most innovative. For example Apple Inc.’s design of iPhones and iPads are among the most original and that is why the most innovative. Thus originality is a common factor in both creativity and innovation and it is the basis of self-expression in creativity and the basis of a business model in innovation.

Innovation is frequently about revolutionizing drastically what already exists. The most innovative products bring about a paradigm shift in technology, or other market and sometimes ‘create’ market needs, rather than simply follow or meet the needs. Apple successfully created market needs for new technology and new design by integrating user expectations. Thus innovation not only meets market needs but can create new market needs and change market dynamics. Innovation is a commercial and business process, whereas creativity is more of a personal process and creativity itself cannot change the market, whereas innovation can change market dynamics significantly and can in fact change the world. Innovation is about evolution and progress of an industry, whereas creativity is more of about the evolution and progress of a creator’s mind.

Innovation is necessary in technology and in every industry to keep the pace of progress in human civilization. Innovation is usually preceded by an invention, whereas creativity is preceded by incubation and organizing the thought processes. Innovation is capable of revolutionizing the market, any industry and set the direction for future technologies and products. Let’s talk about search engine technologies by Google. That’s an innovative technology which brought about considerable profits to Google and thus transformed from a mere technology invention to innovation. So success of an invention defines an innovation. Innovation is used not just in technology but in architecture, automobile industry, engineering, and in all other fields and the primary goal of innovation is progress and also profitability by meeting or creating market and user needs.

The most successful companies thrive on innovation and cannot survive in the market without innovation. Today’s market is an innovative market and the focus is on competition in innovation. Whether it’s Samsung and Apple competing for the most innovative product in the market or two lesser known advertising companies competing for the most innovative advertising campaigns, innovation is the pulse of modern businesses. Even in the 20th century, innovation was not so important and the focus of businesses was on growth, strategy and advertising with emphasis on quality of products.

Quality management is what drove the 20th century businesses. This has changed significantly as businesses have now realized that to reach to the top and to become a powerful force in the market, quality and strategy are not enough. The 21st century will truly be the century of innovation.

Innovation Audits

Whilst it is generally recognised that innovation is important and enhances shareholder value, what is less well understood is how to become more innovative. Innovation audits review current practices enabling the consultant to advise on alternative and additional measures and techniques that companies can adopt to improve and maximise their innovation capabilities.

The preceding paragraph succinctly encapsulates the rationale for innovation audits. They are designed to assist companies in understanding their current innovation practices, and how these might be improved upon or added to. Indeed, the audit may illuminate some practices which are actually hindering innovation, and these need to be reduced or stopped. Why? All companies interested in growth will be looking at how they can be innovative and it is increasingly, and widely, recognised that innovation capability is one of the key determinants of long-run profitability and survival. Companies will, therefore, all be wishing to improve their processes to maximise their innovation capabilities and maximise opportunities for growth.

All organisational systems should support innovation. Corporate executives need a means of auditing their firm’s innovation capability so that they can get a sense for the overall performance of their innovation process and where it may be deficient. The innovation audit is a proven method to improve innovation. It examines key indicators, determines strengths and weaknesses and identifies ways of improving innovation throughout the organisation.

The subsequent report tells you what is working well in terms of culture, processes, communication and actions. It also analyses what is inhibiting innovation.

The outcome of the audit should be a clear identification of issues and the obstacles of innovation. It enables you to significantly improve the culture and process of innovation within your business. It should also lead to higher levels of motivation throughout the organisation, resulting in a more innovative, and entrepreneurial organisation that welcomes and initiates change. All of which leads to an ability to implement fresh ideas to generate revenue or reduce cost.

A summary of the benefits of an innovation audit is as follows:

· It enhances the company’s innovation capability;

· It identifies opportunities for increasing innovation;

· It clarifies where the organisation needs to focus to maximise innovation success;

· It embeds innovation in the company’s processes;

· It can build on individuals’ creativity to be innovative;

· It can identify and control the barriers that stifle creativity and innovation;

· It fosters innovation in the organisation’s culture; and

· It can align the organisation in common purpose and action.

Examples of questions, which can be asked, include:

· Innovation strategy

o Is there an innovation strategy?

o Does the innovation strategy support the corporate strategy?

o Is the innovation strategy known and understood throughout the organisation?

· Idea generation

o Are ideas readily canvassed from staff?

o Are ideas submitted from different levels and departments?

o How many ideas were submitted over the past twelve months?

· Selection

o Are financial and scoring techniques used to select projects?

o Are there appropriate mechanisms in place to assess potential projects?

o Are decisions made quickly?

· Implementation

o Is there an appropriate project review mechanism?

o Is there an appropriate mechanism for capturing learning from projects?

o Are there links between the appropriate departments?

· Organisation

o Does the organisation’s culture support innovation?

o Do individuals’ have innovation targets and goals?

o Are there rewards and recognition for innovation efforts.

An example of an audit:

Audits can be conducted on different levels. One level is an on-line survey completed by client companies and their staff. Such a survey could be based on the following five areas:

Innovation strategy- why, what, where, when;
Idea generation – creativity;
Selection – which;
Implementation – making it happen;
Organisation – how.

The responses are then analysed, and a report submitted to the client setting out conclusions and recommendations.

The second level adopts the on-line survey, referred to above, as a starting point. Once this has been completed and analysed, face-to-face interviews would be scheduled with selected staff. This gives a more in-depth fact base from which to draw conclusions, insights and recommendations.

Other Examples of Audit Methodologies

The Innovation Diamond considers the following four headings:

Strategy for product innovation and technology (the need for new products to tie into corporate goals);
Resources: Commitment and Portfolio Management (the portfolio needs to have maximum return on investment, a balance of projects – risk, markets, technologies, etc, and a strong link between efforts and strategy);
Idea-to-launch System: Stage-Gate®;
Climate, culture, teams and leadership.

An alternative is to adopt the McKinsey 7S framework based on:

Strategy – which considers questions around Strategic Plans, innovation and change;
Structure – this considers questions of roles and responsibilities;
Systems – this looks at the processes which governs the organisations’ actions;
Skills – this reviews the skills within the organisation as well as identifies what gaps exist within the skill set;
Staff – this considers personnel and team aspects;
Styles – this touches on organisational culture and tools adopted;
Shared Values – this also touches on culture, vision, rewards and attitude of employees.

A third technique is to consider the following five broad headings:

Strategy and leadership;
Organisation and culture;
Planning and selection;
Structure and presentation;
Communication and cooperation.

A further approach is to liken the innovation to a fruit tree that produces a superb crop (outcomes). Such a crop results from how it is fed (via its roots) and what supports the tree’s environment. Within the organisation, the roots are its people, groups, teams, leadership and innovation processes. The environment is its culture. Outcomes consider the organisation’s proficiency in incremental and breakthrough initiatives, how it develops its ideas, manages teams, decision-making and learning.

Another approach combines quantitative and qualitative data sources to provide the fullest picture of the firm’s innovation strengths and weaknesses. It uses interviews, assessment of financial data, review of relevant project documentation and bespoke market research to assess an overall innovation performance and identify factors that might contribute to poor outcomes. This approach looks at the organisation’s innovation performance to date, the capability of the organisation against relevant activities (strategy, creativity, selection, development, exploitation and resources). It reviews leadership and top management’s attitude to innovation.

All of these different methodologies follow a broadly similar tack They ask questions to understand the processes, attitudes and ethos of the organisation and its members. They use surveys and interviews in a structured format, under broadly similar headings.

Conclusion

To conclude, innovation audits are an examination of current innovation practices. Such an understanding allows the consultant to advise on alternative and additional measures and techniques which companies can adopt to increase and maximise their innovation capabilities.

Innovation for Growth is a business consultancy service offering advice on innovation, innovation audits, strategy, business plans and business research.