Innovation is the key to sustainable value creation, meaningful difference and attractive margins. While most organizations would like to be more innovative, there are often barriers to innovation baked into existing ways of doing business. The right management process helps remove those barriers to unlock innovation.
How innovation drives value creation
Value can be thought of as a simple equation:
Value = total benefits delivered – the cost of delivering those benefits.
Whether the focus is on increasing benefits or reducing costs, the most powerful way to create additional value for customers and investors is through innovation.
Innovation can take several forms:
- Creating new technologies or adopting new technologies that have been created by others;
- Developing new product and service offerings;
- Adopting new business models;
- Finding new marketing and distribution channels (and eliminating layers in those channels that no longer add value);
- Reducing costs while maintaining or improving quality;
- Building superior management capabilities, for example, organizational structures and cultures that can attract, motivate and earn the loyalty of the most desirable employees and customers.
Innovation helps you maximize your biggest challenges
- How to differentiate offers to drive sales and avoid commoditization and margin pressure;
- How to attract, energize and retain great people.
Opportunities for innovation or more simply, for systematic learning and improvement, are everywhere, and new opportunities are being created all the time, due to changes in the leader world in which organizations operate (changes in technology, government policy, demographics, the economic cycle, customer priorities, etc.) In any market, the companies that innovate faster and more effectively will be more successful. Those that are slow to innovate will be at risk .
Barriers to innovation
Many organizations have recognized the importance of innovation, but have difficulty making it happen because of one or more key barriers:
- Lack of a clear innovation strategy that identifies the most promising innovation goals and a plan for achieving them;
- Lack of a simple but robust execution process for executing on innovation initiatives, including clear milestones with clear ownership;
- A culture that does not support innovation (eg, risk-taking is seen as damaging to one's career);
- Difficulty balancing the demands of the future (innovation) with those of the present (meeting this year's targets);
- Difficulty doing all of the above when resources are scarce and many days are consumed with fire-fighting.
How the right management process can remove these innovation barriers
A management process that drives innovation must make it easy to:
- Define your innovation strategy and roadmap, and communicate them through the organization;
- Set clear goals and plans that balance the need to innovate with the needs of the current operation;
- Execute consistently to achieve milestones;
- Develop great people who are motivated and fully engaged;
- Build a winning culture that supports innovation, a culture based on real value creation, learning and adaptation.
To summarize, innovation is critical to sustained organizational success, but in order to innovate, a company or non-profit must take a hard look at its management process, and remove any unintended barriers to innovation.