Insight # 42 : Organizing Chaos: Innovation Management

5 Myths about Innovation Management

by Shan Rajegopal

Portfolio Management: How to Innovate and Invest in Successful Projects - by Shan Rajegopal

Portfolio Management: How to Innovate and Invest in Successful Projects

by Shan Rajegopal. Released on November 27, 2012 by Palgrave Macmillan.

If your company's idea of innovation is to make sure that it continues funding R&D, it's time to re-examine your understanding of how to find and invest in successful projects. Here, in advance of his new book on the topic of innovation management, Pcubed's Head of Innovation and Portfolio Management Practice, Shan Rajegopal, disassembles five common myths about organizational innovation.

Myth No. 1: Innovation Is the Job of a Few People

The old mindset says that innovation is unique to a specific type of person - those who work in R&D labs, for example - and that not everybody can be innovative. The reality is that to encourage innovation within the organization, you need to dispel that view. When you start encouraging everybody in the company to share their thinking for improving products or process, you'll find that people will come out with any number of interesting ideas. The human mind is the storehouse of knowledge - all ideas and knowledge that the world has ever received comes from the mind. The infinite library of the universe is in our own mind, and it is inherent in us.

The organisation must then provide the stimulus for its employees to unveil their knowledge to spark new interesting ideas. From that point, you need to structure a process within the organization to help capture those ideas, those potential innovations, and manage them in a more systematic and transparent way.

Once that process is in place, then the organization can either manage the ideas from top down or bottom up. For the first approach, the executives can specify: OK, this is what I'm looking at. This is the budget I have. I need some thinking on how to perform this better. For the second approach, the culture is very much about people coming up with and trying out ideas; in that scenario, individual workers or project members are empowered to explore ideas that will help them improve their areas within the organization.

Myth No. 2: You Don't Need Software to Capture Innovation

That may be true if you leave innovation up to one or two people. But an important aspect of building an innovation culture within your organization is the systemization of it. By that I mean managing the process of innovation.

However, even before you go into figuring out how to capture ideas, you need to understand what the innovation strategy is. Will idea generation be open to the world, closed to everybody except those within the organization, closed to the world except the company and its partners, or some other configuration? Each one of those strategies will encompass a different set of tools and processes.

For example, if you open up idea creation to the world, as Kraft Foods does with its Collaboration Kitchen, then you'll want a system that is easy for people to get into through online means in order to submit their contributions. At Kraft, they also set parameters for the ideas the company is seeking, such as packaging, ingredients, and technology.

If idea creation is internal to company personnel, the system would need to accommodate submission, for example, by both individuals and by teams.

Myth No. 3: Managing Innovation is Like Herding Cats; It Can't be Done

We've worked in client settings where thousands or hundreds of ideas are generated every year, and we have seen that the leading companies for innovation have figured out that idea sparking needs to be managed just as well as other kinds of projects or processes.

The same system that captures new ideas and suggestions should flow data into or integrate data with a system for evaluating ideas and sorting them by various criteria. That filtering of ideas is important, because somebody is going to have to examine the ideas in each group or category and decide whether it's worth moving forward in the process and having a more detailed proposal developed for it.

After more detailed business proposals are developed for the most promising ideas, they'll enter into the project portfolio management phase, in which each proposal is prioritized by its potential return for the company and its fit with strategic direction.

By that point, an innovation budget will have, presumably, been set by company executives. That's the portion of the budget allocated to pursuing innovative ideas. At that point, the ideas that come in "above the line" - that fit within the innovation budget, starting from the top and working down in the list - will be turned into projects or programs for execution. Those will be managed the same as if they were another kind of project.

Myth No. 4: The Benefits of Innovation Can't Always be Measured

Part of the business proposal for a given idea will be to set out its benefits - its value proposition. That might be increased sales, efficiency improvements, avoiding risk or improving your risk profile; the innovation might be a totally radical way of positioning a product or rebranding it for different markets. In each case, many if not all of the benefits can be quantified.

Tracking those benefits becomes part of the project management phase, with reviews coming quarterly, half-yearly, or annually.

Myth No. 5: You Either Work in an Innovative Company or You Don't

I've worked in companies where innovation has become a "one-off" kind of process. Executives push it, track it, then seem to forget about it as they move on to other endeavors. So, yes, in that situation, your company is either innovative or it's not.

But I also believe innovation can become part of the company's culture. How do you achieve that?

First, employees must feel empowered. They can recognize that the organization is supporting them and motivating them to do greater work. This is a key factor. It doesn't matter whether the organization is large or small. You have to invite employees and say, "You are the key part of the company. We have processes and tools, but they won't work without your contributions."

Second, the innovation process needs to be transparent. People need to be able to see how to submit their ideas and then to know what happens to the idea once it has been submitted. They need to believe that ideas are reviewed regularly. And they also need to see others recognized for their efforts. The innovation may be a radical departure for the company - such as a new idea for a product or service that will expand its market - or an incremental improvement - a process that will address a customer concern or save staff people hours of effort. In either case, those who came up with the ideas worth pursuing need to be shown appreciation in the form of public recognition and bonuses that reflect some relative proportion of the benefits the company expects to enjoy as a result of the innovation. The continual message needs to be: If you come up with good ideas, you will be recognized and rewarded.

Whatever you believe about innovation management, remember that even the best process or easiest of tools or systems cannot replace empowerment of employees. Motivating them to do greater work and to make contributions for improving the company can make a huge difference. The greatness of an organization comes from its people. And that is no myth.

For further information on this article and Pcubed please contact Carl Dalby, Head of Business Development, at carl.dalby@pcubed.com.