Time to redefine "innovation"March 12, 2012: 2:30 PM ET
Innovation, the buzzword, is being overused. Innovation, the practice, is simply changing. Here's how.
By Doreen Lorenzo, president, frog
FORTUNE -- Despite the many case studies and op-eds you might read on the importance of "innovation" as a strategy, in real life many businesses are struggling to be innovative. It doesn't mean that they can't come up with enough new ideas or that they don't have creative people on staff. Instead, executives might find that they cannot implement innovation within their company's structure, or that they get bogged down by distractions that only seem to be taking them on the path to inventions that are timely--and potentially profitable.
In addition, many of the barriers to corporate innovation are forces that are much bigger than internal ones. These hurdles range from the economic challenges in Europe; entire industries dying or at least experiencing troubling states of transition (print and television media, for example, or investment banking); and the shifts in global financial power that are taking place (the rise of China and India, among other "emerging" markets).
But perhaps the biggest dilemma that businesses face when it comes to innovation is that the concept of "innovation" itself must be constantly re-thought to remain relevant. Look at GE's recently released Global Innovation Barometer, a global study that surveyed nearly 3,000 senior executives in 22 nations around the world. Ninety-two percent of respondents said innovation is "the main ingredient for a more competitive national economy" and 86 percent said that "innovation is the best way to create jobs" in their countries. Not surprising. But then another strong statistic emerges: Eighty-eight percent said that companies will innovate in ways that are "totally different than ever before" in the 21st century. Yes, this is an exciting, forward-thinking conclusion, but it is also a daunting one. The ante has been upped: no longer is it enough to want to create "the iPod" of a given industry and follow in Apple's much-admired, design-worshipping footsteps. Companies have to "think different," as Steve Jobs always encouraged his team to do.
Of course, simply copying how a successful company does things "different," won't automatically ensure parallel results. You have to rethink what "think different" really means in 2012--for you. Are your company's innovation efforts really resulting in unique work? Do you have original human resources policies to retain your top performers and to recruit—and retain--the next generation of leaders? Will your own management style help define, or at least reflect, the winning business strategies of the 2010s, and not the outdated leadership tactics of the 2000s?
These questions, which can be tough to confront and to answer, are not only good for innovating your offerings, but they're also generally good for business too. Daring to be different and not just think different can reap long-term dividends. In other words, doing business as usual means you could be out of business sooner then you think. Straying from tradition--conducting business as unusually as you can-- might keep you in business longer than your critics and competitors have expected--as IBM and Google have proved.
In 2007, only half a decade ago, Gary Hamel wrote about the urgency for companies to engage in management innovation and highlighted these two "blue ribbon," "serial" management innovators in his book, The Future of Management. He outlined how Google and IBM were constantly re-inventing themselves at the time—and today, they continue to do so. IBM has lasted to celebrate its 100th anniversary because it is always shape-shifting, famously and steadily breaking away from its core businesses to evolve from a hardware maker into a service provider and thought leader. Its ability to adapt has been its strength; it is far from a stodgy relic. Google has nimbly moved into mobile operating systems, unmanned vehicles, and numerous other directions that you'd never imagine the search engine giant pursuing back in the late 1990s, when it was a competitor to Yahoo!
So, how to best become more flexible and adaptive as a corporation, or within a corporation? How can you, as an executive, better manage creativity amidst chaos? Indeed, how can one re-define innovation? These tactics are worth a try.
1. Try breaking away from standard business models. Take Sanofi, which in early February announced quarterly profits were up and that it would likely see sales grow by at least five percent on average between 2012-2015. The pharmaceutical giant is facing expiring patents on its well-known medicines such as Plavix, but it is stretching into new areas with daring new twists. One is diabetes solutions, for which Sanofi held an open competition for mobile-phone application developers to design diabetes-management tools, such as services that monitor and analyze food intake. The goal is to quickly scout for fresh apps and then market the winner as a Sanofi product--one that has nothing to do with Sanofi's previous business model focusing on making drugs.
2. Hire a different type of employee. At frog, we hire people with a variety of backgrounds to manage a global innovation consultancy. Along with MBAs, engineers, and industrial designers, we've added former trapeze artists and performance-studies majors to our team, to help lead projects for Fortune 500 companies on technology solutions and business strategy. We've found that providing a variety of smart and experienced perspectives can often lead to, well, a spectrum of fresh ways of thinking and doing. IBM knew this; the company hired designers such as Charles and Ray Eames and even sculptor Isamu Noguchi to advise on innovation projects back in the 1950s and 1960s.
3. Harness "Big Data" to better understand your customer—but not as a "Big Brother" corporation that wants to monitor behavior. Use data collection to help you understand what can you fix and improve about your products and services based on real input, not just what can you sell to a particular demographic. McKinsey research has shown, for instance, that McDonald's tracks and analyzes customer traffic to re-design store layouts for better flow, and that some manufacturers of enterprise computer hardware are scheduling pre-emptive repairs based on user data.
4. Embrace social media as something other than me-too publicity platforms. Instead, consider social sites as free research for product and service ideas, as author and MIT research affiliate Grant McCracken suggested recently in a Harvard Business Review blog post. Avoid having the typical, knee-jerk reaction to every new, popular social platform--from Pinterest to Tumblr, which is "let's immediately get a company account and use this for marketing!" Yes, sometimes this can be valuable, in an attempt to show you're staying current. As tempting as this is, it can lead to wasting time and resources . Rather, truly stay current by devoting staff energy to using these sites for timely inspiration instead. Ask staff to see if there are cultural, aesthetic, or even behavioral trends waiting to be discovered on Pinterest, for instance, that could feed into a project that's in place. An exercise like this could be focused and useful R&D-related activity that can lead to new, timely ideas—and make wise use of social media. Best of all, it's generally free.
These tips are just starting points, of course--and are certainly meant to be edited and altered in any way that fits your company's goals. Because if you didn't attempt to do so, would you be thinking like a true innovator?
Doreen Lorenzo (@doreenl) is the president of global innovation firm frog and an executive vice president and general manager of the Aricent Group, frog's parent company. Doreen drives frog's company strategy and oversees its worldwide operations. During her 14 years with the company, she has been instrumental in re-structuring the company, taking it from a traditional design boutique to becoming one of the world's foremost global innovation firms, securing broad-based arrangements with an array of Fortune 500 clients. She serves as a member of the World Economic Forum's Global Agenda Council on Emerging Technologies, 2011-2012.