By Rejoy Kurup
There are companies which innovate when the going is good as they have sufficient time and resources to devote to idea generation and creating new products/services and business models. Then there are companies which innovate in tough times when that is their only key to survival, if not success. What that probably suggests is that regardless of the economic and market environment, innovation much like change, should stay a constant.
Innovation has multiple sources including customers, suppliers, academia, partnering firms, competitors and the most obvious yet the most under-utilized i.e. employees. At some firms, innovation through employees is nothing more than a tool for employee engagement and keeping them happy & satisfied through an illusion of control & contribution, whereas in reality it really could have been so much more. If today Archimedes ran through the streets naked having thought of a bright new idea, he would most likely be running all the way to the bank! That is the power of ideas: as creators of financial and economic value.
Especially in the world of today, every idea by an employee that is ignored by a firm is an idea which he could potentially start up on his own or worse still, take to a competitor. Therefore, there is every reason for firms to leverage their employees and elicit their involvement in order to drive innovation. If necessity is the mother of invention, then creativity must be the (much neglected, I might add) father. But how does one foster creativity within a firm and inculcate an entrepreneurial spirit?
High school physics teaches us that "Power = I (squared) X R". As it turns out, the Power of innovation is also a function of I (squared) X R where the R and I's stand for:
1. Recipe: the components, approach, and evaluation criteria
2. Incentives: the monetary and non-monetary rewards
3. Implementation: the execution roadmap
Recipe
Leading firms across different industries (both old-timers like manufacturing and newcomers such as software services) have typically done this through web tools, traditional paper submissions, face-to-face interactive brainstorming sessions or a combination of the above.
The recipe should clearly include detailed steps pertaining to idea generation, idea evaluation and idea presentation/selection. The execution methodology should be able to answer questions such as why (need for innovation), when (timing and frequency), how (modality) and who (involvement). Transparency and involvement are key to building credibility and buy-in, which are some of the crucial ingredients for success.
Incentives
Incentives are potentially the most contentious issue when it comes to idea development within firms. It is only human nature to ask, "What's in it for me?". Apart from the opportunity to contribute to the firm's future direction, possible exposure to senior management and visibility within the firm, incentives in the form of monetary and/or non-monetary rewards go a long way towards ensuring greater involvement.
Without getting into specifics, studies have shown that non-monetary incentives are more effective given certain hazards while implementing compensation-based reward models (most notably confusion regarding idea ownership, distraction from primary role, etc.). Of course, in cases where new product/service might viably be developed elsewhere more profitably at low risk, some sort of profit sharing mechanism could be considered.
On the other hand, attractive non-monetary incentives could include leisure (trips, tickets, memberships, & vouchers), time off work, recognition (certificates, & merchandise), and employee development schemes (enrollment in courses, & seminars).
Implementation
You are Christopher Columbus and have arranged for finances, got hold of some ships, donned your explorer's hat but guess what, you do not have an effective roadmap. Well, it is fair to say that you will not end up in India as planned. And while landing up in the Americas may not have been all that bad for Columbus, the same may not be true for companies who go about innovating without having a robust implementation roadmap.
An effective implementation roadmap should contain details pertaining to idea feasibility, creation of implementation teams/PMO, budget allocation, appropriate governance structures, cost-benefit analysis, time lines & responsibility matrices. It should also identify the various risks and suggest implications and mitigation for the same.
Ultimately any innovation program must be able to hand-hold the employees from stages of Denial ("Nothing new ever happens in this company!") and Resistance ("Why should I share my ideas? What if someone else steals it?") to Exploration ("This might just work?") and Commitment ("I contribute to the future of my firm and my ideas make a difference!"). Once that is achieved, human ingenuity is bound to have a positive impact on the firm's growth & success.
So, what's your idea?
Rejoy Kurup is a Management Consultant with significant experience in the areas of Strategy, Transformation and Operations consulting. Views expressed here are personal. He can be contacted at rejoy.kurup@gmail.com.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.