Why are some companies more innovative than others?
Scan the literature and you are bound to collect a conflicting array of answers.
They are better led. No, they are culturally open. No, they have more efficient processes. No. No. No! They are particularly attuned to customer concerns. Wrong! They understand technology better. They are risk takers. They have cleverer people. Are richer. Just bloody lucky.
So which is it?
Well, precisely the point. There is strong correlation between innovation and all the parameters above (besides the last, which is difficult to qualify). Good leadership provide clarity and focus. An open culture encourages employees to share and develop new ideas. Efficient processes streamline ideas into products. Insight to customer needs ensures these products find a warm home. Technology leadership forges a competitive advantage. A taste for risk is a prerequisite for venturing anywhere new. Luck, clever people and pots of money are always welcome.
An innovative company is fast, flexible and focused. It’s strategy, processes and culture are aligned and optimized for innovation. It excels in many of the points mentioned above and more. Our innovation environment framework consists of over 150 parameters spanning across the company strategy, processes, culture and value proposition. The parameters are cascaded into themes. Below is a depiction of the first two layers of the framework. For example Strategy consists of: Purpose, Insight and Prioritization. Purposefulness breaks further into: Leadership and Clarity. These too are cascaded further.
Companies might not be able to top all the boxes, but the more they do, the merrier. Amazon and Apple, the reigning and recently deposed poster boys for innovation, respectively, are a case to the point. A highlevel illustration of the two companies innovation environment at the time of breakthrough innovation is provided below.
When Amazon Web Services (AWS) was introduced back in 2002, Amazon was a fledgling web retailer mainly known for selling books cheaply. It realized that it could earn handsomely by turning its web hosting technology, which it developed for its own purposes, from a cost center into a cash cow.
As is shown in the illustration above its innovation activities spanned the entire environment.
Starting with Strategy. Amazon was created, and still is, tightly steered by a charismatic, seemingly clairvoyant leader, revered to the point of adulation. (The same was also true for Apple). Being attuned to the market, Amazon had the rare insight to respond to the growing need in flexible computing memory and power. (At the time, the term cloud was reserved to describing a floating body of water particles that occasionally dropped rain). The company communicated a clear vision internally and externally and deployed resources accordingly.
Going to the culture: Amazon exhibited openness to revising the business model and a high level of cooperation between departments. Employees of the (usually shy and reserved) IT/Technology department took ownership to become commercially facing. The company is famed for its high level of customer engagement.
With regard to processes: At the heart of the product was a reuse of dormant assets. Amazon experimented and adapted the product based on market input. It expanded on its brand touting itself as a technology solution provider and not just a retailer.
And finally looking at the value proposition itself: Amazon introduced an entirely new service to customers, empowering clients to provide web-services without having to deal with tricky IT infrastructure, also enabling customization of the service. It was a considerably cheaper option than the alternative. Since the service is subscription based, Amazon could be certain of a stream of continuous revenues.
Similarly when Apple introduced the iPod + iTune service, it revolutionized its market. The illustration below shows how this involved innovating over many facets
These two quick examples demonstrates how innovative companies must be strong across many parameters of innovation and that their strengths can never be attributed to a single metric.
All companies can use this framework to identify their strengths and weaknesses with regard to innovation. It is specifically designed to identify typical pitfalls such as lack of senior management involvement in innovation or blindly sticking to the current business model. I will elaborate on this in my forthcoming blog.
This method can be combined with the disruptibility curve, introduced in my previous blog, toward working to improving the innovation credentials of the company. For more information please visit my site at www.the-rebel-within.com
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The Rebel Within conducts comprehensive assessments of the a company’s innovation capabilities looking at its strategy, culture, value propositions and processes. Based on the assessments we provide clear recommendations and roadmaps for improving companies innovation credentials. For more information please contact firstname.lastname@example.org or view our website: