It's difficult to look at a business magazine, read an annual report or watch the news without finding a story about innovation. Rightly so, because innovation and the efforts to develop it as a habit are critical to the success of every company.
Yet innovation has become a catch-all term that refers to virtually every move a company makes, no matter how small.
One of the biggest problems with terms such as "innovation" and "creativity" is that companies have lost touch with results. We've all heard about individuals at some organizations being told to play with balloons to gain a three-dimensional approach to products, lie under chairs to view the world from a different perspective or design something that has never been considered at the company.
While those efforts are perhaps entertaining, they often are an incredible waste of time, money and the spirit of those involved.
As BusinessWeek reported in May, Whirlpool Corp. -- which has achieved substantial change in its organization only after focusing on results -- experienced frustration when employees were told to innovate without bounds:
"The 25 employees were freed from their regular jobs and packed off to Whirlpool's office in Comerio, Italy, with a single purpose: to dream up products or services that would truly differentiate Whirlpool from rivals. A year later, they came back with their big brainstorm: an Internet business that would enable people to race one another over the Web on stationary bikes. So much for that experiment. It was obvious that Net bike racing, which didn't draw on any of Whirlpool's strengths, was a nonstarter."
The problem with such innovations is twofold:
- They are not tied to the resources and capabilities of the organization.
- They lack the necessary execution.
Thus, it is not innovation that companies need to pursue; that is simply too broad. Rather, they need what we call "ennovation."
Ennovation is innovation that:
- Enlists the skills and participation that are resident within an organization.
- Is entrepreneurial.
- Is tied to the entire company's capabilities.
- Engages the organization to develop groundbreaking products and services.
- Enables a company to differentiate its products and services from the competition.
- Is executable.
- Creates economic returns.
The traditional method for acting innovative is to streamline a company process and perform fewer steps. Employees minimize the amount of time spent on the process, and it has a "fun" nature to it.
The key to successful ennovation is to approach an idea as the midpoint in a process that starts with a deep understanding of the market, business and customer, and finishes with a business case, prototype and investment.
Most businesses inherently understand a new product or service will be valuable only if it fits with the company's unique capabilities. But a deep analysis of those unique resources and capabilities rarely starts off a session on innovation.
That's where ennovation is different. It fits with the strategy, history and capabilities of the organization. Carrying that to the next step requires an ability to accurately define the appropriate market and perfect customer.
We live in a time when consumer expectations are higher than ever. Household brands are being replaced by innovative new products and better-designed private-label and store brands.
It is product innovation that allows brands to maintain their equity and command higher margins. Without innovation, a company's product or service will eventually become a commodity bought at the lowest price.
Companies need to re-energize their efforts toward innovation and abandon the brainstorming sessions that were once enough for a business to be considered innovative.
Ennovation allows ideas to come from a cross-functional group of the company. More importantly, it leads all the way to execution.
The ennovation process starts with the selection of internal sales, marketing and product-development staff, but it adds the participation of finance, manufacturing, customer service and operations. Such an internal team has the unique knowledge of the customer, the company and its processes.
To be truly effective, ennovation also requires an external spark to create combustion. That can come from industrial and graphic designers, market-research experts and behavioral scientists who can tap into trends and successes in other industries.
Innovation without concrete results is just lip service to the critical avenue available to businesses to gain an ongoing competitive advantage.
Charles Bamford is the Dennis Thompson Chair of Entrepreneurship at the McColl School of Business at Queens University of Charlotte and the author of Small Business Management: A Framework for Success. Louis Foreman is the founder of Charlotte-based product-development company Enventys Inc. and the executive producer of the PBS series Everyday Edisons.