The terms “globalisation” and “commoditisation” strike fear in the hearts of today’s executives. In response, “innovation” is being bandied about as the new Holy Grail in business. Yet, while innovative ideas are easy; implementing them is hard.
Back in Business Week’s August 1, 2005 issue, Bruce Nussbaum offered some advice for those business leaders who on one side were surrounded by the never‐satisfied customers, and on the other, were fighting against three billion new competitors from former socialist countries: “Listen closely. There’s a new conversation under way across America that may well change your future. If you work for Procter & Gamble or General Electric, you already know what’s going on.”
The globalisation of white‐collar work is the new trend beyond sending blue‐collar jobs to Asia and beyond.
Even much of the so‐called “knowledge economy,” once thought of as the last bastion of America’s economic might, has been digitised and beamed to China, India, Russia and beyond.
In short, knowledge work is being digitised, globalised and commoditised. So, what’s left for companies wanting to avoid commodity purgatory?
The Innovation Economy
Nussbaum describes an innovation economy as, “innovation which is based on an intimate understanding of consumer culture—the ability to determine what people want even before they can articulate it.”
“You’re thinking ‘this is all hype,’ aren’t you? Just another ‘newest and biggest’ fad, right? Wrong. Ask the 940 senior executives from around the world who said in a recent Boston Consulting Group Inc. Survey that increasing top‐line revenues through innovation has become essential to success in their industry.”
Nussbaum also reports that nearly 96% of all innovation attempts fail to beat targets for return on investment, leading to talk of “innovation frustration” in the corner offices.
Indeed, is it time to innovate innovation itself—as a repeatable business process.
What is a business process? It’s how work gets done, which leads us to Do the Work – a manifesto by Steven Pressfield, that will show you that it’s not about better ideas, it’s actually about doing the work of innovation.
That, in turn, leads to another question, “How does work work in a hyper‐connected world of total global competition?” Just as the world of business transformed from the Industrial Age, where components of competitive advantage (land, labor and capital) are now undifferentiating commodities, we’ve witnessed a so‐called Information Age where knowledge was king.
However, today knowledge is a global commodity.
In today’s wired world, business success absolutely depends on innovation, not just what is commoditised knowledge.
And it’s not just a single innovation, it’s about setting the pace of innovation in your industry. It’s also about getting into new industries as you seek to serve the total needs of your customers. In today’s connected world, business innovation goes hand in glove with IT innovation.
Open‐innovation efforts are also on the rise. There are more and more examples of innovation efforts whose success is due to the thoughtful use of non traditional, external sources of information and ideas. Nevertheless, significant barriers exist in many enterprises to capitalise on the potential benefits of open innovation.
On the other hand, open innovation does not necessarily mean external innovation. Internal, non traditional participants can open up the innovation process and contribute increased value.
However, current research focuses specifically on how to open up the innovation process to external participants— that is, to people residing outside the boundaries of the enterprise.
No matter how formal or informal the innovation initiative, using a process to transform latent ideas into value‐creating business innovations is key. There are vast numbers of innovation processes out there, but all encompass the following steps:
1. Scope
2. Capture ideas
3. Evaluate and select
4. Develop
5. Implement
6. Champion
Each of these steps can be opened up to external contributors, with varying degrees of difficulty, risk and reward.
Current innovation research focuses on how and what to open in each step, including the benefits and drawbacks of each.