ESPRIT Counsellors

Ask people what 'innovation' means and you get lots of different answers. But to almost everyone, the word has a positive meaning. Usually people think of new products, new things. To business leaders, innovation is considered necessary to the growth of their company and closely linked to competitiveness. CEOs consider innovation as a fundamental and critical factor in achieving competitive advantage.

It is striking though that when managers, politicians or even customers are asked what the word "innovation" means to them, they almost invariably mention new products. Politicians and scientists also see new technologies as innovations. Sometimes the two are mixed up and one can hear people talk about new technologies when they actually mean products or materials (e.g. kevlar). That may be one of the reasons why innovation is most commonly associated with knowledge-intensive sectors such as biotechnology, pharmaceuticals and IT which tend to generate the highest numbers of product innovations. This in turn is probably the reason why innovation is most commonly closely associated with high tech, knowledge management, data bases and sophisticated laboratories.

We define innovation as the successful application of a new idea. In which 'successful' means that the application decreases associated costs (time, energy, money...) and/or increases value for the user (such as income and comfort). So success may come directly from the effort itself, from the new or improved product or process, or from increasing revenue or profit, or from the fact that people learned something.

Fear of failure on the one hand and fear of disrupting the security of status quo seem to be the real important barriers for managers to develop innovations. No need to worry: an innovation does not need to be absolutely new to the world. Just new to your organization is enough. However, new to your industry is better.

The same with size: a small innovation is good (incremental), an important one (breakthrough) is better. After all one thing is certain: a business cannot survive without changing over time.

Today, most companies prefer a relatively safe life in established markets, competing primarily on the basis of price. It is however easy to understand that one cannot indefinitely lower the price of the product, and still be generating profit, creating jobs and growing continuously.

(If politicians are serious about innovation and their goal to keep the west ahead, some radical innovation within governments themselves may be required.)

For any organization that is serious about innovation, there are broadly speaking three approaches that can be followed.

One can easily see that these approaches are not only ways to follow but are indeed levels of innovation. Highly individualistic companies with autonomous workers will rely on changing tools to make progress. But companies facing severe competition for market share will need to turn to the highest level possible: changing behaviour of employees. Only this level can bring about innovation competitors cannot imitate or buy since all renewal stems from the minds of its own personnel. Tools can be bought, processes can be re-engineered, but these may not work or people may try to boycott or sabotage them.