Innovation is almost universally seen as a good thing. One great innovation can see an organisation gain a significant edge over the competition, albeit perhaps only in the short term. An organisation with a culture of innovation embedded in its DNA enjoys an even greater advantage; continually able to reinvent itself, its way of doing business, and the products or services it brings to the market, it has a far greater chance of continued success.
So what is innovation?
What exactly do we mean when we talk about being innovative? Is it just another corporate buzzword, or is it something more substantial?
The Merriam-Webster Dictionary defines innovation as:
- A new idea, device, or method
- The act or process of introducing new ideas, devices, or methods.
While this provides us with a good jumping off point, there is, perhaps, a slight flaw in Merriam-Webster’s definition. It’s quite possible to come up with a new idea, device, or method that is utterly unique but still totally useless. It might be an invention that nobody had ever conceived of before, but that doesn’t necessarily make the idea innovative. The thong diaper is an invention, it was even granted a patent in 2005, but it couldn’t sensibly be described as being innovative.
An invention has to be something new, but, as in the case of the thong diaper, that invention could still be pointless, or even ridiculous. An innovation is something much more than this; any true innovation always adds something of tangible value.
So we know that invention isn’t necessarily quite the same thing as innovation, but it’s also worth noting that innovation doesn’t always manifest in the form of physical products; it can just as easily be a new concept or way of doing business. The success of Dell Computers1 can provide us with an excellent example. Michael Dell struck on the idea of purchasing off-the-shelf components and cheaply assembling PCs tailored to his customers’ specifications. His business became officially known as Dell Computers on 3 May 1984, and it grew to be worth around $70 million by the end of 1985. There was nothing remarkable about Dell’s product, his innovation was in his business model.
What drives innovation?
Dell’s direct marketing business model was revolutionary in the 1980s, but other companies soon imitated the idea. Pressure from competitors, the need to drive down costs and increase productivity, new technologies, and changes within society itself, are all external factors that can drive innovation.
A business model that worked ten years ago might not work today. An invention that was on the cutting edge of technology a decade ago will eventually become obsolete. The ability to continually generate innovative ideas and products are a major factor in ensuring an organisation can thrive at a time of unprecedented technology-driven change.
A survey conducted by PricewaterhouseCoopers found that 97% of the CEOs they questioned valued the importance of innovation. 10% of them even identified it as their primary focus. However, while the overwhelming majority of organisations recognise that innovation is linked to success, there’s no question that some are consistently better at than others.
Great ideas rarely spring forth fully-formed in a single “eureka” moment, and waiting for a bolt of pure inspiration to strike isn’t likely to be a winning strategy. While external forces can drive the need for innovation, internal factors determine how well an organisation meets these challenges. It’s no accident that organisations prepared to invest in innovation tend to be the most innovative. However, it’s by no means the case that a company can always come out on top simply by throwing more money at a problem than its rivals. A smaller company that thinks and spends smarter than the competition can, as Michael Dell demonstrated in 1984, go from nothing to being a major player in a very short period of time.
When we think about companies with a proven track record of innovation, then Apple will very possibly top the list. It’s perhaps surprising then that this most innovative of companies has traditionally spent much less on research and development than many of its competitors. In fact, it was only in 2015 that Apple broke into the list of the twenty biggest spenders2. While a financial investment in innovation is important for most organisations, money is clearly not the sole deciding factor in achieving success. If everything else is in place, it’s quite possible for a small company to compete with the deeper pockets of its bigger rivals.