Back to Basics: What is Innovation?

When I worked on P&G’s WalMart sales team, one of my bosses was a big guy with an even bigger personality. He shared his opinions loudly and broadly and one of his opinions was that we needed to stop using the word “breakthrough.”

“If I have to hear one more time about some new 'breakthrough’ soap, I will throw you out of this office myself!” he would bellow.

Years later, I can’t help but wonder what he would think of the word “innovation.”

In May 2012, The Wall Street Journal published an article positing that, as the word “innovation” increased in usage, it decreased in meaning. The accompanying infographic said it all:

  • 33,528: Times “innovation” was mentioned in quarterly and annual reports in the previous year
  • 255: Books published in the last 90 days with “innovation” in the title
  • 43%: Executive who say that their company has a Chief Innovation Officer or similar role
  • 28%: Business schools with “innovation,” “innovate,” or “innovative” in their mission statements

That may seem like a lot but, remember, that data is nearly 8 YEARS OLD!

The desire for and investment in Innovation in all its forms — accelerators, incubators, startup/venture studios, corporate venture capital teams — has only grown since 2012.

While this may seem like a good thing, the fact that the success rate of innovations hasn’t changed, means that most people react to “innovation” the same way my boss reacted to “breakthrough” — if you bring it up, they throw you out.
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To avoid getting thrown out of offices, one of the first thing I do with my clients when we begin working to build innovation into an enduring capability within their companies, is re-establish what innovation is and is not.

Innovation IS something different that creates value.

When people hear the term “innovation,” they tend to think of new-to-the-world gadgets that fundamentally change how we live our lives. Yes AND it’s many other things, too. Let’s break down the definition:

“Something” includes products and technology, it also includes services, processes, revenue models, and loads of other things. Consider this, many would argue, quite convincingly, that the Toyota Production System was one of the biggest innovations of the 20thcentury
“Different” often surprises people. After all, even Merriam Webster defines innovation as “something new.” But here’s the thing, one of the most commonly cited innovations, the iPhone, wasn’t “new.” Even Steve Jobs admitted it when he said, in his keynote speech, that Apple was introducing three products — a widescreen iPod with touch controls, a mobile phone, and an internet connected device. The iPhone was, however, different because it combined those three devices into one.
“Creates value” is probably the most important part of the definition. All innovations solve problems. Solving problems creates value. If you solve a big problem, either because it’s a problem lots of people have or it’s a very painful problem a few people have or something in-between, you create a lot of value for others and for yourself.

Innovation IS NOT a one-size-fits-all term.

Think of it this way, both a Kia and a Maserati are cars, but you wouldn’t expect to pay Kia’s price tag and get a Maserati (and vice versa). Similarly, both a convertible and a pick-up truck are automobiles, but you wouldn’t use your convertible to carry building equipment to a construction site.

With a definition as broad as the one above, it’s possible for “innovation’ to become even more meaningless as it gets applied to more things. That’s why it’s important to identify different types of innovation.

There’s no universally accepted set of innovation types, which is why I recommend companies consider defining at least three types that reflect their business and forward-looking strategies.

One of the most common set of innovation categories is based on the degree of change required for implementation:

Adjacent Innovation changes a significant change to at least one element of your business model. It could be changing who you serve, like expanding from interventional cardiologists to general cardiologists, what you offer, like P&G’s expansion into “durable goods” when it launched Swiffer, or how you offer or deliver it.
Radical innovation is the stuff that gets all the press. These innovations fundamentally change the business, like IBM moving from computers to business services. These innovations are high-risk and require a lot of time, money, and patience to see to fruition. This type of innovation is also called “Breakthrough” but, for obvious reasons, I shy away from that term.

There are many things that need to be done to shift innovation from buzzword to business capability. Defining innovation AND at least three different types is only the first step in moving from innovation theory and theater to building innovation into a true capability that drives sustainable growth.

Or, as I would tell my old boss, “It’s the first step. But it’s a breakthrough one.”

 

Originally published on December 30, 2019 on Forbes.com

Most recently published at https://www.milezero.io on May 27, 2020.