18 July 2004

6 Features of Highly Innovative Companies

I am a regular reader of Dave Polard's Save the World blog. Today, he touched on something relevant to the work I do with companies and I thought you might enjoy opening this discussion in your organization.


processThe Conference Board of Canada recently conducted a survey that revealed six common features of "highly innovative" firms (those that get more than 20% of their revenues from new products).. The six features:
  • Draw on customers as the primary source of new ideas and an integral part of the decision-making process.
  • Collaborate extensively with universities and colleges on research and to access expertise.
  • Operate a defined R&D process.
  • Have formal processes for generating, testing and commercializing new ideas, including incentives for participating employees.
  • Use both evaluative processes and intuition in deciding on innovation projects and investments.
  • Have an appointed internal "innovation champion" and at least one "pathfinder" customer to collaborate on innovation projects.
These aren't rocket science, or particular surprising findings, but from my personal observation some or all of these six features are not only often absent from large organizations, but have often been abandoned by such organizations as part of the past few years of cost-cutting and 'rationalization'. I have been astonished to hear senior executives of large organizations essentially say they can no longer 'afford' innovation -- that is has become a luxury that does not engender enough short term return on investment to warrant any expenditure. This is classical large corporate myopia, of course -- since you're rewarded only for what is measured in the latest fiscal quarter, you're overwhelmingly tempted to outsource, offshore, slash staff, eliminate training and otherwise cut costs that will increase short-term profits at the expense of longer-term viability. Any investment in infrastructure -- new technology, knowledge, fundamental research, education, support processes that improve front-line worker productivity -- is frowned upon. It's insanely dysfunctional behaviour, but increasingly commonplace in corporations driven by tyrannical demands of shareholders for constant double-digit profit growth to justify wildly inflated stock prices. And just like the parent who tells his child that he has to go out to work at 18, rather than investing in a university education, this short-sightedness will have profound and lasting long-term negative consequences. When will the overpaid clods in the corner offices learn that you can't cut your way to greatness? "

What have you noticed in your organization?

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