What makes innovative firms different - By R. Sridhar

What are the best practices in innovative companies? Read on to discover.

HERE are the results of a recent international survey on innovation with CEOs:

Innovation is very important or critical to their future, say 59.4 per cent.

They talk about innovation frequently or all the time, state 63.6 per cent.

Thirty-eight per cent state they have a definition of innovation.

Twenty-four per cent state they have a well-defined process of innovation.

Twenty per cent state that they monitor a set of innovation metrics.

If we were to conduct a survey in India about innovation with CEOs here, the situation would be no different.

Why is it that only 24 per cent have a well-defined process of innovation and only 20 per cent monitor results scientifically?

It might seem that CEOs pay lip service to innovation when they keep talking about it or say it is critical to their future. Often, it is not true.

Innovation Network (www.thinksmart.com) has done extensive work to understand what differentiates innovative organisations from others.

A study of the following material gives indications of the best practices of the innovative companies.

Best Practices Survey Report by Arthur Andersen Global Best Practices{trade}

The Creativity and Innovation Survey by Ruth Ann Hattori, Innovation Network

George Land World Class Innovator Award Winners Reports

Published material on companies known for innovation (3M and the like)

Here are the key drivers to innovation:

Context: What is the current situation of the business? What threats for survival might exist?

Leadership: What is the leadership passionate about?

Core Values: What drives choices, decisions and behaviour in the organisation?

Culture: Who are honoured and respected as heroes in the company and why?

Here are the operational elements that help in making a company more innovative:

1. Challenge

2. Customer Focus

3. Creativity

4. Communication

5. Collaboration

6. Completion

7. Contemplation

The Andersen study was specially commissioned by Innovation Network for Convergence 98, a conference on Creativity and Innovation. (Innovation Network holds a Convergence Conference every year.) It was conducted among Innovation Network members and Andersen clients. It covered manufacturing as well as service industries.

Here are some key findings:

Over 30 per cent of companies had formal processes to collect ideas.

Customer analysis and brainstorming contributed the maximum to new ideas generated.

Internal sources and customers were the best source of ideas.

Amongst internal sources, senior management and R&D contributed the maximum ideas.

Only about 30 per cent of the companies had an ideation committee for promoting, collecting, and screening ideas and improvements

Widespread commitment to creating customer value was the most important way to encourage innovation, followed by an environment of mutual trust and respect.

Informal praise was the most often used method for rewarding innovation, followed by monetary compensation.

Cycle time for ideas-to-concept development was 1-13 weeks in most companies.

A majority of companies conducted creativity sessions for employees; most of them once a quarter.

Over 25 per cent of employees were formally rewarded for innovation efforts

Product innovations

1. Most ideas were incremental improvements. Only about 20 per cent of the ideas were breakthroughs (known but not in market) and just about 10 per cent of the ideas were truly radical (totally new).

2. Most companies spent less than 25 per cent of the time on innovation efforts.

Creativity & innovation survey

Here are the results of another study conducted amongst members of the Innovation Network. Responses are from CEOs as well as non-CEOs:

1. Most CEOs and non-CEOs claimed to have read books on creativity, innovation, problem-solving and such topics

Most had attended seminars on the subject.

Forty-four per cent of CEOs and 60 per cent of non-CEOs claimed to have used creative thinking techniques.

Thirty-six per cent of CEOs and 44 per cent of non-CEOs claimed to have formal brainstorming processes.

Less than 30 per cent of CEOs and non-CEOs mentioned that they had a designated place for idea generation meetings.

Less than 30 per cent of CEOs and non-CEOs mentioned that there was a single individual responsible for managing the process of innovation.

Most CEOs and non-CEOs believed that innovation takes place at senior management level.

Over 60 per cent of CEOs and 30 per cent of non-CEOs felt that it was important to be a leader through innovation.

Over 50 per cent of CEOs and 25 per cent of non-CEOs felt that people in their companies were encouraged to develop their ideas for new products/services.

Over 25 per cent of CEOs and 10 per cent of non-CEOs felt that their company recognised and developed an individual's creative abilities.

Over 10 per cent of CEOs and 15 per cent of non-CEOs mentioned that their people were offered training on creativity and innovation.

Over 25 per cent of CEOs and 10 per cent of non-CEOs felt that their employees were rewarded for unconventional, `out-of-the-box' thinking.

Over 40 per cent of CEOs and 20 per cent of non-CEOs felt that their company was known to be innovative in their industry.

Over 70 per cent of CEOs and 50 per cent of non-CEOs felt that they were innovative in products whereas only 60 per cent of CEOs and 25 per cent of non-CEOs felt that they were innovative in customer relations.

Innovation Network also initiated something called the George Land Awards. George Land is the author of two books � Grow or Die: The Unifying Principle of Transformation and Breakpoint & Beyond, Mastering the Future � Today. He is credited with helping several companies become more innovative. This award honours leaders in the field of organisational innovation and creates a database of insights.

There were several questions in the entry forms that the companies had to answer.

These questions pertained to: Innovation definition, barriers to innovation and overcoming them, innovation part of mission statement, innovation goals, encouraging innovation, recognising and rewarding innovation, critical skills, training for innovation skills, employee participation, communication, sharing information, encouraging risk-taking, employee non-technical training, training hours, cross-functional teams, employee free time for pet projects, environment that stimulates innovation, formal process for collecting ideas and suggestions from employees, providing time for idea generation, punishable anti-innovation behaviour.

Over the next few weeks we will examine the answers to each of these questions to understand what differentiates innovative companies.

(The author is a creative consultant and Partner, IDEASRS.)

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