Managed well, an adventurous workforce can prove profitable for businesses
Members of the Economist Intelligence Unit (EIU) and Scottish Enterprise took part in a panel discussion in front of invited guests in Glasgow last Friday. The occasion marked the publication of Innovation Engine – Extracting Value from Ideas, the second in a series of three White Papers produced by advisers Grant Thornton in cooperation with the EIU.
It argues that companies can continue to succeed during the economic downturn by driving innovation: “History shows there is no shortage of innovative products born during recessions such as nylon or freezedried coffee,” said Robert Hannah, managing partner of Grant Thornton Scotland.
“Certain aspects of innovation, particularly around processes, can also yield powerful cost savings.” Leadership, cultural openness and trust, cross-functional idea generation, processes and integrated funding to balance risk are central to successful innovation, according to the experts, business leaders and academics questioned in the research. Of those surveyed, 85 per cent said innovation was important or critically important to long-term success even during economic downturns; 86 per cent said that the impact of customers’ requirements on their innovation process had greatly increased.
“What our report has revealed is that innovation isn’t as volatile or unpredictable as many believe,” said Hannah. “While businesses adopt different strategies, there are five key trends – leadership, cultural openness, cross-organisational idea generation, customer-led innovation, and disciplined processes towards innovation – that are adopted when innovating.
“Competition and customer insight drive innovation by going beyond traditional market research and opinion gathering with good innovations getting to the heart of customers’ greatest needs and frustrations.” John Bessant, professor of innovation at Imperial College London, commented: “Today, customers aren’t passive. User-led innovation is … the final frontier in a sense; at the limit you have co-creation with the customer. Here customers become part of the process rather than the recipients of a process.” Commitment to innovation from the top down and a clear vision of how an organisation wants to innovate is crucial for innovative successes, according to the report. Without leadership – to support the people, processes and culture – these other key ingredients for successful innovation can’t exist.
“Look at Woolworths: it just didn’t seem to have any clear purpose any more,” said Mat Hunter, a partner in the design consultancy IDEO. “But compare that with Ikea: [founder Ingvar Kamprad] has a clear vision to educate consumers about home furnishing solutions.” With the right leadership, creative employees – Hunter called them ‘intrapreneurs’ – can thrive: “They are not afraid of losing their jobs, they have a heretical mindset and are willing to break the rules.” But innovation does require procedural discipline: “Good innovators have a way of balancing … the passion for an idea, the charisma of the project, with the ability to push ahead with something. They possess a clear analytical approach, taking calculated risks and the practical steps that are needed.” And financial discipline, according to the report: “Smart innovators evaluate their portfolio of projects to achieve a balance in terms of risk, time frame and scale of innovation.” The survey showed that only one third of respondents’ measure spending on innovation or research and development, while just over one half keep track of the number of new products or services launched. One third admitted that their company only has a ‘vague sense of the effectiveness of any innovation initiative’.
“Too often than not, companies find it difficult to measure innovation effectively or few have clearly defined strategies to drive innovation,” said Hannah “There is a real need for companies to bridge the gap between the importance of innovation and implementing the right strategies to bring innovations to life.”