Monday, 25 November 2013

Managing Innovation and Creativity

As the IMF, the Bank of England and the UK Government report that "the economy is turning a corner", we are yet again challenged to make the best use of our innovation and creativity to support these early signs of recovery.
However managing these elements in our firms is not easy. In fact attempting to manage innovation as if it were just any old business process can actually be counterproductive.
For example a recent paper (Winsor, 2012) concluded that time pressure could eliminate innovation in some businesses.

My research in 2004 and then again in 2009 concluded that innovation in teams can be 'managed' but that it requires a different approach. I summerised my recommended approach under five areas.
(Patmore, Whittaker, Watkins & Hessey, 2009)

  • Leadership style - participative, democratic and non-authoritarian
  • The ‘job’ - people should have both discretion and autonomy 
  • Organisational structure - a non-hierarchical, flat structure with no perceivable boundaries
  • Culture - supportive of risk-taking, open to new ideas and encouraging non-traditional thinking
  • Attitude - flexible, sharing of thoughts and able to work around preconceived ideas

Trust and Value

Providing innovation teams with autonomy and support for their risk-taking is, in many organisations, a challenge and managers need to understand the value and impact of doing this before embracing it as part of their innovation strategy. In essence a high level of trust must exist between those responsible for innovation and those in charge of budgets and targets such that qualified risk can be supported. However investing in innovation has tangential benefits.

According to Lerner & Bronwyn (2009) an investment in innovation benefits an organization in terms of skills growth. "First and most importantly, in practice fifty per cent or more of R&D spending is the wages and salaries of highly educated scientists and engineers. Their efforts create an intangible asset, the firm’s knowledge base, from which profits in future years will be generated".

Trusting that 'profits in future years' will materialise relies on those responsible for innovation having, ideally, a track record of success. For mature innovation groups this should not be an issue, but for new groups the challenge is large and will often rely on the credibility and track record of individuals or the vision of a leader.

A Track Record of Success

But what defines success in innovation? If scientists and engineers have historically, within an organization, provided insight and ideas which have led either directly or indirectly to reduced costs or increased profits, then this will be deemed a success. Ideally this will have happened regularly enough for the rest of the organisation to believe (trust) that it can continue to happen into the future.

Defining the Value of Innovation

One of the major challenges facing organisations however is defining how their innovation and creativity can be measured in terms of increased revenues and reduced costs. Below are four areas where the impact can be measured in these terms. (Patmore et al., 2009)

  • Insight -  new papers or presentations on key business issues or future markets, which enhance understanding in the organization (impact, -training / seminar costs)
  • Business Development – the enhancement of new business collaborations through innovation partnerships (impact, -costs / +revenue)
  • Press and or media coverage - coverage in the media which results in a reduction in PR/Marketing spend (impact, -costs)
  • Intellectual Property - new licensing opportunities (impact, +revenue)
This leads to the question, who will measure this?

"Technology managers must regard 'the architecture of the revenues' as a vital and necessary element of capturing value from technology. Technology managers cannot disregard these matters or simply rely on others in the organization to address these questions on their behalf". (Chesbrough & Rosenbloom, 2002)

- the managers of innovation, in partnership with their finance colleagues.

Innovation in Business Models (as well)

"By the late 1990s, Apple’s initial pathway to growth was running out of steam. The company’s proprietary approach to designing both hardware and software limited it to being a niche player and hampered its ability to compete on price. In 2001, Apple began introducing a series of successful new products and services—the iPod, the iTunes online music service, and the iPhone—that propelled the company to the top of its industry. But the shift wasn’t only a matter of product innovation. Apple’s success resulted from its ability to define a workable business model for downloading music—something that had eluded the music industry for years". 

Sometimes the existing business model just will not support the innovation we need, the answer - change it. The bigger question is;  "whether to embed a new business model in the core business or establish it separately. The benefits of common assets, customers, and capabilities argue in favor of integration. But a significant disruption to the current model argues for a separate approach"


Having both an appropriate business model and system of metrics is key within a firm but ensuring that a team are able to see their innovative ideas realised is essential to the continued success of team and the firm.

According to Professor Mike Payne; "If a team is charged with the responsibility to be creative and/or innovative then they need the authority to see their best ideas implemented - this authority can of course be delegated elsewhere if it is better for a manager or another group to do the implementation - but if the authority to do something is removed then total disillusionment follows soon after". 

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