innovation as I see it

Innovation has become a business jargon. You see it in companies’ values statements as often as you find them. I have the feeling that most of these firms not even know what innovation actually is about and how to grasp it. Nevertheless, it’s something that should be true. Every company should pursue innovation simply because it is profitable. Offering new products and services, new versions with new functionalities, better performance, less impact on the environment, less cost is something all companies should be looking after. Innovation is the driving force of competition these days because it supports profit margins and firm survivability.

However, profitable doesn’t mean cheap, easy, and quick. Innovation is fundamentally different from most economic phenomena. While every resource allocation implies risk, innovating involves uncertainty. The difference is that you can calculate risks[1]. In fact there are professional careers dedicated to calculating economic and financial risks. On the other hand, you can’t even predict what risks are involved in innovating. This is due to the unknown nature of the process. Innovation by definition represents something new and successful. You only know what it is after you’ve achieved it. So how would someone calculate the risks of a process with unknown results? Moreover, if it’s unknown, how would you predict success or failure?[2] Just because it’s technically good, doesn’t mean it’ll be a market success.

But enough with the bad news. Most innovations don’t come from big R&D departments from even bigger corporations after years and lots of money invested. They also come from improvements in daily practices or existing offers achieved through the basics of innovation: interactive learning. Experimenting with new sources of knowledge, bringing experts to question what and how things are done, talking to customers, suppliers, and co-workers can spring innovation. By lengthening interacting channels you can enhance your ability and possibility of identifying gaps between market offers and customers’ needs – and that’s where the new offers come from.

So get off your chair, and go make innovation more than a jargon. Start talking to people and question them if there is anyway to do what you do better. New tools, new practices, new markets, don’t settle. Because the best thing about innovation is that the more you do it, the better you get at it – and more benefits you’ll get out of it. Don’t let innovation stand as a nice word in your organization’s values statements as every other firm out there. Copying others is not innovative at all.

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[1] Or else let’s assume that for now.
[2] Of course I’m exaggerating. There are different degrees of innovation and most of them are based on more familiar grounds that allow some reduction in this uncertainty.

 

REFERENCES:

DAVILA, Tony; Epstein, Marc J.; Shelton, Robert (2006). Making Innovation Work: How to manage it, measure it, and profit from it. Upper Saddle River: Wharton School Publishing.

LUNDVALL, Bengt-Aake; Johnson, Bjorn (1994). The Learning Economy. Journal of Industry Studies, Volume I, Number 2.

TIDD, Joe; Bessant, John; Pavitt, Keith (2005). Managing Innovation: Integrating technological, market and organizational change, 3rd edition. Chichester: John Wiley & Sons, Ltd.

VILLASCHI FILHO, A. (2004). Paradigmas tecnológicos: uma visão histórica para a transição presente. Revista de Economia. Curitiba, v.30, n. I, p. 65-105, jan./jun.2004.