When thinking about innovation, business leaders often set the bar too high for themselves. They hear about new technologies coming out of Silicon Valley and other tech hubs around the world and they equate that with innovation. Surely, new technologies are innovations. But that view is too narrow.
What executives need is a more expansive view of innovation. Too much focus on technology for technology’s sake can actually lead to a lack of real innovation.
Innovation Is Something New For You
According to Merriam-Webster, the word innovation has two meanings. First, it is “a new idea, device, or method.” This generally fits the common understanding of innovation. But the second definition is “the act or process of introducing new ideas, devices, or methods.” The first definition is the new thing itself, while the second definition is the introduction of that new thing.
Smartphones were an innovation. But the introduction of smartphones into, say, an expense reporting process is also an innovation. In business, innovation does not just mean that you invent something new. Innovation means that you introduce a new invention into your organization.
Furthermore, innovation is not just to do something that no one has ever done before. Innovation means you do something that you have never done before. Others may have introduced smartphones into their expense reporting processes. That was innovation for them. But when you introduce smartphones into your expense reporting process, that is innovation for you.
Several years ago, our consultants were working with a large high tech manufacturer that wanted to “transform the customer experience.” The goal was to develop a three- to five-year plan of strategic initiatives in which new technology would play a starring role. Over a period of weeks, the project team came up with a long list of ideas such as building a customer-facing knowledge base, new mobile apps for field service engineers, and big data analytics.
But some team members were concerned that none of the ideas were “far out” enough, that top management would think the team had failed to be “innovative.” At one point, a team member joked about coming up with a “hologram” of a service agent, which the customer in the field could conjur up, like a spirit.
In brainstorming, no idea is too far out. But that does not mean that innovation is only in far out ideas. As it turns out, the project team had many good ideas, including leveraging the company’s smart products in the field as a platform for customer service. Were other companies already doing this? Yes. But this company had not fully exploited these opportunities. Rather than worry that their ideas were not “innovative” enough, this company would be better served by actually implementing the ideas they already had. In other words, it was not a matter of inventing a new technology but of introducing a new technology to their business.
Business Process Innovation
Innovation is not a synonym for technology. The innovations that many organizations need today are not new technologies, but the application of available technologies to their business processes. The goal should be to simplify a process—or even better, eliminate the process.
For example, what if customers could serve themselves? Or, what if customers could serve each other? The technology for customer self-service and for customer communities is now widely available from commercial software vendors. Innovation is no longer a matter of developing the technology for customer self-service or community platforms. The innovation needed today is to bring those technologies into use within organizations.
Of course, at some point, introduction of a technology becomes so commonplace that it can no longer be considered an innovation, even if it is new for you. If a manufacturer is just now starting to use computer systems instead of index cards to track inventory, that manufacturer could hardly be said to be innovating.
Many organizations do not focus enough on business process innovation. Even when they introduce new technologies they do not spend sufficient time ensuring that they change their business processes. The customer self-service system is installed, but service engineers do not spend time to populate the knowledge base behind it. The community platform is installed, but no one invests the time to nurture a community. The computerized inventory system is in place, but when the materials manager wants to check on-hand inventory he walks out to the warehouse because he does not trust the system. In many cases, the technology does not lead to innovation because there is no business process improvement.
Business Model Innovation
Innovation becomes even more powerful when it means introduction of something new in the organization’s products or services. This goes beyond business process innovation to innovation in how the organization makes money or, in the case of a public sector organization, how it delivers its services and fulfills its charter. In other words, how it leads to innovation in business strategy.
Business model innovation certainly can involve introduction of a new technology. For example, Uber’s business model is heavily dependent on mobile apps to match drivers with riders who are physically nearby one another. Here the mobile apps do not make money directly but enable a whole new business model, one that is highly disruptive to the traditional taxicab market.
Caterpillar is another example. Sensors built into Cat’s equipment have opened up a whole new way for the company to make money by offering job site services such as controlling compaction of soil and asphalt. Caterpillar is no longer just selling heavy equipment and maintenance contracts. The innovation is not in the sensor technology but in the business model that sensors enable.
Innovation should be more than a buzzword on the business conference circuit. Business leaders should take an expansive view of what innovation means for their organizations and think beyond technology to business process and business model innovation.