Innovation has been one of the trending management models of the last 20 years. There have even been long discussions as to its meaning. A great deal of agreement has been reached on its general outlines, namely driving innovation, coming up with different perspectives and approaches, creating new ideas and, most importantly, establishing processes that will create economic value from all these. Every company has tried different management models. Ideas are gathered using different methods and these ideas are put through maturation and evaluation processes. Companies with an awareness of innovation find that they gain a large pool of ideas and projects during this period.
It is indeed a matter of some significance that the process of collecting ideas and their maturation is managed by a company’s own resources. However, we have recently focused on the question: “With so many new ideas being thrown into the pot, how many of them are actually brought to life and create value?” Our main goal is “to produce value” and ensure the process of producing value is “sustainable”. Sustainable competitive power, in other words.
One of the things we need to look at for measuring our competitive power is how many customers are willing to pay for the new product-services we produce.
Meaning we are in tip-top shape if we can sell and make customers use our products. We must be providing benefits for them if they are choosing to use our products and services.
Based on all that, we have to come up with practical ideas that can be quickly brought to life with the potential to be turned into services and products we can actually sell.
My own personal assessments with regards to how innovation processes in different companies are managed brings me to the conclusion that the most obvious difficulty lies in managing that “bringing to life” process.
Well-established companies especially often end up embroiled in lengthy discussions on whether the investment decision should be carried forward during the final stages of the innovation process or internal entrepreneurship model. In some cases, even if investment decisions are made, the innovation road-map is subsumed under the annual production plan. To put it more precisely, we usually set targets that would see us fully utilize our human resources and production capacity when we make annual plans. As new business keeps coming as the output of the innovation process and there is no new capacity created to deal with the extra work, planned jobs are prioritized with innovation projects being pushed further back. Time is of the essence when it comes to innovation projects. The difference and competitive power that the project will create is critical in that period. When a project is put on the back-burner, enthusiasm dwindles, causing the company to lose precious time in entering the market with the new product, culminating, in some cases, in total dismissal of the project.
I think the solution here is for corporations to include in their annual plans the effort needed for the innovation road-map to achieve its ultimate goal as a target from the very beginning and manage it separately.
Factors Obstructing the Innovation Process in Corporate Life
Another factor that lowers the performance of our innovation processes is hidden within the corporate and individual targets we set during the strategic planning period We would all expect a company managed by strategic management principles to have an annual plan and objectives that are clearly defined and shared with all employees. And what matters the most is that all company departments adopt common sub-goals and work together in unison to achieve these goals together.
Managers like me who have worked in corporate life for years know that achieving this kind of harmonious cooperation is perhaps the hardest job. Generally, business units, including the main functions of the company, have their own business models and ways of realizing their goals. They may even wish to bring this model to the forefront when setting their targets.
Let me be a bit more specific on that as the topic at hand is innovation. The September-December period witnesses ambitious projects being put forward and heated discussions take place in company boards, while business and financial plans for the next year are conducted. Each group sets its own goals in such a fashion as to expose themselves to the minimum amount of risk. Bringing new ideas to life and creating value… that is innovation, as the name implies. It lies outside the scope of routine work. It comes with its own risks. Which one is easier to sell? An already proven product, or a new one? It’s a bit of an adventure, if you like.
Except for those who believe and support the difference that the innovation process will bring, dissenting voices emerge from those who are afraid to pursue new products and services and the related goals.
If those outside the R&D and engineering departments dig their heels in forcefully enough, they usuallyget their own way in not including the new set of products and services in their annual sales targets. And since that move detracts from the commonality of purpose, you might not get sales support even if you bring the idea to life. This means the idea of creating economic value goes down the drain. Get ready to face slings and arrows from all around you.
It is the leader here who will fix the deadlock. A leader must be a visionary. He/she should manage the company not only on the back of short-term financial targets, but also with a focus on achieving medium and long-term sustainable competitiveness. He/she should be flexible and open to change and innovation. He/she should have a good grasp of technological developments, the global trends and competition in the target markets, and have the power to direct his/her subordinates. He/she should ensure a sustainable competition plan is prepared that covers at least the next three years and take ownership of it. Most importantly, he/she should ensure that all bodies of the company work in harmony and cooperation towards the same goals.Only then will the potential to create value by making a difference grow.
Time to get the ball rolling
Whether it be within a corporate setting or an entrepreneurial eco-system, there are two issues which I see as major bottlenecks in innovation. The first is that the ideas and projects we get look so similar, almost identical in nature, that most of the time I leave the table with the feeling, “Well, I have heard this all before.” It even transpires that the products or services offered as “novelties” are already on the market. And I often get far from satisfactory answers when I ask, “How is this different from others?”
My advice is that every entrepreneur and anyone with a new idea should ask themselves this question: “Would I put my money into it if this idea was brought to me? There are already other companies on the market who provide similar services. Lots of other people or companies in my position could come up with a similar idea. Where do I differ from them? How is my offer going to stand out from others and create demand?”
The second issue is thinking globally. The business plans for most projects/ideas get drawn up haphazardly without paying attention to strained market conditions, the target audience and the competition. “What is the target market?” Most of the time the answer is “Turkey or just a city.” Okay, so “Why? Have you looked into the effect of global or local competition on this market?” And the answer you get is, “We set our targets according to a target audience that we know best, well tested and analyzed.”
I say: let’s not do it this way. Look for similar potential markets instead of developing services and products catering to the needs of a single market. If possible, plan ahead for several phases while designing. Make it a matter of priority to constantly improve your products and services and grow your market. Because a global or local competitor offering similar products might try to infiltrate your market in the space of only a few months. If it is operating in a larger market than yours, it can afford to sell the product at a cheaper price because it sells more. You will face the likelihood of losing your competitive edge unless you differentiate your range of products and increase their sales.
It is like a game of strategy. See the big picture. Think through all details. Create scenarios, do some planning. It’s time to get the ball rolling.