What is innovation and how can businesses foster it?

Hajra Rahim
'To survive, you need to stretch out; balancing the safe bets and long shots is a tension that many organisations need,' says John Bessant - Tim Pestridge Photography

Professor and author, John Bessant, explains why innovation is often confused with ideation, and why learning from failure is so crucial to business success.

How would you define innovation?

Innovation means creating value from ideas.

While a lot of interest is in commercial value, a lot can be done with social value. For the Red Cross, creating social value is a case of life and death, and while it’s not creating lots of money, it's creating real value from ideas, such as simple low-cost hygiene products to avoid sanitation-linked infection.

There should be no limits as to where innovation comes from. It can come from our own teams, what competitors are doing, and the market. Today, it’s all about what users want and need, so it’s up to businesses to make sure that they have a good set of antennae to pick up on these trends.

How do people commonly misdefine it?

People conflate ideation with innovation. If I have a great idea for a heart valve, I will need a long time to refine the idea, take on
board other people's input and knowledge to develop it, and require users to test it. It's a long journey to create potential value from an idea.

If it’s a business idea, you have to convince a lot of people – such as investors, suppliers and, most importantly, customers and end users – that it’s a good idea and, ultimately, that they will be happy with it.

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What ingredients are required for business innovation?

You need a roadmap for the journey to creating value, and a strategy that lays out where and how innovation is going to help your organisation get to where it needs to be.

Businesses then need to create an atmosphere where creativity is welcomed, by making people feel like they can deliver an idea, and that it’s safe to share their own and link up with others.

It’s also crucial to collaborate. The need to build links has always been there, but today it’s called “open innovation” – which means networking with people inside and outside of the organisation.

By now, enough mistakes have been made that we can see recipes for successful innovation management dating back to the 1960s.

It’s vital to listen to users, the market and even collaborate with competitors.

Lastly, you need to give yourself time to reflect and improve your approach. Characteristics of companies such as Three mobile or Philips, which has been around for more than 100 years, is the need to adapt their innovation approach.

What challenges might a larger company face when it comes to innovating?

Any firm begins as a start-up with one idea – and while it’s hard, it can make that happen. However, when you start to grow and have to balance multiple ideas, you need a portfolio of innovation. That means having some ideas that are long shots and some that are fairly safe.

Very often, organisations get stuck at playing safe, so their form of innovation becomes doing what they do better, and it becomes more incremental as the organisation tries to manage risks and maintain stability. But to survive, you need to stretch out and explore; balancing between the safe bets and long shots is a tension that many organisations need.

Can you measure innovation?

You can measure what you put in, such as the money or the time that you give employees to work on the idea. You can do the same with things that come out, such as how many new products have been released in the past few years, as a proportion of the products that your organisation offers. Or you can count the number and type of suggestions for innovation made by employees.

It’s also important to measure the process of how well a business is managing innovation, rather like going to the gym and running through how strong you are in different muscle groups. You can do this by asking if you have effective processes for turning ideas into successful innovations, or if you have a supportive structure and
climate to encourage it.

What common mistakes do businesses make when it comes innovation?

The most common is putting everything into an idea and never getting actual innovation. Businesses need to have some kind of process for translating those ideas into something that creates value.

They also fall prey to becoming insular by not exploring all the possible spaces open for innovation. They will only focus on improving their products, for example, when they could also be innovating their processes at the same time.

Can you teach people to be innovative?

Yes. By now, enough mistakes have been made that we can see
recipes for successful innovation management dating back to the 1960s. For example, it’s not just about technology, or asking the market what it wants, because they don’t always know.

Sometimes, as was the case with the iPhone, you have to lead the market.   

A popular idea at the moment is business model innovation, where companies are changing their identity from being a supplier to a creator of a specific service. Airbnb doesn't own a single hotel, but is the world’s largest accommodation provider – its business model based on a platform enabling people to share their own spaces.

Consultants and lecturers can teach what to do but, in the end, mastering the technique and approach is up to individual businesses and people. They need the ability to manage innovations by being willing to admit that something didn’t work in the past and seeing how it can work better in the future.

John Bessant is an author and professor of innovation and entrepreneurship at the University of Exeter


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