Innovation Process: 3 Things You Can Count On

There are many things to consider during your innovation journey: insights into your customer and markets, good understanding of your ecosystem and its complex interactions, being comfortable with uncertainty, your culture and its dynamics, focusing on concrete milestones while managing to a long-term vision, and even a bit of luck.

Peter Drucker has boiled down the essence of the innovation process into the following three necessary conditions: innovation is work, innovation is built on strengths and innovation is an effect in economy and society.

Innovation is work

“There is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than the creation of a new system.”
– Niccolo Machiavelli, The Prince

Drucker indicates that innovation is work; it is hard, focused, and purposeful and makes great demands on diligence, on persistence, on commitment and requires resilience. Winston Churchill made the statement “To improve is to change; to be perfect is to change often.”

It is important to remember that innovation is not a linear process, but an iterative one. You learn by doing, where you discover market and technology unknowns and make course corrections on the fly. No wonder the traditional business planning falls flat in the face of the innovation process. Instead you need to utilize planning tools that are more appropriate, such as the assumption based planning processes.

Innovators must build on their strengths

Drucker also points out that innovators must build on their strengths, that innovators look at opportunities over a wide range, but evaluate these opportunities on the merits of their fit with the innovator herself, and with the organization.

Hamel and Prahalad define core competency as something that a firm can do well, such as technical know-how, specific processes, design skills, innovative culture, or relationships with customers and suppliers. However, more specifically, a core competency needs to meet the following conditions:

• Has a direct customer benefit, such as lower cost, key feature/functionality, …;
• Is difficult for competitors to imitate, thereby providing key differentiation;
• Has the ability to leverage and utilize the competency in other parts of the firm, including products, technologies and/or markets;

Jeffrey Phillips of Innovate on Purpose shares a key observation: “consider your core competencies when you generate and consider ideas, but don’t define them too narrowly or you’ll likely miss a great opportunity – one that exists at the intersection of your capabilities and anothers.”

My experience and past interviews in large organizations have shown that opportunities that are adjacent to the organization’s existing competencies help increase the innovation’s success rate. Along the same lines, there is a higher degree of failure on projects that did not have synergistic fit with the organizations’ strategy or existing workforce competencies.

Building new competencies in an area is a valid reason for pursuing a new innovation. M&As are often used to close a competency gap, and to acquire new ones. However, about two-third of M&As fails. At the same time, the innovation process requires constant vamping of your core competencies and exploiting them in unique and creative ways. So, not only do you need to build on your strengths, but also you do need to have the competency to further grow your strengths.

Innovation is an effect in economy and society

Finally, Drucker indicates that the innovation is an effect in economy and society; it is a change in behavior of customers, in how they work and produce something. As such, he points out that the innovation always has to be close to the market, focused on the market, and be market-driven.

Yet, market adoption and acceptance is a complex process where one rarely has the power to control. No wonder resilience is highlighted as an essential strength for the innovators. Innovators use their experiences and skills for solving problems, where their background and interest define their innovation’s target focus. However, the real work starts with the answers and insights they gather through this experimentation.

With that, we came full circle – innovation is work, it is built on strengths where strengths continuously need to evolve, and it is an effect in economy and society, where its adoption requires even more work and new competencies for it to be successful.

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