The cover story of the May edition of “CNBC Business” took a critical perspective on innovation and its relevance to business. The article, contributed to by a number of high profile commentators including Chris Barez-Brown, Kjell Nordstrom and Vijay Govindarajan claims innovation is at the top of business agendas right now because everything else has been done: cost cutting, customer relationships, engagement.
But what is innovation? It is suggested few companies have a firm grasp on what innovation really is or means for their enterprise. Leaders often confuse innovation for creativity. “Innovation is not creativity” says Govindarajan, “it is commercialising creativity”.
“Creativity is messy and intense, while most executives prefer order and predictability” contributes John Hagel, co-chairman of Deloitte’s Center for the Edge based in San Jose in the heart of innovative Silicon Valley. Yet often in the tech industry, Chief Innovation Officers are appointed, put in a corner and told to innovate.
These statements support Nordstrom, economist and author of “Funky Business” claims that “innovation is a form of creative destruction” and when big companies acquire smaller, innovative firms, after a few years only a brand is left, “the innovators have either been shackled or they have moved on”.
So how can this be addressed? Nordstrom refers to Novartis as a good example and outsourcing of innovation as the answer. In return for a stake in the company, innovative collaboration is shared: whilst one party does the research the other focuses on its core strengths – the application of the innovation and exploitation of economies of scale in the marketplace.
Here at Metis we value innovation as one of the ten key areas of hidden company value, areas where IP assets are often under-exploited. Innovation, as the article suggests is not a standalone activity: it relies on each of the other areas including brand, relationships, processes and most importantly strategy. Where we see value being created is in collaborative IP development: one company licensing its IP assets to another who in turn can give the former the market traction or way through barriers to entry it cannot breach on its own.
Have you looked outward for innovation? Are there synergies to be developed in your relationships or are you committed to doing on your own?