Innovation: critical in a down economy

In a bad economy, cutting costs becomes the first tool organizations resort to when they try to keep their heads above water. The creative group is among the first to go and last to be returned. That is likely a mistake. If anything, the creative team should be kept because you really need to focus on developing new products and services – or at least that’s what PricewaterhouseCooper’s survey of 1200 CEOs from around the world revealed.

“Innovation, along with increasing their existing business, now outstrips all other means of potential expansion, including moving into new markets, mergers and acquisitions, and joint ventures and other alliances,” the survey determined. The CEOs “believe innovation will generate ‘significant’ new revenue and cost reduction opportunities over the next three years…(M)ore than 40 per cent of CEOs believe their greatest opportunities for growth come from spawning new products and services.”

The study also contents that “the drive for innovation must arise from the CEO and other executive leadership by creating a culture that is open to new ideas and systematic in its approach to their development.”

According to PricewaterhouseCoopers, the innovation process can be broken down to four phases: Discovery, Incubation, Acceleration and Scale. The study also identifies seven misconceptions about the innovation process:
• Innovation can be delegated. Not so. The drive to innovate begins at the top. If the CEO doesn't protect and reward the process, it will fail.
• Middle Management is the ally of innovation. Managers are not natural champions of innovation. They tend to reject new ideas in favor of efficiency.
• Innovative people work for the money. Establishing a culture that embeds innovation in the organization will attract and retain creative talent.
• Innovation is a lucky accident. Successful innovation most often results from a disciplined process that sorts through many ideas.
• The more open the innovation process, the less disciplined. Advances in collaborative tools, like social networking, are accelerating open innovation.
• Businesses know how much innovation they need. Leaders must calculate their potential for inorganic growth to determine their need to innovate.
• Innovation can't be measured. Leadership needs to identify its ROII--Return on Innovation Investment.