The concept of innovation is often associated with companies
and products – successful companies like Apple, Google and similar are coined
to be innovative or to have innovative products. Nobody has yet found a good
way of measuring how innovative a product or an organisation is although number
of patents is used by some. This did not help Kodak, Nokia or Motorola much
even though each of them had many patents.
The reality is that innovation is a cognitive process that often
is team based, especially in a corporate frame and as such not an organisational
or product characteristic – it is a way of thinking about new methods of using
the present resources.
“Innovation is not an organisational characteristic – it is a human
activity”
The role of the organisation is to allow, encourage and
enable innovation though their people and their collaborative thinking
processes. That means innovation is closely related to motivation, purpose and
employee engagement and not just something that happens in a laboratory.
The way that organisations chose (or is forced by tradition)
to shape innovation can be divided into 4 different categories:
The two lower categories are typically in well-defined markets,
the two left categories are typically larger corporations and the two top
categories are the most disruptive.
History has traditionally protected the larger corporations
and their access to capital, technology and scale of economy manufacturing. Large
corporate super tankers are built to fight similar entities in a competitive
battle with well-defined market rules. It was almost impossible for a new
company to enter an established market and get access to customers through an
exclusive sales network.
The start of the internet century has changed that completely.
Foxes – small innovative companies have easy and scale able access to capital, technology,
prototyping, knowledge and customers and are not bound by the rules of any
markets. The list is growing rapidly lead by companies Uber, Nest, AirBnB,
Tesla and similar.
They follow a blue ocean strategy where they redefine the
rules of the market and look for joint value creation with customers and
collaboration with potential competitors - Google sees Apple not only as a
competitor in certain business areas but also as a partner in other.
The established companies have a hard time competing as they
are locked in the logic of their market and a zero sum product price battle
with similar companies.
Maybe Tesla is still a small company compared to the automotive
giants, but they have certainly captured the agenda – so much so that OPEC had
to comment that they did not believe Tesla would become successful. The reason
Tesla scares the established community is that they are innovative in 4
different areas – all of them disruptive.
Not only are the Tesla cars innovative as a product with a
great sustainability message, they also incorporate new innovative technology
in storage, drive and information displays. At the same time Tesla uses a
business model alien to the industry with ownership of the technology
development and the sales channel and finally they think completely different
to the incumbents:
”Tesla is not a car
company, we are an clean energy storage company”
Elon Musk
With this in mind it is of vital importance that companies
not only upgrade their labs, their scientists and their people to be able to
innovate but also create an environment where innovative thinking is possible.
Not just innovative thinking about products but also about business models and
how the corporation is organised. Finally it is important to motivate employees
to innovate – employee engagement is vital for innovation.
"Great innovation does not come from satisfied employees,
it comes from fired up engaged employees"
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