The true meaning of Innovation

Bring up the topic of innovation and often the conversation will soon revolve around a cool, new gadget or an exciting start-up company with a revolutionary idea.  If the talk is about the challenge of innovation, it usually focuses on developing something new, original and radically different.  As the Institute for Competitiveness and Prosperity points out in its recent report, “innovation” has now become synonymous with “invention”, when invention is just part of the process of innovation.

It seems to me that discussions about innovation often turn to how poorly Canada performs as compared to other countries.  For example, the Conference Board of Canada recently gave Canada a grade of “D” in nine of the 12 categories evaluated in its innovation report card.  It ranked Canada 14th among 17 peer countries.

Some business people largely blame governments for this lacklustre performance. They say there are simply not enough incentives to stimulate innovation. But we can see that this is not the case.  In this same report card, the Conference Board also ranks Canada second in terms of government funding of business research and development.

I believe that business leaders have to stop talking about innovation as only the invention of new products undertaken by a handful of entrepreneurs or a cluster of scientifically oriented industries.  We also have to stop counting on governments to stimulate it through funding and other incentives.  Rather, we have to start looking at innovation as integral to every organization’s culture — how it operates internally, how it interacts with other organizations and its customers, and how it views itself within the global marketplace.  Above all, we have to start talking about innovation as a fundamental responsibility of business, where it is up to business leaders to create organizational cultures that continually renew and change.  That is what innovation truly is. Government may participate in funding of education, research and development, competitive tax policies and infrastructure, but the rest is up to businesses.

As Arkadi Kuhlmann, the Chairman and CEO of ING DIRECT USA, wrote recently in the Ivey Business Journal, “For all the talk about the importance of innovation, very few companies have figured out how to make it happen in a sustained way. Many businesses come up with one big idea, but that’s not enough… The key to long-term success is to make innovation happen continuously. That’s where companies fall down. Intentionally or not, they become complacent.”

How does a business leader create a culture of continuous innovation?  First, I believe that they must actively seek to understand how events, decisions and actions affect not only their own company, but the rich complexity of interdependencies within their company and between their company and the environment in which it operates.  In this way, business leaders gain a full and accurate understanding of the bigger picture.  They are able to see around corners and anticipate opportunities and challenges before they happen.  What is more, by sharing and discussing these insights with others within their companies, they highlight the importance of learning and listening in order to foster innovation.

Second, I believe that business leaders focused on innovation appreciate that playing it safe or taking it slow just doesn’t make sense in today’s often-unpredictable global environment. We live and work in an era of instant messaging, social networking and ubiquitous wireless communications.  Real-time competition is the reality and complacency is never an option. As a result, business leaders who want to continuously propel innovation create a sense of urgency within their organizations.  Through a strong and vibrant vision, they strive to build excitement about the future.  In doing so, these leaders create an atmosphere where employees are anxious to exploit new possibilities, to experiment and to bring plans to fruition.

Third, I believe that leaders who successfully cultivate innovation don’t solely look at a handful of people in research and development to come up with new ideas, products or services.  Instead, they actively seek out people from across and outside their organizations and industries.  In this way, they continually acquire new perspectives, gain new experiences and demonstrate to their employees and partners the value of curiosity and a fresh outlook.

I firmly believe that every organization has the capacity to become innovative. In other words, innovation is not limited to start-ups or elite research labs. Every company is capable of renewal — renewal that changes the rules of the games, that uncovers opportunities and that capitalizes on new possibilities.

Last November, Annette Verschuren, the former president of The Home Depot Canada, gave the 2010 Thomas d’Aquino Lecture on Leadership at Ivey’s Lawrence National Centre. She lamented that, “Too often in the past 15 years, Canadian business put all its eggs in the basket of a low Canadian dollar and a resource-rich economy. We saw incredible growth, but this narrow-minded approach cost us dearly in innovation and productivity.”

As she believes, “this is important, because innovation is the engine that drives Canadian productivity.” It is also a problem that we, as business leaders in Canada, “have to fix”.  I could not agree more.