Unit 1: Innovation

INNOVATION

Nick Skillicorn
What is your definition of ―innovation‖: Turning an idea into a solution that adds value from a
customer‘s perspective

What mistake do companies often make when they talk about it?: They talk about it being a
company value without actually putting the required level of support behind it to make it happen.
Coming up with ideas is relatively easy, fast and cheap, but then those ideas need to be executed.
This is where companies often fail, by not providing the required level of time and budget to take
a rough idea, refine it, experiment on it and finally turn it into a real solution. Additionally,
companies usually think of it just from an internal viewpoint, such as whether they think the
offering is being improved when it is updated. In reality, if the customer doesn‘t perceive the
changes as having value, then they won‘t be compelled to purchase it. So it is all about the
customer‘s perceived value.

What simple thing can a company do to change their conversation / perspective about
it?: Flip it on its head, and look at every new thing you are trying for various customers‘
perspectives.

David Burkus
What is your definition of ―innovation‖: The application of ideas that are novel and useful.
Creativity, the ability to generate novel and useful ideas, is the seed of innovation but unless it‘s
applied and scaled it‘s still just an idea.

What mistake do companies often make when they talk about innovation?: The think about
products or technology. Innovation is bigger than a product or a technological platform. And in
truth, it‘s the innovations to organizations and management that precede product or technology
innovation anyway. Great leaders don‘t innovate the product; they innovate the factory.

What simple thing can a company do to change their conversation / perspective about
innovation?: Change the conversation? For starters, let‘s have the conversation. Conversation
meaning a two-way dialogue. Telling employees that ―we need more great ideas‖ almost never
works…yet it‘s almost always what is done. Instead, let‘s open up a dialogue with everyone in
the organization about how we can get better at finding, testing, and implementing the great
ideas that people are already having.

Stephen Shapiro
What is your definition of ―innovation‖? Very simply put, innovation is about staying
relevant. We are in a time of unprecedented change. As a result, what may have helped an
organization be successful in the past could potentially be the cause of their failure in the future.
Companies need to adapt and evolve to meet the ever changing needs of their constituents.

What mistake do companies often make when they talk about it? The biggest mistake
companies make is asking others for ideas. When asking for ideas, we invite a lot of noise and
unnecessary work. Every person inside and outside of your organization has an opinion,
suggestion, or idea about how to improve things. The reality is that most of these ideas won‘t be
effective in producing positive results. Organizations that spent too much time on idea collection,
implode from the weight of all of the ideas.

What simple thing can a company do to change their conversation / perspective about it?
For the most effective results, focus on the question, not the solution/idea. I have done a number
of studies that show that when you ask people to think outside the box, you reduce the quality of
your solutions. By asking more abstract questions, you increase the noise, lower the value, and
reduce the relevancy of solutions. The issue isn‘t that you need to expand the box. Quite often
you are simply looking in the wrong box!

Framing the challenges correctly is a critical key to innovation. For example, bicycle safety
advocates have been pushing for mandatory helmet laws. But the real goal is to improve safety.
And numerous studies show that safety is greatly improved when there are a large number of
cyclists on the road. Ironically, helmet laws have been shown to reduce the number of riders.
Solving the problem of getting helmet law compliance is not the same as increasing riders.

Pete Foley
What is your definition of ―innovation‖? I define the innovation process as a great idea,
executed brilliantly, and communicated in a way that is both intuitive and fully celebrates the
magic of the initial concept. We need all of these parts to succeed. Innovative ideas can be big or
small, but breakthrough or disruptive innovation is something that either creates a new category,
or changes an existing one dramatically, and obsoletes the existing market leader. We can
obsolete ourselves or someone else, and it can be ‗sexy‘, or address a basic human need – both
the iPad and disposable diapers qualify for me. But it needs to either create a new market, or
radically change an existing one.

What mistake do companies often make when they talk about innovation? We need to stop
calling everything breakthrough or disruptive, especially in internal company discussions. It is
more than OK to have a balanced pipeline of big and small ideas, and we need to get comfortable
with that again. If we demand nothing but disruption or breakthrough, (delivered tomorrow and
on small budgets) then that is all people want to work on, and to accommodate this, everything
gets labeled in those terms. But language matters, and once we start calling good but smaller
ideas breakthrough, we lower the bar. This is a recipe for mediocrity, and is one of the reasons
why so many companies struggle with too many small initiatives and not enough big ones.

What simple thing can a company do to change their conversation / perspective about
innovation? Make a long-term investment in innovation culture. Strategy is important, but it is
culture that drives most of the smaller, often largely unconscious decisions that permeate an
innovation organization. Big ideas take time, productive failure, communication, and
collaboration. These are enabled by a culture that protects, and to some degree nurtures big ideas,
and innovative, fearless people. I‘m not sure if this qualifies as simple, but I think it is essential,
and often overlooked.

Gijs van Wulfen

What is your definition of ―innovation‖? An innovation is a feasible relevant offering such as
a product, service, process or experience with a viable business model that is perceived as new
and is adopted by customers.

What mistake do companies often make when they talk about it? Companies lack focus in
their discussions on innovation. Often there‘s a senior manager experiencing an urgent need for
something new, fueled by a business challenge. A new competitor may have entered the market;
revenues may have decreased dramatically or a big contract has been lost. One essential point is
often missed at the start: innovation ideas for what? That‘s the question! When you focus your
innovation efforts, you‘re much more productive. You should start innovation choosing a clear
focus.

What simple thing can a company do to change their conversation / perspective about it?
Don‘t accept the status quo. Innovation means coming up with something really new: a big idea.
When you fully accept the status quo at work or in your personal life nothing will change.
There‘s a wonderful quote by George Bernard Shaw: The reasonable man adapts himself to the
world; the unreasonable one persists in trying to adapt the world to himself. Therefore all
progress depends on the unreasonable man. Innovation often starts with something that annoys
you personally and is relevant for you. Something you personally really want to change, because
you need to. It‘s the WHY for innovation.

Kevin McFarthing
What is your definition of ―innovation‖? the introduction of new products and services that
add value to the organisation.

What mistake do companies often make when they talk about innovation? Companies often
confuse invention and innovation; they‘re different things.

What simple thing can a company do to change their conversation / perspective about
innovation? Companies should really listen more to their consumers and customers.

Robert Brands
What is your definition of ―innovation‖? Not an easy answer: Innovation needs to be defined
and agreed upon in each organization, making sure it is strategically and everybody is aligned.
Without it, misalignment results in less than optimal focus and results. As long as it includes
―new‖ and it addresses customer needs and wants, any variation goes.

What mistake do companies often make when they talk about it? Innovation is not just Idea
generation. It should encompass all Ten Imperatives to Create and Sustain Innovation, from
Inspiration to Results; a structured repeatable process needing continued reinforcement and
continuous improvement.

What simple thing can a company do to change their conversation / perspective about it?
Since it is ―Innovative or Perish‖, the ideal thing an organization can do is set a clear and simple
goal, like ―At least one new product per year‖ that can be adopted and understood at all levels.
However, make absolutely sure objectives and rewards are aligned.
Difference Between Innovation And Creativity

Creativity and innovation are often seen as interchangeable. However, while there is overlap
between them, they‘re different. It‘s important to understand and apply that difference in your
innovation strategy.

Creativity vs. Innovation

Creativity is the act of conceiving something new, whether a variation on a theme or something
wholly new. Innovation is the act of putting something into practice. It‘s the difference between
conceiving of the idea of a craft that could fly through space, and actually building a rocket that
people can ride into space.

Why the confusion? One follows the other, and the two usually nest within each other as well.
We often even use the terms interchangeably; look at how often a new invention is called both
―innovative‖ and ―creative.‖ Take building that rocket, for example; the ―space dividend‖ from a
host of parts and materials created to solve a particular problem yielded research and ideas that
allowed people to go to new creative heights, and then put those heights into practice. If you use
a memory foam bed, scratch-resistant sunglasses, take a picture, or put an LED light into a lamp,
you‘re the beneficiary of the creativity and innovation of NASA and other space agencies.

Can there be innovation without creativity? In the sense that you can build something just to see
what happens, curiosity or wanting to know why can be a powerful force as well. However,
innovation is strongest when it‘s directed toward a goal. Creativity helps you find the goal, and
innovation allows you to reach it. So how do you use this intellectual waterfall?

The Flow Of Innovation

Creativity should be key in the goal stages of your innovation program. Keep in mind, goals
don‘t have to include vast, world-spanning approaches. A creative goal can be modest. Say you
have a creative vision to reinvent the car. Along the way, you‘ll have to reinvent all the systems
within the car, most likely, and you‘ll have to apply creativity each step of the way, and then
innovate to reach your goal.

This means you‘ll be using creativity constantly during your innovation process. It may be used
as a way of solving problems, or it may be a way of reframing the problem. Look no further than
the many, many electric vehicles that are about to hit the market. Replacing the battery and
motor has led to a whole host of changes; Ford‘s electric F-150 can pull one million pounds.
Electric vehicles can be built on a ―skateboard‖ platform, so models are experimenting with
―frunks,‖ trunks in the front, ―crawlspaces‖ to hide safety gear, and even swappable frames.

Creativity has even led to rethinking transit itself. There are concepts like folding cars that can be
―popped‖ open, cars with spherical tires that do away with parallel parking, and more.
Remember the key difference. Creativity lets you think of new goals for which to reach, and
innovation lets you get to those goals and find new ones.
14 Different Types Of Innovation: Why One Size Doesn’t Fit All

 Callan Hough
 23.03.20
 Innovation Management

Each year, consulting firm PwC conducts an Annual Global CEO Survey. The purpose of this
survey is to understand which hot-button issues are on the minds of today‘s global leaders. Over
the years, innovation has remained at the forefront of their concerns. This is to be expected,
given how the mainstream and trade presses are awash with stories of new technologies
threatening to disrupt businesses, industries, and even entire countries.

We continue to hear tales of nimble and agile startups upending venerable institutions who failed
to remain on the cutting edge. No-one wants to be compared to the likes of Kodak or
Blockbuster, consigned to public memory as casualties of the ‗innovation wars.‘

Part of the problem is that innovation is such a catch-all term that it makes it very difficult to pin
down precisely what it means. The reality is that the term can be applied to everything from
business models to new processes.

This guide will help to demystify just what innovation can be, enabling you to innovate more
effectively. It will also look at the various types of innovation that exist, and how to utilise them
to the benefit of your organisation.

Why innovation matters

It is estimated that the largest 1000 companies in the world spend $782 billion on research and
development. Whilst measuring innovation purely by R&D spending is an extremely blunt
instrument, this should give you an indication of its importance in the global marketplace.

Research from Stanford University highlights the growing cost pressure involved in this kind of
R&D, with productivity declining by a factor of 41 since the 1930s, working out at around 5%
per year. In other words, organisations need to spend considerably more to achieve the same
outputs.

Despite this, jumping off the carousel has even worse consequences. Studies from the London
School of Economics show that firms who achieve at least one new product launch per year
boost their revenue productivity an estimated 17%, with each new product launch adding an
extra 22% to this. What‘s more, the University of Houston found that investing in one‘s
innovation capacity had a significant impact on both the profitability of firms and their share
price.

Indeed, at a macroeconomic level, policy-makers and economists have long bemoaned the poor
state of productivity growth in much of the Western world. Cambridge University researchers
attribute this mostly to the uneven distribution of innovation across the economy.
What are the different types of innovation?
Over time, we‘ve created a distorted view of innovation as predominantly scientific and highly
disruptive. These are both inaccurate assumptions, as is the idea that innovation is the lone work
of a generation-defining genius. Instead, the following projects have managed to capture the
sheer variety of exactly what can be considered innovation:

The Innovation Matrix

One of the most common ways of looking at innovation is via the Innovation Matrix, which is
included below.

The Innovation Matrix classifies innovations according to both the technology it uses and the
market it operates in. Therefore, it allows us to conceive of four distinct forms of innovation:
Architectural innovation

What is architectural innovation?

Architectural innovation (also referred to as ‗recombinative‘ innovation) involves taking an

approach, technology or methodology from one field to another. This type of innovation is
incredibly common, research suggests that around 40% of the patents registered over the past
150 years fall into this camp, with the ratio growing each year.

Examples of architectural innovation

Consider the app Uber. Ride-sharing, geolocation and freelance workers were nothing new.
Combined, however, they became a game-changing innovation that served as a standout example
of the sharing economy – so much so that the term ‗uberisation‘ has become a term in and of
itself.

A slightly less glamorous example but a pertinent one nonetheless: desktop vacuum cleaners. A
common household staple, but repurposed for the world of work, desktop vacuum cleaners typify
the concept of adapting a classic product for modern needs. We hope this shows that you don‘t
need to reinvent the wheel to be innovative.

Radical innovation

What is radical innovation?

Radical innovation is what most springs to mind when we think of innovation, as it involves the
birth of new industries and the application of ―revolutionary‖ technologies. As such, while it‘s
also a relatively rare form of innovation, it‘s credited with allowing society to take substantial
leaps forward.

Examples of radical innovation

History is littered with examples of radical innovation, from the Enlightenment and the Renaissance to the
Industrial Revolution. All of these periods provoked fundamental questions in how we go about our lives
and our relationship to the world about us. Many argue that we are on the cusp of the Fourth Industrial
Revolution, with advocates believing that artificial intelligence, 3d printing and the Internet of Things
(IoT) will cause a profound shift in everything from transportation to healthcare.

Smartphones are a standout example of radical innovation. What‘s fascinating about

smartphones is that they caused us to backtrack on our fixation on making devices smaller, and
ultimately reconceptualise the potential of the traditional handheld device. Whether used for
communicating, travelling or shopping online, it is undeniable that smartphones are essential to
our day-to-day lives – a defining characteristic of radical innovation.

Incremental innovation

What is incremental innovation?

The overwhelming majority of innovations are incremental in nature. Incremental innovation is

when a series of small and seemingly insignificant improvements culminates in large-scale
organisational change. Incremental innovation is arguably the most accessible form of
innovation, as it can often be performed without requiring huge budgets, a large team, or a
reorientation of the business‘s strategy.

Examples of incremental innovation

Some of the world‘s most recognised companies have maintained their position at the top due to
incremental innovation. You may not notice the changes, but many ‗legacy‘ brands have become
industry mainstays because they do not allow themselves to become complacent. Take Gilette,
for instance. From inventing the world‘s first ‗safety‘ razor they have slowly but surely refined
their product to better suit customer needs.

Another fantastic example of incremental innovation is Amazon. To say that Amazon is a global
juggernaut is a staggering understatement, and they have achieved this by steadily perfecting
their service offering. This ranges from introducing next-day delivery to continually
experimenting with their web interface, resulting in daily optimisation of the user-experience.

Disruptive innovation

What is disruptive innovation?

Popularised by the late Clayton Christensen, the term ‗disruptive innovation‘ refers to when an
innovation creates a fundamentally new value network. This can be achieved by either creating a
new market or by entering an existing market and changing how consumers interact with it.

Christensen‘s theory sees innovations typically entering the market at a lower performance point,
at least when measured by the traditional metrics of that market. They nonetheless offer value in
an alternative way to a subset of the market for whom that feature is highly important. This
bridgehead is then used to rapidly scale and disrupt the whole market.

From Netflix to Aldi, it is highly likely that you benefit from disruptive innovation on a regular
basis. Ultimately, in a competitive market it‘s the risk-takers that rise to the top, and these two
companies are prime examples of disruptive innovation done right. Take a look at our article on
examples of disruptive innovation to explore this in more detail.

The Doblin Innovation Framework

Doblin‘s Innovation Framework defines innovation within 10 distinct categories, providing a
more practical perspective than the more strategic viewpoint offered by the Innovation Matrix.

The 10 categories are broadly divided across business model innovations, product innovations
and marketing innovations:

Business model innovations

Profit model

Innovation in the context of profit models typically aims to package up existing offerings in new
ways. They can be considered an example of disruptive innovation in terms of the traditional
customer relationship, and therefore often require detailed knowledge of the customer and what
they really crave from your business.

Network

As supply and value chains become more complex and interconnected, network innovation is
growing in popularity. Network innovation will typically involve the creation of new ways of
taking advantage of the processes or technologies of other companies. This then empowers an
organisation to significantly punch above its own weight.

Structure

Structural innovations look at how an organisations internal assets can be utilised to create fresh
value. This may include improving internal software and processes to make better use of your
talent or equipment. Managerial innovations often fall into this category, with organisations
using their culture and processes as a means of attracting the brightest talent.
Process

Process innovations are another inward-looking innovation and involve changing the way you go
about your business. These innovations often form a key part of the core competencies of the
business, and can provide a significant advantage over your rivals. A great example of this is our
work with Kent Police force. By using Idea Drop, they were able to crowdsource several
hundred ideas from across their organisation. The resultant process improvements had a long-
lasting impact on efficiency, employee engagement and empowerment.

Product innovations
Product performance

Product performance is the first product-related categorisation proposed by Doblin, and is

perhaps the one closest to the conventional definition of ‗innovation‘. Whether it‘s by expanding
on a product‘s features, improving its overall quality or creating something entirely brand new –
the key is that businesses look to add significant value to their product lines.

Product system

The product system is not as popular as the product itself, but is no less important. Innovations in
this domain revolve around the complementary products and services that can add real value to a
core product. You might look to establish interoperability, modularity and integration with other
products and services to provide value added to the customer.

Making innovations
Service

The final category revolves around the customer experience, and begins with service-related
innovations. The aim is to enhance the offering of your product or service, whether through
making it easier to use, highlighting overlooked functionality, or fixing common problems. Such
innovations are easy to overlook but they can really make an offering stand out.

Channel

Channel innovations focus on the way you deliver your offering to consumers. E-commerce has
been an obvious innovation in this domain, but as brick-and-mortar retailers have got to grips
with the changing retail landscape, there have been clear innovations in how stores and retailers
interact with customers. The ultimate goal is to delight consumers by ensuring they get what they
want, when they want it, and how they want it.
Brand

Branding remains hugely valuable, and innovations in this domain can help a company
distinguish itself in a competitive market. Great branding innovations typically involve a wide
range of customer touch points and result from collaboration between advertisement, customer
service and employee engagement.

Customer engagement

Last, but not least, are innovations which will help you build long-lasting relationships with your
customers. Innovations in this domain require a deep understanding of the customer journey,
allowing you to build a meaningful connection with your audience. At insurance company
Covea, they innovated improvements to their customer processes that delivered approximately
£2.5 million in savings.

The classifications highlighted above are not intended to be an exhaustive list, nor indeed a
prescription that requires you to innovate in each of the ways that are possible. Rather, they are
intended to showcase the breadth of innovations that your organisation might seek based upon
your specific circumstances.

The most innovative companies seldom operate across all of the categories, but rather find the
right mix for them. Just as the most successful investors don‘t put all of their eggs into one
basket, neither do the most successful innovators. The key is to ensure that the approaches you
do employ work together effectively, propelling your organisation towards a common goal.

How can we innovate successfully?

Even the most successful organisations can find things they can improve on, and indeed, to avoid
the innovator's dilemma, it's vital that successful businesses continue looking for ways they can
improve.

The above frameworks provide a degree of structure and inspiration for your efforts to do that,
but there are limitless possibilities when it comes to employing innovation tactics.

John Kotter famously advocates the dual operating system approach to innovation, Vijay
Govindarajan proposes a three box method. Henry Chesborough is a strong advocate for open
innovation, with Kaihan Krippendorff making the case for intrapreneurship. The lean startup
methodology has been strongly promoted by Eric Ries, with the likes of Amy Edmondson and
Carol Dweck looking at the cultural and individual aspects of ‗bucking the norm‘ respectively.

There are many approaches one can take, but perhaps the first step is to recognise that innovation
has to be a priority. A recent survey from Harvard Business School revealed that just 30% of
executives believe this to be so, which perhaps underlines why executives placed innovation as
the 18th strongest capability in their organisation, some way behind areas such as compliance
and financial planning.
This perhaps underlines why just 14% of companies surveyed by Accenture thought they were
getting a return on the £2.5tn they had spent on innovation over the past 5 years. Accenture
sagely remind us that the amount you spend is less important than how you spend it, and they
argue that the best innovation tends to:

 Tackle the most pressing concerns of customers

 Harnesses the power of the crowd, including internal employees and external stakeholders
 Tap into the best talent you can, regardless of whether that‘s inside or outside the business (find
out more about open innovation here)
 Ensure that data drives everything you do (find out more about data driven innovation in this blog
post)
 Tap into the latest technologies (such as idea management software) to drive your innovation
 Involve a wide range of stakeholders to not only tackle the needs of customers, but society as a
whole.
 Embrace agile innovation methods as it leads to increased productivity and greater innovation
output

Innovation is anything but straightforward, and there are many ways you can approach things,
but hopefully the above will provide a degree of guidance to help you on your way.

Idea Drop: The Leading Innovation Software

Now you know the many different ways of defining innovation, you can begin to unleash its
possibilities for your organisation.

Innovation can be a single idea on how to do things more efficiently, or it could be the start of
large-scale transformation. Whatever form it may take, the Idea Drop platform helps to make
innovation possible.

Businesses can use our idea management software to source new ideas from across their
organisation, and then refine and implement those with the potential for real impact. Not only is
our platform entirely cloud-based and easily incorporated into daily operations, but our
innovation experts are also on-hand to guide you through the implementation process.
Innovation Platforms
An innovation platform is a tool for building and growing ideas. However, an innovation
platform also refers to a technical solution where you can build things fast and prototype tools.

Furthermore, for a business, an innovator‘s growth platform means using products, services, and
technology in a new way to reach your goals—preferably more efficient than before.

Let‘s discuss the insights about the innovation platform by explaining its types, examples,
benefits, and how to choose the right platform for your workplace.

Types of Innovation Platforms

Technical Open Innovation Platforms

One of the biggest changes in the way in which companies approach innovation has been the
growth of a technology-based open innovation platform. Let‘s go through an example to
understand what is an open innovation platform?

Moreover, one of the biggest open innovation examples is Linux, an operating software that
competes with Microsoft and Apple, which are developed in the closed innovation policy
platform.

Therefore, the biggest benefit of open-source software is that the software is continuously tested
by programmers with 100 percent transparency.

Idea Management Platform

This is an idea-sharing platform where people can come together and share their thoughts on the
idea management process.

So, the goal of an innovation management platform is to help companies come together, gather
ideas from their employees, and evaluate each idea individually.

Then, developing good ideas for the market more quickly will allow them to increase
productivity.

Examples of Platform Innovation

Ennomotive – The hub for engineering innovation

Ennomotive is an open innovation platform that specializes in experts and connecting

companies of various projects and win-win partnerships.
So, this platform is perfect for organizations that are looking to solve technical challenges and
need fresh ideas from creative and talented individuals.

Crowdspring – Design has done better

Crowdspring is a platform that facilitates various design projects, such as website logos or a
book cover, for organizations and private individuals.

Hence, this platform is perfect for organizations that need a reimagined or new design and want a
very broad spectrum of ideas that can be molded and discussed in an effortless iterative manner.

Viima – The best way to develop and collect ideas

Viima is an idea management platform that can be used for developing and gathering ideas into
innovations within an open or chosen group of stakeholders.

Therefore, this platform is perfect for organizations that are looking for an effortless way of
gathering ideas or thoughts. This is for smaller to larger groups. Furthermore, then to develop
them into something that can be implemented.

Kaggle – The place for data science projects

Kaggle is a platform that hosts a community of data scientists and machine learning engineers
who together process raw data gathered and submitted by organizations.

Furthermore, large organizations use this platform without existing data science environments
and access to raw data.

Choosing the Right Workplace Innovation platform

Let‘s discuss some tips and tricks to help you understand the many other aspects of which tool
you should end up with.

Start with your goals

Always remember to start by addressing your goals. If you understand your destination, it‘s
much easier to choose a platform that will help you get there.

For example, if a company needs fresh business ideas to solve a technical problem, such as
making a manufacturing process more cost-efficient, Ennomotive is a great candidate for the list.
A platform like Maestro is not.
Check characteristics

Different platforms have different characteristics. For example, if you compare Android with
Apple. It includes the idea that ―people know their own needs best‖. The other includes a unique
package with the idea: ―We know what people want.‖

Hence, if a platform has been designed based on a philosophy similar to your own, it‘s a good
indication that it could support your ways of working.

Custom or off-the-shelf?

Custom platforms for enterprise customers have the specific features requested by the customer.
However, they are complicated to use, slow, and costly to initiate.

So, off-the-shelf platforms are aimed towards organizations of a more general size. Moreover,
many off-the-shelf platforms are customizable, easy to use, and scalable.

Benefits of Innovation Management Platform

 They facilitate understanding and dialogue among stakeholders and provide a space for them to
create a common mutual trust and vision.

 They enable partners to identify the bottlenecks hindering innovation, and develop solutions
beyond what individuals can achieve.

 Innovation advertising platforms create motivation and a feeling of ownership of the solutions
that they develop.
 Innovation platforms create opportunities for research to be demand-driven, to disseminate
research outputs, and to find critical issues for investigation.

 By improving ideas, communication, learning, and exposure to new people, innovation platforms
help members to clarify their roles, adapt to unforeseen changes, and organize themselves.

 A Crowd-sourcing innovation platform is the best way to gather, surface ideas, and solutions
from your employees, customers, and partners.

 Social innovation platforms provide new ideas that meet social needs, create social relationships,
and form new collaborations.
Service Innovation
In industries ranging from heavy machinery to health care to financial services to consumer
goods, service innovation is helping businesses find new revenue streams by satisfying their
customer‘s need to get things done. In the book ―Service Innovation: How to Go From Customer
Needs to Breakthrough Services,‖ these seven service innovation fundamentals are presented:

1. Customers ―hire‖ services to get a job done.

People ―hire‖ a credit card to make purchases, ―hire‖ a doctor to diagnose and treat an illness, or
―hire‖ education to develop career skills. By making the job the focus of service innovation
rather than the service itself, organizations can define customer value in a way that can guide
improvements to current services and create entirely new services.

2. Customers hire solutions to get distinct steps of an entire job done.

A job is a process, and any step in that process presents opportunities for service innovation. But
many companies offer value to customers only for certain steps. For example, most credit card
companies focus their attention on the paying step, neglecting other steps along the way (such as
making purchases or tracking purchases). The result? Many companies leave valuable
opportunities on the table; opportunities that are adjacent to what they currently offer.

3. Customer ―outcomes‖ are the metrics that define success in getting a job done.

―Outcomes‖ are the customers‘ measures of how well they are able to get the job done. When
customers hire products and services to get a job done, they choose from among competing
solutions based on how well the various solutions satisfy the outcomes they are looking to
achieve. By capturing and prioritizing the outcomes customer are using to judge success, an
organization gains a comprehensive understanding of customer value to guide service
innovation.

4. Customers have unique needs that relate to the consumption of a solution.

Once a customer decides to hire a particular service to get a job done, there are tasks that
customers must accomplish as part of ―consuming‖ that service—such as making contact with
the service, communicating service needs, and paying for the service. This is true whether we are
having a meal at a restaurant, getting a haircut, or obtaining a mortgage. Although studying the
job of obtaining service is unlikely to lead to new service innovation, successful service
companies have differentiated themselves with a deep understanding of this job.

5. Organizations can approach service innovation in four ways: new service innovation, core service
innovation, service delivery innovation and supplementary service innovation.

New service innovation comes from the discovery of new or related jobs that a current or new
service can help the customer get done. Core service innovation comes from helping the
customer get a core job done better by improving a current service or introducing new services.
Service delivery innovation comes from improving how the customer obtains the benefits of a
service when getting a core job done. And supplementary service innovation comes from helping
the customer get jobs done related to using or consuming a product.

6. The foundations of ―service innovation‖ and ―product innovation‖ are the same.

Services and products are both solutions to customer needs. Before seeking a solution for a
service or product, it is critical to first discover the opportunities before crafting solutions. Nearly
all ―solutions‖ include aspects of both services and products within their delivery.

7. Before innovating within a service business, consider the different design continuums.

With specific measures of customer value, an organization should consider the primary ways in
which services are designed to come up with innovative services that truly differentiate them
from the competition.

Each of these service innovation process steps are part of our universal innovation process,
Outcome-Driven Innovation.
Design-led innovation
What is a design state of mind?

What we refer to as a ‗design state of mind‘ is partly about perspective, partly about empathy.
When you step back and consider every angle, you will be able to better appreciate all the
individual elements, rather than just the design as a whole.

Having a design state of mind means incorporating empathy and understanding in order to
appreciate your goal and work towards it. It means considering the impact of a decision and
being prepared for any consequences that might arise. Designers work up theories and test
several options thoroughly to help generate ideas and options not previously considered. In a
nutshell, a designer is required to use empathetic and calculated reasoning to find tangible
solutions. Applying this manner of thinking to all areas of business is what is meant by design-
led innovation.

You can’t rely on traditional sciences to solve problems

Take AirBnB, for example, one of the biggest advocates for design-led innovation. AirBnB was
founded by designers, and the application of their expertise in running the business is what made
it successful. In a video by Design Week, the founders talk about how they started their business
in the way they thought they were supposed to run it – with ‗Silicon Valley values‘ where
‗everything has to be solved with code‘. But this didn‘t work for AirBnB and they rethought how
to run their company based on what they knew: design. As Joe Gebbia, co-founder of AirBnB,
put it:

―Design is used to create a culture… where people are conditioned [to] be their most creative.
Because, in my mind, I believe that‘s the only way we‘ll overcome challenges that are ahead of
us. The best way to prepare for that is to design a culture and an environment where people can
be their most creative.‖

What can you do to become design-led?

So perhaps you‘ve decided you need to orient your business around design based on the data and
information you‘ve received? Or maybe you‘ve already made that decision, but are yet to see any
results? You need to look inside your company and ask yourself if you are encouraging a culture
of design and creativity. Step number one would be to bring in some designers (obviously), but
step two is a little less prescriptive.

All businesses treat design differently so it is in sync with their brand identity. There is no set
formula for design. As Nathan Sinsabaugh wrote in his Wired article, ―Design is about
understanding people in the context and culture they live in to develop genuine empathy, and
testing and iterating solutions with customers to explore the validity of decisions.‖ This way of
thinking doesn‘t suit the mathematical mindset of traditional business innovation, so you‘ll need
innovative people working in a creative environment that encourages out-of-the-box ideas and
intuition.

Design is about creating solutions and providing what users need. That‘s the essence of design-
led innovation: being user-friendly. If your clients and customers like engaging with you, that‘s
good news for everyone. So if you‘re interested in the advantages of design-led innovation, then
perhaps it‘s time to change the way your company thinks.
Improvisation
Improvisational performers and musicians have always known that there is a magical state called
―focus and flow.‖ That is when a troupe or single performer is in a state of off-script and off-
music creation, utterly in the moment and without inhibition. It is in this state that even scientists
have reported unconscious breakthroughs and ideas.

Unfortunately, our modern world is making reaching this state of unconscious creation more and
more difficult. What is the culprit?

Enter multitasking

The past decade has produced many studies proving the cognitive detriment of multitasking.
Even the youngest generation, those born into the electronic, multitasking world, are suffering. A
study from London University proves that multitaskers lose IQ.

And get this: when studied side by side with marijuana smokers, multitaskers lose IQ at more
than twice the rate of cannabis users. Fortunately, the loss is short term, and our ability to think
and work returns to normal when we focus.

So, if we‘re turning our brains to low-level multitasking, how do we regain our ability to create
inventions, great novels, and disease-killing drugs?

Advertisement

Enter improvisation

Improvisation is nature‘s answer; it lets the brain run free. Improvisation actually orders the
brain to shut down regions of itself that would interfere with the free-flowing process of
creation. Distractions are eliminated; self-consciousness is unplugged.

It simply requires us to enter a state of focus. In 2010, Aaron Berkowitz and Daniel Ansari
studied the brain activity of musicians and non-musicians. Highly trained musicians, when
improvising, entered a different chemical state. Their brains shut down the temporo-parietal
junction, which allows your attention to be distracted by peripheral stimulus like a shiny object
or movement, sound or color. Also shut down were the lateral, prefrontal regions, which are the
areas that control inhibition and self-consciousness. Conversely, there was a surge of medial
prefrontal activity, where expressiveness occurs in the brain.

Amanda Rose Martinez explains it well in the Seed magazine article, ―The Improvisational
Brain,‖ ―In other words, in the improviser‘s brain, the area that imposes self-restraint powers
down, allowing the region that drives self-expression, which ramps up, to proceed virtually
unchecked.‖

Enter a state of absorption

Advertisement

True improvisation occurs when years of experience allow a performer, athlete, musician, or
scientist to enter a mixed state of conscious and subconscious. When a person knows so much
about a subject or has done something for so long that it‘s no longer entirely conscious, they can
go ―off script.‖

They begin creating, dancing, or speaking a foreign language without the need for a plan or self-
conscious editor. Things come out that are perfect, yet uncalculated. All those years and hours of
experience come together and throw out new material. In this state of ―flow,‖ they are no longer
consciously in control, but innovation flows out of them.

The beauty here is that almost anyone is capable of this state—engineers, mathematicians, and
mechanics—often report entering a state of timeless absorption when faced with a puzzle they
need to solve or a project that captures their imagination.

So the question is: What have you done forever? What is your special ability? Try to create a
way to enter total absorption, where time and cares fall away. Can you:

 allow for total absorption—remove distractions

 allow for abandon—remove observers, only players allowed
 allow for play—nothing is wrong and everything is fun.

The idea is to take the reins off your brain, and allow it to focus and run. When you can go
deeply into a subject, you can begin to improvise with what you know, creating new pathways,
new processes, and new innovations. Improvisation is a beautifully deep and absorbing process,
and one that your brain already knows how to accomplish.

How Improvisation can Boost Innovation

If you have an innovative culture already in place (meaning you‘re working with stuff like agile
project management, design thinking, lean, etc.) perhaps it‘s time you consider Applied
Improvisation Training. If instead you are a static and uncommunicative company, Applied
Improvisation may even work against your innovation efforts. Edoardo Binda Zane explains
more.

Improvisation, well taught, can boost innovation in companies, but not in all of them. There are
certain conditions you need to have in place to get the creative boost you‘re looking for. Without
them, applied improvisation may even damage your innovation potential.

Your company should have these four conditions in place:

1. High expertise
2. High teamwork skills
3. High experimental culture
 4. High real-time internal information and communication

If those four conditions are in place, then Improvisation Training can generate a positive effect
on innovation (Vera and Crossan, 2005). If they are not in place, the effect of applied
improvisation on innovation may be even reversed.

Take a look:

Source: Improvisation and Innovative Performance in Teams (Vera, Crossan, 2005)

If you look at the net effects in terms of innovation, though, you are always better off having
your four factors established and adding improvisation to them. In other words, you reach your
highest innovation potential if you first work on your team‘s expertise, teamwork, experimental
culture and communication, and only then add improv to the mix.
Large firm Vs. Start-up innovation
Every company is different—regardless of size—and there are a few key characteristics that ring
true about startup and corporate culture.

Startup Culture

A startup environment is typically a fast-paced culture in which creativity and communication

are valued. Startups tend to be smaller than large corporations, especially in the early stages of
growth, enabling employees to build strong relationships and freely exchange thoughts and ideas.
They‘re also capable of acting nimbly to adjust business practices and hit shifting goals.

Startup culture is often perceived as being less formal than that of a corporate environment, and
usually puts less emphasis on hierarchy within teams.

Corporate Culture

A corporate environment, on the other hand, is often characterized by a more structured,

formal approach to company culture. Because many corporations employ thousands of workers,
it‘s not uncommon for employees to be unfamiliar with colleagues outside of their immediate
teams or departments.

With years of experience under their belts, corporations tend to have concrete procedures,
protocols, and guidelines that govern daily operations. This rigidity can sometimes have the
effect of slowing down innovative processes.

How do you know which work environment you‘ll thrive in? There are a few major
considerations you should make before deciding to join a startup or corporation, which may
indicate which culture is a better fit for your personality. Read the five statements below and see
which traits resonate most.

Startup Culture Could Be Right for You If…

You Love a Fast-Paced, Ever-Changing Work Environment

Startups pride themselves on moving quickly. It‘s likely that the role you were hired for will look
drastically different after a few months. This means working through ambiguity, wearing
multiple hats, and embracing change. If this sounds exciting to you, a startup might be a good
choice.

If this sounds a little unnerving, you might prefer corporate culture. In a corporate environment,
you can benefit from greater stability and well-defined roles. You‘re expected to hit the ground
running on day one with little to no orientation at some startups, but in a corporate environment,
there is typically a well-developed protocol for onboarding, setting you up for success in your
role.

Creative minds will thrive in a startup environment. Small companies often encourage
experimentation and out-of-the-box thinking. The larger the company, however, typically the
more regimented and resistant to change.

Related: 11 Questions to Ask Before Joining a Startup

You Don’t Shy Away From Responsibility

Being in an early-stage startup means having a lot of responsibility—not only to perform your
duties, but to take responsibility in the event the company or your team fails. If this sounds
stressful, you might consider taking the corporate route, where your individual role is less
visible.

But you may thrive in this high-pressure environment. A smaller team means the ability to take
on more responsibility and the flexibility to get involved in different projects. If well-defined
roles and responsibilities are more your speed, though, you might consider pursuing a corporate
role.

With the flexibility of working in a startup environment comes the opportunity to advance
quickly. Corporations typically have a more rigid, slow path to the C-suite. After all, it‘s called
climbing the corporate ladder not sprinting. At a startup, it‘s not rare for someone to start in an
entry-level role and quickly ascend to a senior-level one.

You’re Passionate About the Work

Succeeding in a startup environment isn‘t always easy. In a new venture‘s early stages, budgets
are often tight and teams tend to be small, forcing many employees to wear multiple hats and
perform a range of tasks, often without commensurate compensation.

While compensation is important, it isn‘t the only reason individuals choose to work at a
company or in a particular industry. Other factors, such as passion, play an important role in
boosting employee engagement and zeal. When you‘re passionate about the work you‘re doing
or the mission your company is pursuing, it‘s easier to put up with the inherent uncertainties of
startup life.
Corporate Culture Could Be Right for You If…
You Value Work-Life Balance

If you prefer a nine-to-five role, you‘ll likely enjoy working in a corporate environment. The
lines between work and home blur in a startup. With limited resources and staff, it‘s the norm to
work long or unusual hours. You might be expected to answer an email after 5 p.m. on a Friday
or hop on a Sunday conference call.

You should also consider your hourly rate. Comparing two identical jobs with the same salary—
one at a startup working 60 hours per week and one at a corporation working 40 hours will result
in a lower hourly rate at the startup since you are working more hours than you would at a
corporation.

You Prioritize Compensation Over Passion

Startup success stories will make you believe that you can get rich if you work for a company
that takes off. The reality is: Three out of four startups fail. Even if you join the one successful
startup, you won‘t reap the benefits immediately.

To be in on the ground floor of a new venture is exciting but far from glamorous. In the early
stages, the founders often scramble to find funding and money is tight. Startups typically can‘t
offer competitive salaries. Benefits like health insurance or paid time off might not be available
until the team grows.

To make up for this, several startups offer equity in the company, which, again, only benefits you
if the company is a success. Of course, there are often other more intangible benefits, like free
lunches, weekly happy hours, nap pods, casual dress code, and a more laid-back, social work
culture.
At a corporation, you can count on competitive salaries and benefits packages, as well as the
stability of being part of an established organization.

Essentially it‘s a choice about your priorities and stage in life. Are you willing to accept a lower
salary to pursue your passions? Is financial stability a priority right now? Thinking through these
questions should provide a clearer answer.

Choosing a Path
Startups and corporations aren‘t mutually exclusive. You may find qualities of startups in large
companies and vice versa. In fact, many corporations have started creating teams dedicated to
innovation in an effort to respond more quickly to change. The question is: Are you interested in
entrepreneurial work?

The principles of entrepreneurship aren‘t strictly related to starting your own business. Instead,
they focus on being able to identify business opportunities, explore the risks and rewards of
pursuing a venture, and develop a thorough business strategy. Each of these skills are valuable to
startups and can help you prepare for a leadership position at a startup company.

Differences Between a Startup and a Big Corporation and Why We Need

Both

Growing up, you often hear a lot of household names such as Google, Boeing, Nordstrom,
Walmart, or Costco without really knowing what they are. Big corporations from all over the
world have been so registered into the society and people‘s minds that we only know what they
do and stopped thinking about their impacts to the society. In comparison, startups, though
recognised by people, do not get remembered as easily and are not as integrated into our
societies. However, it is important to note that both startups and big corporations are essential to
the progressive improvements and growths of a society with the each of them providing different
strengths, opportunities, and purposes.

By definition, a startup company is an entrepreneurial venture that is typically a newly emerged

business that aims to provide an innovative product, process or service to the market and hopes
to scale to a big company. On the other hand, a big corporation is a larger, more stable, and profit
making enterprise that has certain social and economic impacts.

To better illustrate their differences, allow me to use the too commonly used but never
disappointing analogy of comparing big corporations to the huge tankers and comparing startups
to the small speed boats. The big tanker moves very slowly, is untouched by the ocean currents
and waves, and hire a lot of people on board. The speed boat is agile, has a small team, and is
capable of going far or be punished by the cruel nature of the sea.
Jumping off this analogy, let‘s take a look at the strengths and weaknesses offered by startups
and big corporations.

Startups:

 Huge risks with huge returns: According to Forbes and other sources like Wamda, 90%
of all tech startups fail. Whether it‘s the lack of funding, being pushed out by
competitions, poor management, or not adapting to users in time and evolve to something
better. There are many reasons that can lead to the failures of startups because of their
immaturity as a whole. However, what comes with this high risk is a high return after
success. Every startup company today dreams of being the next Uber or the next
Snapchat because of their fast and rapid success.
 More than just a job: People often hear about the differences between working in a
startup and working in a big company. So what is it like working in a startup? Easily put
everyday is a battle. Startups are often working on tight schedules whether it‘s to meet
product deadlines or meeting a different investor. Working in a startup also means that
you‘re most likely going to have an active role in the growth of the company. People who
join to work in a startup often believe that they are part of something bigger and it‘s a
valuable experience to watch a company they‘re part of grow and mature.
 Small team: The reason why you feel impactful in a startup is often because you‘re part
of a very small team. The average startup team can very well be within 10 people. So
when you‘re part of that team, you are going to be tasked with tasks that are very core to
the survival of the entire team. It‘s great to be impactful in a startup, but that also means
that it can go both ways. For example, Breezi, a website building tool, once hired a
customer service manager that couldn‘t keep up with the pace. Though the bullet was
dodged at the end, it was still a close call for the team as a whole.
 Always pivoting: One thing you hear all the time about startups is that they are always
pivoting, and that‘s true. Pivoting correctly is crucial to the survival and growth of a
startup. Instagram isn‘t always the photo sharing application you see today. It started off
as a check in application that allows you to show people where you are. Through a series
of pivots and edits Instagram became what it is today. This is why it‘s important to know
that the final products of startups isn‘t always what they set off to create at the very start.
There will be new challenges and opportunities that will either evolve or destroy the
startups.
 Offering innovation: Startups normally set of their journey as an entity that is trying to
solve problems through innovation. Coursera and Udemy allows people to learn anytime
and anywhere via their platforms. Venmo allows people to pay each other conveniently
via their phones. Discord allows people to talk to each other as a team when gaming.
Point is, startups always have their eyes set on a problem and they firmly believe that
their products are the keys to solving these problems.
 Low cash flow: Another important but saddening fact about startups is their low cash
flow. One thing you hear most about startups is that they are always fundraising. If you
imagine a startup as a plane preparing to take off and its funds as the runway. The longer
the runway is the more likely it is for a startup to take off successfully. That is why you
often hear startups actively going through series of fundraising. Startups won‘t take off
 without the funds necessary. It‘s great to have a dream of solving problems, but there are
also harsh realities that one must face when doing so.

Big Corporations

 Emphasis on profits over risks: Once a company increases in size, it starts becoming
more risk adverse. Corporations know that for every success they get, there is more
failures coming their way. When a corporation get larger in size, there are more things to
consider such as the well being of its workers, its public images, and its constant growth.
With so many people‘s well being as risk, corporations can no longer take big leaps of
faith. Instead, they have to focus on what they‘ve been doing and continuing that success.
 Regular Jobs: Working in a big corporation means you‘re the one out of thousand
people they hired this year. You feel more invisible in a big corporation, meaning you
hold less responsibility but less accountability as well. You will receive standard pay and
have high security in hold your job, but in exchange for that is probably a less interesting
life style.
 Huge Team: According to CNN money, the total number of employees among all
Fortune 500 companies is 26,405,144 people. This makes the average number of
employees per firm 52,810 people. Big corporations offer more job security to people
because of how big they are. Big corporations aren not as likely to fail and go bankrupt
compared to small startups because of their solid foundations, well established
relationships with the government and people, and board of executives that makes
decisions together.
 Doing similar things: Like previously stated, big corporations tend to be more risk
adverse. They won‘t make huge pivots and conduct large scale company restructuring
like what some startups may do. They focus on doing what they do best and substantially
increasing profit. Companies like Walmart are still innovating, but what keeps it alive is
the everyday process of selling household goods to customers.
 Huge Pools of Funds: The biggest difference between startups and corporations is
probably their amount of funds. Startups are always tight in cash flow and always looking
for more. Corporations are always looking for profit, but a week without sales will not
have as much of an impact to the company‘s well being compared to a startup.
Corporations also have more funds to spend on things like advertisements, talent hiring,
and opening up additional locations. Startups probably have to pick between hiring a
sufficient engineer and running online ads for 2 months. That is the main different.
Startups have to be careful in every step they take while big corporations and more
rebound for mistakes.

After reading these points, I don‘t want you do treat corporations as boring entities and startups
as time ticking bombs. The existence of both is extremely important. People needs to be hired by
big corporations while innovation needs to be implemented by startups. However, this doesn‘t
mean big corporations are not innovative. Companies like Google, Apple, IBM, and Amazon are
constantly looking at new technologies and creating revolutionary products.

Going back to the tanker vs speedboat analogy, you can treat big corporations as the tanker that
moves slowly but never stopping. Startups on the other hand, will be the speedboats that explores
different industries, the newest trends, and disrupting industries drastically. Uber disrupted the
taxi industry without owning one car at all. AirBnB changed the hotel industry forever by not
owning any real estate. WeWork changed the traditional concept of working space by through
space sharing. Startups are constantly changing the traditional concept of things.

It is also a possibility that the two can work together. Startups are constantly being acquired by
big corporations for their talents and unique value proposition. Facebook acquired Instagram,
WhatsApp, and Oculus because it felt connected to what they were doing. Big corporations often
treat startups as little R&D centres where innovation is created by constant failures and talented
people.

Although startups and big corporations offer very different things, they both keep the society
moving and ensures progress through their constant engagement in revolutionary changes and
their look out for opportunities.
Co-creation and open innovation
Since the turn of the current century, product developers have increasingly looked to new
processes to improve the likelihood of a successful launch. Some of these upstream processes
include market research, which taps into everything from geographics and demographics to
psychographics. Other midstream processes include co-creation and open innovation to spark the
design of new concepts. Finally, downstream processes, including Lean Manufacturing, Six
Sigma and Kaizen, have been adopted to reduce costs and improve efficiencies in manufacturing.
The loop is then closed with market research reappearing as a commercial process at launch
through post-launch. Of course, what happens at every stage is important but it can be argued
that what happens in the middle stages is the most critical. Here, we will focus on co-creation vs
open innovation and highlight some benefits, risks and examples of each methodology.

What is Co-Creation? What is Open Innovation?

Co-creation is a shared process by which customers, suppliers, retailers, designers and other
relevant third-parties work together with the company to generate ideas towards a mutually
valued endpoint. Each party represents their unique perspective in the product relationship
ranging from buyer to developer and, via the process, is encouraged to communicate their
thoughts around things that work, things that don‘t, areas of need, opportunities for improvement
and more. These discussions continue from product inception through launch. Co-creation
sessions are typically lively with each party fully engaged as each party is regarded as equally
invested and equally important. This is a hallmark of co-creation.

Open innovation, according to the founder of the movement, Henry Chesbrough, Ph.D. and
author of ―Open Innovation‖, is ―equal parts philosophy and process.‖ It is a corporate mindset
that embraces external thinking and recognizes that great ideas are not exclusively generated
internally within the company. Specifically, Professor Chesbrough, states ―Open innovation is
the use of purposive inflows and outflows of knowledge to accelerate internal innovation.‖
Similarly to co-creation, open innovation as a process can be applied at any and throughout all
phases of product development.

How are Both Development Processes Used?

Co-creation can be executed as a simple process of gathering around a table for a discussion with
a group of internal and external experts, including customers, who have an opinion on the
product or product need being discussed. Co-creation can be as elaborate as having product
designers and marketers do double-duty as furniture delivery people so that they can go into
consumers‘ homes. For IKEA, this clever process allowed them to make observations and
engage homeowners to understand why they purchased and what product they wish they could
buy but can‘t yet find. In a similar fashion, Lego® encourages its customers to engage and
develop new designs and upload them to the website where customers vote on the designs. Once
a design gets 10,000 votes, Lego® brings the design, and designer, internally through its stage-
gate co-creation product development process.
Corporations with successful product track records, such as Siemens™, Apple®, GE®, P&G®,
J&J® and so many others, apply open innovation daily, in every aspect of product development.
At J&J, the philosophy/process is so entrenched that it is actually called out in the company‘s
credo which is the essence of the brand. GE literally hangs a sign in every building lobby
professing open innovation as its manifesto, ―We believe openness leads to inventiveness and
usefulness‖. Today, companies commercialize combinations of internal and external ideas
together with in-house and third-party pathways to market.

Co-Creation vs Open Innovation: Benefits, Risks &

Examples
Forbes goes so far as to call co-creation the ―secret sauce to success‖ and ―the future for all of
us‖. Perhaps this is due to a shared outcome where every party is made to feel like they are an
equal contributor (as they truly are) and hence, equally invested in the outcome. In today‘s age of
customer-centricity, it is tough to conceive a more intimate way for a consumer to connect with
his/her brand. Co-creation affords companies with enormous benefits including the following.

 You are dialed into the consumer need and expectation

 You can build brand loyalty and champion from Day 1
 You can return to your audience at any time to check in.
 You have access to real-time information on demand.
 Co-creation can be readily deployed regardless of the complexity of the product.

New pharmaceuticals, for example, (which, require a regulatory review process) can benefit
from co-creation early in the process. Specifically, interested people can use their home
computers to

In the 1990‘s, when closed innovation (seeking new ideas exclusively from internal sources) was
the norm at the dawning of the tech revolution, Lucent Technologies was poised for tremendous
success with the acquisition of Bell Laboratories (a patent powerhouse in its day) given the
break-up of AT&T. Lucent took an unusual step at the time, they began looking externally,
globally, to source novel raw materials and state-of-the-art components to accelerate their
development efforts in a process not yet recognized as open innovation. In parallel, a newcomer,
Cisco®, was also embracing open innovation by partnering with startups and acquiring those that
had already developed prototypes or working products not well commercialized. In essence, they
bought their R&D and accelerated development, ultimately leapfrogging Lucent. Here, the risk
of open innovation was looking at the wrong problem. Another risk of open innovation is that it
is not embraced top to bottom as a philosophy within the company: when this is the situation,
new ideas are unlikely to progress forward due to political, not technological reasons.

Which Methodology Is Right for Your Business?

Both co-creation and open innovation can be and are routinely used interchangeably. In our
experience, co-creation offers a combination of market research, brand loyalty, product
champions, insights on demand and a host of other benefits that provide value at every step of
the way along the product development process. As such, co-creation may have great relevance
and appeal to a wide swath of business functions. Open innovation, on the other hand, may be a
better solution for addressing deficiencies in in-house expertise, addressing supply chain
problems and the like.
Developing an innovation strategy

Strategy is about making choices between a number of feasible options to have the best chance at
―winning‖, and innovation is just one of the means to achieve your strategic goals.

Without a good one, it‘s actually quite difficult to achieve long-term success and orient
your business for speed in order to secure competitive advantage.

What‘s interesting is that according to statistics, 96% of executives have defined innovation as a
strategic priority. However, the lack of clear innovation strategy is a fundamental problem
especially for established companies when optimization of existing business becomes a priority.

While developing an innovation strategy isn‘t necessarily difficult in itself, aligning it with your
overall business goals and ways of working is what takes most of the time and effort.

This time, we‘ve decided to try to make sense of the broad topic by introducing five steps for
developing your own innovation strategy. In addition, we‘ll introduce a few tools that can be
used when mapping your strategic goals in order to make the best choices for long-term success.

What is Innovation Strategy?

Innovation is about creating new value people are willing to use and pay for, whereas strategy is
the plan for harnessing for example marketing, operations, finance and R&D to support
achieving the competitive goal.

To clarify, innovation strategy isn‘t about innovation tactics, such as setting up an idea
challenge, but more about mapping organization‘s mission, vision and value proposition for
defined customer markets. It sets boundaries to your innovation performance expectations by
simplifying and structuring your innovation work to achieve the best possible outcome.

Innovation strategy can be described as an explicit roadmap for desired future.

Before moving forward, it‘s important to mention that your innovation goals shouldn‘t be
separated from your overall business objectives as having a unified vision and common goals for
innovation will help fight the silo effect and increase your operational efficiency.

If you think about marketing, for example, you wouldn‘t want to separate your marketing
strategy from your overall business objectives but rather make sure your marketing strategy and
initiatives help contributing to your overall business plan and vision.

The same goes for innovation. There‘s no point of innovating just for the sake of it, as it has to
contribute to your bigger plan. So, before starting to develop an innovation strategy, make sure
you‘re aware of how innovation helps you to achieve your goals.
The Strategy Choice Cascade

Building innovation into your strategy development process starts with making a deliberate
choice of focusing on the best possible way to win as well as justifying the reasons behind that
choice.

Often, the best approach to this is to make a set of choices you‘re more capable of putting into
practice compared to other players in your field.

One relatively solid framework for making those strategic choices is The Strategy Choice
Cascade. The cascade is introduced in a strategy book called Playing to Win, by A.G. Lafley, the
former CEO of P&G and Roger L. Martin, Dean of the University of Toronto's Rotman School
of Management.

Needless to say that these two gentlemen have a lot of experience on business and innovation
strategy consulting.

The purpose of the strategy choice cascade is to turn strategy from a complicated, messy and
often deeply confusing and divisive chore, to a systematic and simple exercise.

The cascade consists of five steps that can help develop and implement sustainable strategy at
any organization:
Next, we‘ll look into each of these steps separately from the perspective of innovation.

5 Steps for Developing Your Innovation Strategy

1. Determine objectives and strategic approach to innovation

The first step in the strategy choice cascade is to define your winning aspiration. In other words,
your innovation objectives and the why behind your innovation strategy.

As any other strategy, the planning process of your innovation strategy starts with defining your
objectives: What do you want to achieve with innovation?

If we take a step back, think about your long-term business goals and the things that are most
likely to drive your business forward even after some time. As already mentioned, your
innovation strategy should help supporting your business objectives and vice versa.

An example of a good strategic approach introduced in Playing to Win is Olay. Olay's winning
aspiration is to become a leading skincare brand that wins convincingly in their chosen markets
and channels. Along with hair care, it will help establish a key pillar in the Procter & Gamble
beauty-care business.

It's likely that your approach to innovation will be something different. Typically, there are two
different approaches to innovation strategy: business model innovation and leveraging existing
business model.

Business Model Innovation

Business model innovation is the development of new, unique concepts supporting an

organization's financial viability, including its mission, and the processes for bringing those
concepts to fruition. The primary goal of business model innovation is to realize new revenue
sources by improving product value and how products are delivered to customers.

The purpose of business model innovation is to address the choice of target segment, product or
service offering, and revenue model. At the operating model level, the focus is on driving
profitability, competitive advantage, and value creation.

Business model innovation is the art of enhancing advantage and value creation by making
simultaneous — and mutually supportive — changes both to an organization’s value
proposition to customers and to its underlying operating model. — BCG

Business model innovation requires a deep understanding of your company‘s competitive

advantage and can be approached in four different ways:
Leveraging Existing Business Model

Leveraging existing business model refers to continuous improvements and

incremental/sustainable innovations. As opposed to the business model innovation, the strategic
focus with organizations that leverage existing business model is on improving the core
business rather than building new business models to create new value.

Based on these two approaches to innovation, we can identify three innovator archetypes:
2. Know Your Market: Customers and Competitors

The second step in the strategy choice cascade is defining the right playing field, as in, the
market you‘re operating in and the customer segment you‘re offering value for.

To be able to innovate and to respond to your customers‘ needs, you should listen and
understand what your customers really want and remove the rest. To be able to do that, knowing
what happens in the market is essential.

However, because competitive needs are individual and often very specific, a strategy that
worked for another player in your field shouldn‘t be copied but learned from. Although defining
your playing field is important, your unique value proposition is what will make or break your
innovation strategy.

3. Define Your Value Proposition

Next, and probably the most important step is to define that unique value proposition. How will
you win? What type of innovations allow the company to capture that value and achieve
competitive advantage?

Because the purpose of innovation is to create competitive advantage, you should focus on
creating value that either saves your customers money and time or makes them willing to pay
more for your offering, provides larger societal benefit, makes your product perform better or
more convenient to use, or becomes more durable and affordable compared to the previous
product and the ones in the market.
To be able to create a unique value proposition, the ability to identify and exploit new
uncontested markets is recommended. This can be done through value innovation.

Value Innovation

Value innovation was first introduced in the HBR article called Blue Ocean Strategy and later in
the classic book bearing the same name.

The purpose of value innovation is to achieve sustainable competitive advantage by looking

beyond your current understanding of the industry and reforming your value proposition to stand
apart from the competition.

Securing new competitive advantage is done by making competition irrelevant, also referred to
as the blue ocean. To succeed, one must adapt existing products or services through
differentiation and lower cost.

Often, companies imitate their competitors offering slightly improved products and services with
slightly more competitive price. Because rivals and imitators are about to attack fast, both the
value proposition and the profit proposition should be outstanding.

This makes your business model more difficult to imitate and gives the best chance for you to be
able to swim in that blue ocean.

To reach value innovation, try to clarify which customer segments your competitors are focused
on, and how do these segments overlap with the ones your new offering targets. Is it possible to
adapt any of your existing products to differentiate them further for the geographies or segments
that will face the most pressure?

4. Assess and Develop Your Core Capabilities

The first three steps in the strategy choice cascade really come down to one thing; your
fundamental capabilities required for winning.

When assessing your set of capabilities that need to be in place, consider the following:

 Culture
 R&D
 Behaviors
 Values
 Knowledge
  Skills

For example, if you want to win at delivering breakthrough technology, you must have internal
skills and knowledge to be able to build that. The ability to connect and develop these
capabilities is key to innovation.

5. Establish Your Innovation Techniques and Systems

Last but not least, to be able to execute your innovation strategy in a scalable and integrated
manner, you should find out what systems need to be in place.

Define: which innovation techniques and systems do we need in to be able to link our innovation
infrastructure elements together? What are the most important systems that support and help
measuring the results of our innovation strategy?

According to a recent study, Christopher Freeman defines the system of innovation as 'the
network of institutions in the public and private sectors whose activities and interactions initiate,
import, modify and diffuse new technologies'.

This includes the following elements:

 The role of company R&D, especially in relation to technology

 The role of education and training related to innovations
 The conglomerate structure of industry
 The production, marketing and finance systems

The Play-to-Win Strategy Canvas

Now that you know which strategic choices you need to make in order to succeed in innovation,
you should map these choices. This will help you to identify what must be true for your strategy
to be valid.

A simple and visual tool for the job is The Play-to-Win Strategy Canvas:
Reverse Engineering a Strategy

Reverse engineering is a technique a part of the strategy canvas that can be used to ensure your
strategic choice is sound. Instead of relying on opinions, reverse engineering allows you to
design and conduct valid tests in order to make informed choices.

It helps you to involve all of the decision makers (VP‘s included) to critically assess the viable
options and make them committed to the process and strategy.

Reverse engineering helps identify the ―nice to have conditions‖ vs. must have conditions and to
find an answer to: what would have to be true instead of what is true. This question helps you to
focus on analyzing things that really matter.

Since testing is often the most time-consuming and expensive part of developing a strategy, the
fewer tests you need to make, the better. Use reverse engineering to pinpoint only what you
really need to know.

So, to find out what would have to be true for your strategy to work, consider the following
aspects:

 Segments
 Channels
 Customers
 Capabilities
 Costs
 Competition
 The Choice Process

In the end, only viable strategic options remain, as all other conditions failed to pass the test.

Best Practices – How to Make your Innovation Strategy Work?

Pick your focus

After you‘ve picked your strategic approach to innovation and mapped all of the most important
elements related to it, it‘s time to put your innovation strategy to work.

To make sure innovation remains a strategic priority, stay focused on your goals and execute
your innovation strategy in a systematic manner.

"Choosing what kind of value your innovation will create and then sticking to that is
critical, because the capabilities required for each are quite different and take time to
accumulate‖ – Gary Pisano
Your strategic long-term goals give structure and support to your innovation work. Having
boundaries and staying focused on your end goal is the only sure way to get there.

Align innovation strategy with your business goals

As already mentioned, aligning innovation strategy with your overall business goals is one of the
most difficult tasks when it comes to succeeding in innovation. So much so that 54% of
innovating companies struggle to bridge the gap between innovation strategy and business
objectives.

According to Deloitte 2016 Global Board Survey, one of the reasons for this might be that the
overall understanding seems to be weak with regard to talent management and innovation/R&D
strategy. Other common issues are uncertainty and the unusual time horizon of innovation
results.

To succeed with strategy alignment, aim for communicating the role of innovation within the
entire portfolio to drive innovation across all units in your organization. Ensuring that innovation
is fully embedded into an overall business strategy is the only way to allow your organization to
innovate in the long term.

Communicate and integrate your strategy to the ways of working

No matter how great your innovation strategy is, it won‘t get you far if you fail to get people
committed to your innovation management processes.

Often, the root cause of these types of challenges is the top management. If senior managers fail
at the top-down communication, even a good strategy won't work if not integrated into the actual
ways of working.

Because senior leaders are often the ones making the decisions, prioritizing active
communication and engagement can help motivate people to be more active. When your
employees are aware of the goal and purpose, as in, why you‘re doing what you do, it will make
the long-term commitment much easier.

To integrate innovation into the ways of working, you might want to consider partnering with
your key people and set individual goals that support your innovation strategy. Providing clear
direction and guidance can help you to make innovation a part of your everyday work.

Measure systematically and adapt

Last but not least, to be able to tell how your innovation strategy works in practice, you should
be able to measure it in a systematic manner. Picking the optimal metrics and setting the right
expectations helps monitor your progress.

Systematic measuring is the only way to be able to adapt to changes to achieve better outcomes
in the future. So, don‘t do it in a silo, but aim for bigger impact by making a systematic
measuring a part of your innovation strategy.

Conclusions

Innovation strategy is about making the best educated choice between a number of feasible
options. To succeed in developing the best possible innovation strategy for you, you need to
identify and map your best possible strategic choices required to win.

However, making those choices is only half the battle as it‘s equally important to test and
validate your approach.

For your innovation strategy to work, strategic alignment and seamless integration to the ways of
working is the key. By clear communication as well as supporting metrics on company and
individual level will help you make innovation a continuous practice.

Succeeding in innovation takes a combination of knowledge, the right skills and practices, as
well as a lot of hard work. To help you succeed, we designed The Innovation System, a
program to support you across all facets of the journey.

We've recently put together a framework that helps you address all of the aforementioned
challenges: The Flywheel of Growth. We've also created a workbook that comes with tips on
how to use the framework, as well as concrete examples and PowerPoint templates. You can
download it here.

We've also written quite an extensive guide to innovation management which you might find
useful.

When you have the right innovation strategy in place, the next step is to build a systematic
process for generating, developing, evaluating and implementing new ideas.
Sources of innovation
To gain a deeper understanding of innovation, we must understand where innovative ideas come
from. Peter F. Drucker, known as the father of modern management, suggested that purposeful,
systematic innovation begins with the analysis of the opportunities and classifies "Seven Sources
of Innovative Opportunity".

The first four sources of innovative ideas are described as the "symptoms" that happen within the
business or industry. They are considered to be reliable indicators of changes that have already
taken place or which can occur with little effort. The second set of sources for innovative
opportunity are classified as the ones involving changes outside the business or industry.

P. Drucker deeply believes that systematic innovation is the necessity and that it can be inspired
by the following seven sources of innovative opportunities:
1. THE UNEXPECTED

The ever-changing business world is full of surprises. Yet, not only the unexpected failures but
also the unexpected success, or even events that occur in the organization can trigger innovative
ideas and become the creative sources of innovation. Unexpected situations can have a very
powerful influence and can inspire an organization to gain another, new, perspective on the
situation.

Does your organization have some success/failure that needs to be further explored?

2. THE INCONGRUITY

When our reality doesn‘t meet our expectations we can discover new insights and gain new
perspectives. Incongruity is a dissonance between what is and what it is supposed to be. It can be
a great source of innovative ideas as it compares what is and what everybody else assumes it to
be. Of all incongruities, the dissonance between perceived and actual customers‘ expectations is
maybe the most common one.

Do you use your customers’ feedback to determine incongruity and create the opportunity
for innovation?

3. INNOVATION BASED ON PROCESS NEEDS

The weak spots in your organization workflows, processes and systems provide practical
opportunities for innovation. Innovation based on process needs is a task-focused rather than
situation-focused. It improves the process that already exists, redesigns existing, old processes
and reinforces the weak links.

Have you spotted some inefficiencies in your processes?

4. CHANGES IN INDUSTRY STRUCTURE OR MARKET STRUCTURE

As the business landscape evolves, every organization has to adapt. Changes in industry shake-
up businesses, yet they can inspire people to explore and create new ideas as well. Generally,
industry or market structure is ever-changing and it can create great opportunities for innovation
in order for organizations to adapt and adjust quickly.

Do you track market changes and treat them as opportunities?

5. DEMOGRAPHICS

Changes in demographics are defined as changes in population, size, age structure, employment,
educational status and income. They are the most reliable indicators of future trends and offer
diverse opportunities for innovation. Each new generation demands new and unique products
and services. These changes affect the market as they determine the need for products, the target
population who are buying those products, as well as the number of products being distributed.

Have you explored what can Millennials bring to your innovation process?

6. CHANGES IN PERCEPTION, MOOD AND MEANING

With the growth of technology, there are significant changes in the way people perceive the
world. People change their perception about a certain product, brand or even industry. This is
basically the question "Is the glass half full or half empty?". Changes in perception are based on
the mood rather than on the facts. Changing your perception from "half empty" to "half full"
opens up incredible innovation opportunities.

Do you follow changes in perception among today’s consumers to improve your products
and services?

7. NEW KNOWLEDGE, BOTH SCIENTIFIC AND NONSCIENTIFIC

Every year new ideas are discovered and developed and a lot is added to the existing knowledge
base. Knowledge has always been a source of innovation yet knowledge-based innovation has
long lead time and convergence of knowledge. Technological and scientific breakthrough are the
source of innovation that can‘t be neglected. New knowledge can be applied in every aspect of
the organization, starting from learning more about emerging trends, customer expectations,
knowing how to use new technology, to improving customer service and supply chain.

Are you applying new knowledge to generate new ideas?

We hope that these sources of innovation opportunities can help you find new inspiration when
you feel like you lacking new ideas and different perspectives. If you have doubts regarding the
direction your business is heading to, suggested questions can help you get back on the right
track.

"This is a new era of opportunity, but only for those who are willing to accept change as an
opportunity, not for those who are afraid of it".
Peter Drucker
Innovation Environment
It is the culture, management and its people that have a mutual dependency. Culture can enhance
or inhibit the tendencies to innovate, it certainly has a profound influence on the innovative
capacity and provides the rich nutrients to nurture innovation or kill it. Culture has always been
regarded as a primary determinant of innovation.

To foster innovation and its environment, key levels of management and individuals must be
committed to creating an environment and culture that promotes creativity, be engaged and
promote the ability to promote change in nimble, agile and flexible ways to meet changing
conditions in the market place and with customers. It is this creativity through the innovations
that are flowing through the organization that often needs a critical focal point to create a change
that has impact.

Triggering stimuli for change

The job within any change initiative is to give stimuli in the actions, transactions and interactions
in the pursuit of innovation. These come from changing practices but focusing on the critical
interaction between people and the situations that delivering innovation demands.

Altering an organizations workplace environment comes from focusing on the person‘s creativity
and the organizations climate conditions to deliver on its innovation need.

From what I gather, there are over 40 different assessments you can use for creativity and
innovation. Within the best known, most cited and researched two still stand out for me as tested
and valuable.

There are two climate assessments for creativity assessments that stand out

The first is the Climate for Creativity (KEYS) developed by Terisa Amabile and the other one is
the Creative Climate questionnaire developed by Gören Ekvall. Both came out in the late
nineties but seem to have stood that ‗famous‘ test of time.
I have shown in Ekvall‘s model a modified version introducing the split between the attitude for
work and its five part make-up and work atmospheres five parts.

I‘m going to focus more on Ekvall‘s model as it is the one I have used more and it ‗feels‘ more
comfortable for me.

Amabile‘s model contained 17 factors, whereas Ekvall‘s model has only ten factors. There hves
been a number of comparative studies on these two. One argument being that less factors allows
for a more open aspect but less controversial. To be honest I like them both as they each have
slightly different ways to look at creativity.

Firstly though, let me outline Amabile’s model.

It comprises three key elements: resources, management practices and organizational motivation.
Each of these elements interacts with one another and has an impact on the resulting level of
innovation.

In Amabile‘s structure the assessment breaks answers down into two criteria of measuring
current performance and seeking perceived importance and attributed 100 points per section to
gauge relative importance using a simple Likert-type scale with anchor phrases at each extreme.

For her Organizational Motivation section, a questionnaire is broken down into

 1) Explicit value of creativity,

 2) Attitude to risk,
 3) Pride in Employee‘s,
 4) Enthusiasm for Employee‘s,
 5) Forward-facing strategy and
 6) Management systems.

Then for her Resources part:

 1) Time to innovate,
 2) Staff Expertise,
 3) Access to Funds,
 4) Material Reources,
 5) Information Resources, and
 7) Training

Then for her Management Practices it is broken down:

 1) Project autonomy,
 2) Teram Selection- Skills,
 3) Definition of Goals,
 4) Supervisor Support and
 5) Team Selection - Personality.
Ekvalls model

Ekvall‘s model was divided into two halves, each comprising five factors. This also allowed
Ekvall‘s model to be split over two pages, with the first entitled ‗atmosphere for work‘, and the
second entitled ‗attitude to work.‘ Maybe this is why I like it for this defining split for deepening
the conversation.

Again to use this you attribute 100 points per section to gauge relative importance using a simple
Likert-type scale with anchor phrases at each extreme.

Organizational Climate for Creativity and Innovation (1996) is the article that sums up all of
Ekvall‘s research within organizational climate and creativity throughout the second half of the
20th Century.

This was where Ekvall formalized his ten dimensions of creative climate (challenge, freedom,
idea support, trust / openness, dynamism / liveliness, playfulness / humor, debates, conflicts,
risk-taking, and idea time) as well as described the implications of the Creative Climate
Questionnaire (CCQ).

The ten dimension factors from Ekvall’s creative climate questionnaire.

Attitude to Work dimensions

Idea Time: amount of time people can use (and do use) for elaborating new ideas. In the high
idea-time situation, possibilities exist to discuss and test suggestions not included in the task
assignment. There are opportunities to take the time to explore and develop new ideas. Flexible
timelines permit people to explore new avenues and alternatives. In the reverse case, every
minute is booked and specified. The time pressure makes thinking outside the instructions and
planned routines impossible.

Risk-Taking: tolerance of uncertainty and ambiguity in the workplace. In the high risk-taking
case, bold initiatives can be taken even when the outcomes are unknown. People feel as though
they can "take a gamble" on their ideas. People will often "go out on a limb" to put an idea
forward. In a risk-avoiding climate there is a cautious, hesitant mentality. People try to be on the
"safe side" and often "sleep on the matter." They set up committees and they cover themselves in
many ways.

Challenge and Involvement: degree to which people are involved in daily operations, long-term
goals, and visions. When there is a high degree of challenge and involvement people feel
motivated and committed to making contributions. The climate is dynamic, electric, and
inspiring. People find joy and meaningfulness in their work. In the opposite situation, people are
not engaged and feelings of alienation and apathy are present. Individuals lack interest in their
work and interpersonal interactions are dull and listless.

Freedom: independence in behaviour exerted by the people in the organization. In a climate with
much freedom, people are given the autonomy and resources to define much of their work. They
exercise discretion in their day-to-day activities. Individuals are provided the opportunity and
take the initiative to acquire and share information about their work. In the opposite climate
people work within strict guidelines and roles. They carry out their work in prescribed ways with
little room to redefine their tasks.

Idea Time Support: ways new ideas are treated. In the supportive climate, ideas and suggestions
are received in an attentive and professional way by bosses, peers, and subordinates. People
listen to each other and encourage initiatives. Possibilities for trying out new ideas are created.
The atmosphere is constructive and positive when considering new ideas. When idea support is
low, the automatic "no" is prevailing. Fault-finding and obstacle-raising are the usual styles of
responding to ideas.

Work Atmosphere dimensions.

Conflict: presence of personal and emotional tensions in the organization. When the level of
conflict is high, groups and individuals dislike and may even hate each other. The climate can be
characterized by "interpersonal warfare." Plots, traps, power and territory struggles are usual
elements of organizational life. Personal differences yield gossip and slander. In the opposite
case, people behave in a more mature manner; they have psychological insight and control of
impulses. People accept and deal effectively with diversity.

Debate: occurrence of encounters and disagreements between viewpoints, ideas, and differing
experiences and knowledge. In the debating organization many voices are heard and people are
keen on putting forward their ideas for consideration and review. People can often be seen
discussing opposing opinions and sharing a diversity of perspectives. Where debate is missing,
people follow authoritarian patterns without questioning them.

Playfulness/Humor: spontaneity and ease displayed within the workplace. A professional, yet
relaxed atmosphere where good-natured jokes and laughter occur often is indicative of this
dimension. People can be seen having fun at work. The climate is seen as easy-going and light-
hearted. The opposite climate is characterized by gravity and seriousness. The atmosphere is
stiff, gloomy and cumbrous. Jokes and laughter are regarded as improper and intolerable.

Trust/Openness: emotional safety in relationships. When there is a high degree of trust,

individuals can be genuinely open and frank with one another. People count on each other for
professional and personal support. People have a sincere respect for one another and give credit
where credit is due. Where trust is missing, people are suspicious of each other, and therefore,
they closely guard themselves, their plans, and their ideas. In these situations people find it
extremely difficult to openly communicate with each other.

Dynamism / Liveliness: The eventfulness of life in the organization. In the highly dynamic
situation, new things are happening all the time and new ways of thinking about and handling
issues often occur. The atmosphere is lively and full of positive energy. There is a kind of
psychological turbulence that is described by people in those organizations as ―full speed‖, ―go,‖
―breakneck,‖ ―maelstrom,‖ ―and the like. People get caught up in the excitement and energy. The
opposite situation could be compared to a slow jog-trot with no surprises. There are no new
projects; no different plans. Everything goes its usual way.
Over the years the Ekvall questionnaire has been collected and benchmarked.

The value of seeing a significant part of an organization of 7,000 take this test and then be
compared against others completing the CCQ can be valuable. Taking one example between a
group designated as innovation organizations against those regarded as stagnating would deliver
a spider web visual showing the difference and where the gaps are to focus upon.

The discussion from producing such a view can become very telling. Of course this is a snapshot
but it can become a powerful enabler to change. Improving the climate, over time changes the
culture and conditions for how an organization views innovation. Perceptions need to be broken
down, clarity on a pathway forward, navigated and negotiated with a leadership that is providing
a consistent and determined support, so that the climate and conditions are constantly improving
the environment for innovation - the culture learns to adapt and recognize this as the everyday
‗way of working‘.

There are many variables that influence people‘s perception of the working environment and by
focusing on understanding the climate and the possible potential to change this, in what it can
provide as the prime contributor for providing a huge impact within your innovation
environment.
Creative Destruction
Creative destruction refers to the incessant product and process innovation mechanism by which
new production units replace outdated ones. This restructuring process permeates major aspects
of macroeconomic performance, not only long-run growth but also economic fluctuations,
structural adjustment and the functioning of factor markets. Over the long run, the process of
creative destruction accounts for over 50 per cent of productivity growth. At business cycle
frequency, restructuring typically declines during recessions, and this add a significant cost to
downturns. Obstacles to the process of creative destruction can have severe short- and long-run
macroeconomic consequences.

What Is Schumpeter’s Creative Destruction? A Simple

Definition
Creative destruction can be defined as the decay of long-standing practices, procedures, products
or services followed by more innovative, disruptive ones. It is based on the principle that old
assumptions need to be broken so that new innovations can benefit from existing resources and
energy.

What Is Behind Schumpeter’s Ideas? What Is Creative

Destruction?
The economy is based on the principles of supply and demand, where competition has an
influence on market prices. In 1976, Schumpeter, an Austrian-American economist, developed
the concept of creative destruction from the based on the works of Karl Marx. According to
Schumpeter‘s view, capitalism is a constantly changing, dynamic, and innovative process in
which a set of new ideas and processes challenge the existing ones (the status quo) and change
existing paradigms.

According to Schumpeter‘s creative destruction perspective, the great engine of capitalism is

imbalance and not the common idea of market equilibrium. He calls this imbalance creative
destruction based on the idea that innovation leads to chaos. This chaos can be the result of
obsolete or not very innovative products, companies that close, workers becoming irrelevant…
These apparently negative outcomes are, he beliefs, necessary to bring along new solutions and
improvements in quality of life, followed by an even greater economic growth.

An example of Schumpeter‘s creative destruction theory in history was the transition from the
industrial revolution to the use of oil and today until we get to today‘s highly technological
society where renewables are growing exponentially. The waves of innovation make the
previous models obsolete and force everyone and everything to innovate – and the
transformation is drastic.
Only companies with a great strategic vision can survive an episode of creative destruction.
Inevitably, there will be losers – usually, producers and workers who keep working with obsolete
technologies. But there will also be winners, i.e., entrepreneurs, innovators, and first-movers who
will create market disequilibrium and explore new and profitable opportunities.

Schumpeter’s Creative Destruction, Sustainability, And

CSR
And when it comes to sustainability as a management tool, we are also going over a moment of
creative destruction. Many businesses still work in the old, business-as-usual paradigm, ignoring
the supply-chain impacts of the materials they purchase and transform, the waste they produce
and how it is disposed of, or what energy they use.

There is a traditional path of continuous improvement which is what many companies are
developing. Instead of creating true CSR strategies and reports they put together a few cosmetic
actions and announce a few green policies, mostly for reputational reasons. Nonetheless, in
reality, what is needed is a more radical transformation and the development of effective
sustainability strategies. It will allow companies to become more resilient, better prepared for
climate change-related risks, reduce costs, and potentially explore new markets.

Creative Destruction Examples

 Photography companies whose business was greatly replaced by smartphone
incorporated companies;
 Traditional watches increasingly becoming replaced by smartwatches;
 Tablets and kindles replacing conventional printed books;
 Music streaming services (spotify, apple…) replacing digital shopping of music songs or
albums;
 Video streaming services replacing DVDs.