In October last year I was fortunate enough to attend the Business Excellence Global Conference in Singapore as a guest of SPRING Singapore. One of the hot topics at the conference was innovation. Speaker after speaker spoke about the innovation challenge faced by their organisations and explained their efforts at promoting innovative thinking. I also attended an innovation masterclass facilitated by Enric Segarra, a highly reputed innovation specialist from Europe. I found the masterclass both thought provoking and simple. I also realised that Australia was – in many ways – desperately lagging behind other parts of the world.
Australia has indeed been the lucky country over the last two decades. We have experienced steady economic growth and have weathered several global economic crises. In many ways, this economic success was derived from luck rather than design. More than anything, the commodities boom sustained us. Unfortunately, the continued success also made us complacent. We paid lip service to improvement and we barely allocated any efforts to innovation. Our commodities-driven boom didn’t seem to have an end in sight.
The slowdown in the global economy – and particularly the slowdown in China – came as a rude shock a couple of years ago. Politicians and industry leaders alike began to realise that we needed to not only improve our productivity, but also innovate to ensure that we could compete in an increasingly globalised economy. Many organisations have urgently initiated improvement and innovation programs and finally there is a local drive to address this challenge.
Australia still has a long way to go, but at least we are now on our way. However, there are many challenges ahead and I believe that one of the most fundamental challenges is the prevailing confusion between improvement and innovation. Many individuals and organisations do not effectively distinguish between the two concepts and as such are unable to either improve or innovate properly to generate maximum return on investment (ROI).
How does improvement differ from innovation?
I have spent a large part of my career helping organisations to realise ROI by embracing process improvement initiatives. I have learnt and taught on process topics as diverse and ISO 9001 and Lean Six Sigma. I am still a passionate believer that improvement (and particularly process improvement) is fundamental to the success of a business. By integrating the overall guidance of an Excellence Model, effective planning, behavioural alignment and efficiency focused improvement; organisations can maximise the performance of their existing operating models. Improvement or Excellence is hence the enhancement of the existing operative paradigm.
Innovation, however, is a different paradigm altogether. At Thrive Plus, we define innovation as the creation of a brand new business model that is represented by an organisation developing a new product/service or entering a brand new market. Innovation specifically entails the development of a new operating paradigm. This new paradigm may be additional to the old paradigm – e.g. the development of tablets – or represent a complete transformation that requires the shift from one to another – e.g. the transition from analogue to digital television.
Why is it important to differentiate innovation from improvement?
I – and Thrive Plus – have been involved in a number of innovation projects over the last two years. One of these projects in particular has allowed the team to work with one of the largest technology companies in the world and assist the global rollout of an innovation strategy. Thrive Plus was initially engaged due to our expertise with improvement processes. There are many parallels between an improvement initiative and an innovation initiative. The fundamental elements remain the same:
- Process clarity and toolkit
- Prioritisation scorecard
- Leadership support
- Implementation and change management
- Maturity Assessment
The similarities often represent the biggest source of confusion and hence the biggest barrier to effective innovation. With many of the fundamentals remaining the same, the differences between an effective improvement initiative and an innovation initiative lies in the specifics. Unfortunately, due to a lack of awareness around innovation fundamentals, organisations often blend improvement initiatives with innovation. This results in improvement being prioritised and innovation being stifled.
When the same decision-making criteria is applied to improvement as it is to innovation, improvement often triumphs because the business case is more robust and real. Innovation entails greater risk and a larger number of unknown elements. Innovative behaviour is fundamentally different to improvement behaviour and hence leading innovation requires a different approach. Creativity and stakeholder co-creation becomes more important for innovation initiatives. The differences are many.
An organisation that sees the imperative to innovate needs to specifically invest in developing a distinct program for innovation that is resourced and funded separately from the improvement of its current operating paradigm. An organisation that is ready to improve isn’t always ready to innovate. In fact, it can be argued that a focus on improvement and excellence must precede effective innovation.
For further information about innovation fundamentals, feel free to contact Ravi by emailing RaviF@thriveplus.com.au.
Image sourced from luminastock/123RF.