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The Real Recipe for Innovation

When I talk to business leaders, I always ask about the most difficult challenges they face day in and day out. Increasingly, I’m hearing about how hard it is to innovate on a consistent basis.

This anecdotal evidence is now being supported by a recent McKinsey Global Survey that polled more than 2,200 senior executives around the globe on the challenges of managing innovation.

Eighty-four percent of the executives who responded said they consider innovation to be very or extremely important to their companies’ growth strategies. Yet, despite their emphasis on the importance of innovation, many of those executives feel that their companies are not doing a good job on following through on innovation as a strategic imperative.

Why is ongoing innovation so difficult to achieve?

Because it requires several essential ingredients to succeed: idea generation, idea evaluation, and implementation. Most companies do well in one or two of these areas. Very few do well in all three. In particular, implementation — the process of taking new ideas and turning them into commercially viable products or refined, more efficient processes — seems to represent a real obstacle for many companies.

According to McKinsey Global, only 39 percent of the survey respondents rated their companies as good at commercializing new products or services. In addition:

  • Fifty-seven percent agreed with the phrase, “We execute well on the few good ideas we have but need a more robust pipeline of big ideas.”
  • Fifty percent said that, “We have pockets of successful innovation, but innovation is rarely scaled throughout the organization.”
  • Fifty percent reported that, “We have lots of good ideas but do not get enough of them through to commercialization.”
  • Thirty-seven percent said, “We have few good ideas and do not commercialize them well.”
  • Only thirty-six percent, or a little more than one out of every three executives, indicated that their organizations have managed to produce the right balance between good ideas and effective commercialization.

What gets in the way of achieving this balance?

One of the problems I see is that companies often confuse creativity with innovation. They do a great job of coming up with new ideas (creativity), but they stop there, thinking they have accomplished the goal. In reality, all they have done is supply a part of the first ingredient in the recipe for successful innovation.

Creativity is the process of connecting previously unrelated concepts, ideas, or experiences into a new construct or idea. It occurs inside the brain, and can be an individual process or a group process, such as when people get together to share ideas and/or conduct brainstorming sessions. Creativity is an essential ingredient in the innovation process, but by itself does not constitute innovation.

Innovation goes beyond mere ideation. It is the process that transforms new ideas into new value. Unlike creativity, innovation is almost always a group process, which means that it usually requires expertise in multiple disciplines, and thus almost always requires a number of diverse contributors.

Teaching employees to think creatively does not guarantee innovation. New ideas are a dime a dozen. The hard part, as so many business leaders are discovering, is turning those ideas into new products and services that customers value and are willing to pay for. In addition to creativity, that process also requires knowledge about what your customers want and need, coupled with implementation.

The trick is recognizing that creativity and innovation require different skills sets. The best practices that promote creativity have to do with teaching people how to notice, use, combine, and integrate diverse stimuli. The best practices that promote innovation involve teaching people how to take new ideas and convert them into value to customers (both internal and external).

In other words, creativity asks people to think differently. Implementation asks them to act differently. Smart companies teach their people how to do both.

You can’t innovate without creativity. And knowledge without new ideas doesn’t produce new value. True innovation comes only when you combine new ideas and knowledge, and then implement to create new value.

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