Basic levers of innovation

Companies that want to build an ambitious focus on innovation need a secure base to start with; this base can be provided by some basic activities: the levers of innovation. This concept has been extracted from Michael Porter’s work and his value chain model. The basic activities of innovation are those critical processes with a higher impact in the character and the strategy of the innovation process itself.

1. Raising and collecting new ideas

This first lever includes the creation of the processes and methodologies that allow a company to generate new ideas in a continuous and generalized way. It also comprises the valuation of those ideas, in order to select the better ones and improve the creative capabilities of the employees.

This lever is the base of the whole innovation chain. Through this lever the company stimulates the flow of ideas of both customers and employees. To stimulate an idea flow the company may need to provide employees and customers with appropriate tools for the task: techniques for generation of ideas, facilitation of group working, creation of real and virtual collaboration environments, etc.

The use of people who do not belong to a company in order to generate new ideas is called “Open Innovation” or “Crowdsourcing.” Its use has been rising during the few last years. It consists in putting together technicians of the company having problems in the area of sciences, engineering and business with “expert amateurs” from outside the company, spread around the world, capable of offering solutions to the specific problems. These people compete to give innovative ideas, sometimes for the pleasure of boasting about it, sometimes for a symbolic award.

One of the most famous examples is Google Labs, where the company uploads the Beta versions of their products and asks for feedback from the users. This practice, which started among the internet-based companies, is spreading through all kinds of markets.

2. Philosophy of innovation

This lever allows a company to form a clear strategy-based focus on innovation. It provides the employees involved in the generation of new ideas with a guide and a clear vision of where and in what aspects innovation is a priority within the company (for example, creating new supply channels, creating common components for integrated offers, re-designing basic operating processes, improving the relevance of the brand, etc.)

A spider graph can allow a company to make a photo of where there is innovation and the long- term objectives of that innovation. With this element, the definition of innovation can be applied to specific cases, and at the same time identify in which fields the innovation must be incremental, semi-radical or radical.

The elements of the business model (product philosophy, customer needs, delivery system and internal value chain) can be used to prioritize the most important elements of the innovation strategy. A good business model, through the integration of its elements, is a paramount factor to get the company to become more competitive in its market. The more innovative the business model is, the more time the company will have to take advantage of its innovative contribution.

In the beginning, the loss of resources brought by the actual crisis implies a reducing costs mentality, which is not good for innovation. However, in a second move, the companies will have to analyse which parts of their business models do not work anymore. In this phase, alternatives that imply the re-invention of the business will be raised.

3. Metrics of innovation

The aim of this lever is to measure the quality of the innovation management. Metrics expect to measure not only quantitative elements (ROI, return over years, etc.), but also qualitative ones (innovation capacities within the organization, capacitation quality, knowledge creation, etc.)

Fitting the model for innovation metrics with its philosophy is a conceptual challenge, because not succeeding in that fitting makes it almost impossible for disruptive or radical innovations. The metrics should pay more attention to a focus on project portfolios rather than in a traditional, static method, such as NPV (Net Present Value).

Many authors mention this point as one of the reasons for which well-resourced companies fail in the management of radical innovations. In fact, the companies that bring radical changes are not the biggest ones, but the ones with a more audacious metric system and a less bureaucratic business culture.

4. Neuronal “anchorage”

A fourth element in the innovation value chain includes all the activities related to awareness, internal communication, and other initiatives with the objective of keeping the employees engaged with the innovation process.

Through continuous and intense emotional inputs we create “neuronal anchorages” that associate innovation with positive emotions. Magazines, databases for general use, meetings, posters with interesting information, etc., can give these positive inputs, in order to keep good ideas and feelings in the subconscious of people.

Culture is the last boundary of management; on the one hand because improving it takes a long journey and on the other side because its impact on the results is crucial. The importance of this point for the innovation process should not be underestimated.

5. Compensation

Any effort for innovation should be compensated with some kind of non-monetary award. The objective of this award should be not only the generation on winning ideas but mainly the development of the competences related to innovation such as the capacity of creation, creativity, openness to change, predisposition to collaborate, tolerance to disorder, etc. The rewards must be valuable for the employees; for example, the employees themselves could choose their own rewards. Next generations could give more value to independency, visibility, flexibility or interconnection with other fellows. Rewards should be then centred in those areas.