Innovation is a darling buzzword and I still see the term used frequently in my readings. But what’s really behind the word innovation? Why do some companies seem to get it while others don’t? Innovation is defined as doing something new or doing something that already exists in a new way. Established companies want to think of themselves as innovative and like to publicize that to the public and employees. Why wouldn’t they? After all, who wants to be thought of as stale, unimaginative, or not creative?
Yet business is about Return on Investment (ROI). People make a business to create some product or service in exchange for money. Investors don’t give money unless they feel confident they will see a return in excess of their investment.
That’s where innovation and ROI compete
Innovation is about trying something new, something unproven, or something to improve efficiency. It is by nature risky. ROI is about minimizing or avoiding risk. It looks for sure returns and wants to stick to what is proven. In most head-to-head battles, ROI wins out, because its the logical business conclusion.
If ROI is the only measure to initiate work then innovation will die
Companies do cross this divide. Google search, the iPod, the microwave oven are common examples of innovations that transformed and shaped our culture. Not all ideas for innovation produce the ROI that these creations have. However, for any successful innovative idea, groups of people were willing to make a risky investment of time, talent, and money to produce it.
So how do we become innovative?
It takes a leap of faith to pursue innovative ideas. It’s hard hard to manage and is not completed in silos. It requires a complete shift in mindset and culture. It requires an acceptance for mistakes. Innovation must have a place where it trumps what’s known to succeed. Otherwise you’ll just repeat the same pattern of behaviors until you become irrelevant.
Innovation moves beyond ROI
Innovative ideas require thought and not all of them will work. Not all of them will produce a direct financial ROI. Therein lies the hidden beauty of innovation. Its returns can be measured in things like process efficiency, reduced cycle time, customer satisfaction, profits, and employee engagement. The returns of innovation are far reaching because it moves beyond rigid rules and boundaries.
How does your company promote innovative ideas?