Innovation

Matters Now

How to Win in a World of Relentless Change,

Ferocious Competition and Unstoppable
Innovation.
What Matters Now
By Gary Hamel
Innovation – What Is It?
Innovation is the implementation of a new or significantly improved
product, service or process that creates value for business,
government or society.

Some people say creativity has nothing to do with innovation— that

innovation is a discipline, implying that creativity is not.
What do you think?
Creativity is also a discipline and a crucial part of the innovation
equation. There is no innovation without creativity.
The key metric in both creativity and innovation is value creation.
Definition - Innovation

Definition 1.1: Oslo Manual definition of

innovation
Innovation is the implementation of a new or
significantly improved product (good or service),
or process, new marketing method, or a new
organisational method in business practices,
workplace organisation or external relations.
Definition – Innovation System
An innovation system is an open network of organisations that interact with
each other and operate within framework conditions that regulate their
activities and interactions. There are three components of the innovation
system:
1. Innovation activities — the discrete activities that lead to discoveries with
commercial potential including R&D, entrepreneurial activity, innovation
funding (e.g. venture capital), or the generation of skills for innovation.
2. Networks — the formal and informal linkages between people and
organisations in the innovation system, including communities of practice
(such as medical professionals and software developers), joint research
arrangements, industry-research collaboration and public procurement of
private sector research outputs.
3. Framework conditions — the institutional environment and general
conditions for innovation activities, networks and collaboration. These
components collectively function to produce and diffuse innovations that
have economic, social and/or environmental value.
Definition – Types Of Innovation
• Good and services innovation: A good or service that is new or
significantly improved. This includes significant improvements in
technical specifications, components and materials, software in the
product, user-friendliness or other functional characteristics.
• Operational process innovation: A new or significantly improved
production or delivery method. This includes significant changes in
techniques, equipment and/or software.
• Organisational/managerial innovation: A new organisational
method in business practices, workplace organisation or external
relations.
• Marketing innovation: A new marketing method involving significant
changes in product design or packaging, product placement, product
promotion or pricing.

Source: OECD (2005), Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data, 3rd
Edition, OECD Publishing, Paris.
Activity
1. Why does innovation matter in your business – the
one you are building for the business model?
2. How are you going to create and nurture innovation in
the business?
3. Innovators are natural contrarians [a person who
opposes or rejects popular opinion]
– In what respects is our business model
indistinguishable from that of our competitors?
– What aspects of our business model have remained
unchanged over the past 3–5 years?
We Owe Our Existence to Innovation

• Our species exists thanks to four billion years of

genetic innovation
• If life had adhered to Six Sigma rules, we'd still
be slime
We Owe Our Prosperity to Innovation

From the vantage point of our ancestors, we live lives of

almost unimaginable ease
– A thousand years of social innovation gave millions of us
the right to self-determination
– Repeated bouts of institutional innovation paved the way
for economic progress by facilitating trade, capital
formation, and entrepreneurship 
– And a hundred-plus years of frenzied technological
innovation blessed us with personal mobility, instant
communications, an arsenal of disease-fighting drugs,
unprecedented computational power.
– Between 1000 and 1820, global per capita income rose by a
scant 50%. Over the next 12 decades, it grew by 800%
We Owe Our Happiness to Innovation

• Humans are the only beings who create for the

sheer pleasure of doing so
• Forget the Renaissance, the Enlightenment, and
the Industrial Revolution—ours is the golden
age of innovation
We Owe Our Future to Innovation
• Today, humanity's most pressing problems aren't
merely technological; they're social, cultural, and
political, and global in scope.
• That's why, like Edison, we must innovate around
innovation
In Most Organizations One Finds That:
• Few, if any, employees have explicit innovation goals.
been trained as business • Executive compensation
innovators. schemes don't put a high priority
• Few employees have access to on innovation.
the sort of customer and • The metrics for tracking
technology insights that can help innovation (inputs, throughputs,
to spur innovation. and outputs) are patchy and
• Would-be innovators face a poorly constructed.
bureaucratic gauntlet that makes • There's no common definition
it difficult for them to get the of innovation and, therefore, no
time and resources they need to way of comparing innovation
develop their ideas. performance across teams and
• Line managers aren't held divisions.
accountable for mentoring new
business initiatives and lack
Turning Innovation Duffers into Pros

• With the right tools and training, you can turn

“ordinary” employees into extraordinary innovators
• To improve the quality of an organization's
innovation pipeline, you have to improve the
quality of its innovation thinking.
• How – suggest ideas
The Perceptual Habits of Successful
Innovators
Successful innovators have ways of looking at the
world that throw new opportunities into sharp relief:
– Unchallenged Orthodoxies
– Underappreciated Trends
– Underleveraged Competencies and Assets
– Unarticulated Needs
Unchallenged Orthodoxies
To be an innovator you have to challenge the beliefs
that everyone else takes for granted
• Inevitably, fossilized strategies create opportunities for
less orthodox competitors to upend industry rules
• Innovators are natural contrarians [a person that takes
up a contrary position, especially a position that is
opposed to that of the majority]
– In what respects is our business model indistinguishable
from that of our competitors?
– What aspects of our business model have remained
unchanged over the past 3–5 years?
Underappreciated Trends
Innovators are constantly on the lookout for
emerging discontinuities that could be harnessed
to overturn old industry structures
– what are the things you've read, seen, or
experienced in recent months that have been
surprising, perplexing, or disconcerting?
Underappreciated Trends
– which of these anomalies seem to have some momentum
behind them?
– if you “run the movie forward,” how might these
discontinuities play out?
– which of these discontinuities aren't yet topics of
conversation within your industry?
– how might we exploit these discontinuities in ways that
would wrong-foot our competitors?
Underleveraged Competencies and
Assets
Innovation gets stymied when a company defines
itself by what it does rather than by what it knows or
owns
– what are the skills and assets we have that are
• relatively unique
• important in creating customer value?
– where else might these skills and assets add value?
Unarticulated Needs
The goal with innovation is to amaze customers
with something they never could have imagined,
but having once experienced it, can't imagine
living without
Unarticulated Needs
Two skills are essential to excavating
unarticulated needs:
– the ability to read the emotional state of
customers as they interact with your company
– find and exploit analogies from other industries