2010

SMOE

K.Povenesan
B.Eng(Hons) Mal,
MSc (Adelaide)

[RESEARCH PAPER ON INNOVATIVE

PROCESS]
An argument on what the innovative process is and how you would go about implementing this in an organisational
setting.
 Innovation in a company setting, is to create or change something, be it a product, a route to market, or
even back-office business process to generate revenue or provide a cost-savings opportunity. I would call
it as “DARE FOR A CHANGE”. Change is like a wave. Either once can ignore it, in which case the change
will overtake him and will drown him or one can get a surfboard and ride the wave. It may not take him
where he thought he would be, but it will be a whole lot better than drowning. Organizations that are
innovative are change-ready.
According to Peter F. Drucker, “The best way to predict the future is to create it”. We are facing
changes that cannot be addressed with traditional methods, because change itself has changed. Solutions
that worked in the past now simply cause more problems. A whole new perspective is needed to approach
breakthrough change with success.
A business concept or model is a framework for identifying how one’s business creates, delivers, and
extracts value. In today's world of discontinuous change, there is no continuity without constant renewal. A
survey found that more than 90% of large organizations are committed to innovation. (In this case, i’ve
taken my company as a case study) Yet when managers of my companies were asked to describe our
corporate innovation system, almost none of them could do it. One explanation for this mismatch is that
top management is just paying lip service to innovation and has no intention of really working hard on it.
Another and far more likely explanation is that senior leaders do not have a clear, well-developed model of
what innovation looks like as an organizational capability. Since they don't know what it looks like, they
don't know how to describe or build it. Innovation applies to all business activities, not just end products.
Innovation can be in logistics such as in the case of Wal-Mart, merchandising like Starbucks, and selling
like Dell. Pioneers rethink the entire business concepts & build new business models from ground up.
Today greatest amount of wealth goes to those who create new business models, create new sources of
revenue based on changing technology, changing demographics and changing global demand.
According to Gary Hamel, “True innovation is based on the recognition that a business concept
represents a dozen or so design variables, all of which need to be constantly revisited and constantly
challenged”.
Managers have to think creatively & holistically about their entire business concept. Strategic
innovation differs from product innovation. Companies today can succeed through innovative strategies
alone. Southwest Airlines, Dell, IBM, EBay etc. succeeded through innovative strategies. Innovations need
not be risky, but something that changes customer expectations & competitiveness for the better. Only
innovation creates new wealth. Stock markets reward only those with successful innovation.
I would propose my company a local oil and gas corporation an innovation process which can be
supported by current organizational structure and I selected after considering companies strengths and

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weaknesses with minimal tolerance for risk within the company. Will the culture within the corporation
support innovation development procedures? Another question that ponders me, which will be discussed
later section.
Practical innovation is about taking ideas and new thinking and focusing them into a direction and then
executing that direction; in other words, starting with the thinking, creating the strategy (strategic planning)
and then executing the strategy. This focuses the innovation on real-time problem solving.
The innovation process is divided into two broad modes of thinking: “Divergent” and
“Convergent”. The “Divergent” mode lies at the heart of the Strategic Innovation approach. It is open-
ended, exploratory, and inquisitive, deploying non-traditional, creative thinking and future visioning
techniques. It includes “exploratory” consumer/customer insight research, qualitative exploration of
industry/market trends, and speculates on possible industry discontinuities, etc.
It is here, with the notion of “Divergent thinking” that my organization often fails in their attempts to
innovate. Believing that it is frivolous, “blue sky”, time consuming and slows time to market, they choose to
minimize or neglect it.
Impatient for short-term success, driven by quarterly scorecards, or constrained by a corporate mindset
that has to demonstrate activity and quickly “get to the answer”, my corporation find it hard to step back
and diverge. This often results in predictable, uninspired, incremental innovations that clog the pipeline
and take a great deal of time and resources to manage.
In reality they could have far greater impact had they taken the time to diverge at the outset,
acknowledge their “blind spots” and explore potentially fruitful areas, and fill the pipeline with well-
grounded, “bigger ideas” that offer greater potential.
It is “Divergent” thinking, then, that opens the door to the possibility of identifying breakthroughs. My
company have no difficulty generating ideas for new products. During this “Divergent” mode it is important
to explore other areas for innovation, such as new ways to work with external partners, communicate with
consumers or enable faster time-to-market. This is true even if the effort is focused on new products, since
these other factors directly impact the success or failure of the new product concepts.
Subsequently, through “Convergent” processes that call for traditional business tools, techniques and
data analysis, potential opportunities are evaluated, prioritized, refined and then often moved through a
formal decision-based Stage Gate process until the most promising ones are implemented. Throughout
the entire process, a focus on short-term opportunities that leverage “low hanging fruit” is paired with the
search for mid- and long-term breakthrough growth strategies.
While the elements of the process generally occur in a particular sequence there is not one single, rigid
road map – the path is non-linear, modular and responsive to the needs of the moment. It is flexible and
creative, providing the glue, the spark and the artistic magic that weaves together the dimensions of
Strategic Innovation in real-time.

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 The elements of the Managed Innovation Process vary depending on the business challenge (growth
strategy, product innovation, packaging innovation, etc.), but broadly speaking is as follows:

The process is designed and managed to create strategic alignment – the enthusiastic internal support
among key stakeholders required to galvanize an organization around shared visions, goals and actions.
Industry Foresight provides a “top-down” perspective that seeks to understand the complex forces
driving change, including emerging and converging trends, new technologies, competitive dynamics,
potential dislocations and alternative scenarios.
Consumer/Customer Insight provides a “bottom-up” perspective, a deep understanding of both the
articulated (explicitly stated) and unarticulated (latent or unrecognized) needs of existing and potential
consumers/customers.
My firms’ innovation process includes wide range of activities implemented from the genesis of the
initial idea through its realization. This therefore involves research & development, industrial legal
protection, launches of production and ultimately use of innovations in practice.

One of the first challenges in the innovation process is to generate ideas. Almost 60% of my group of
companies responded that they are unable to generate enough innovative ideas to build a pipeline of new
products or support ongoing process change. To fill this pipeline, 56% of them suggest that our
organisations rely on cross-functional teams, while some 40% work with consultants. But even with these
teams in place, results are often disappointing. But it gets worse: when asked about the most difficult part
of the innovation process, very few of them suggest that ideation is the biggest bottleneck. Almost 60% of

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them report that taking good ideas and bringing them to implementation—whether introducing a new
product or transforming a business process-is by far the most challenging aspect of corporate innovation.
Companies like Google and Apple best typify the corporate culture that actively generates innovative
activity. I would like to have the same in my corporation as one of the key factors is the ability to accept
some loss of control. All companies face a trade-off between control and adaptability. At here, we shall be
explicit about our willingness to live with a bit less control in exchange for more flexibility.
This loss of control isn’t really a loss-it’s largely a transfer from senior managers to the wider
companies’ community. As responsibility for coming up with exciting new process and product ideas gets
pushed out further into the organisation- although not in all case everybody gets to make all decisions; it
also becomes more important to tolerate mistakes. We shall have an approach of deliberate
experimentation, which means we need to be more tolerant of failure.
This appetite for risk is another recognised element of a successful innovation culture, especially in the
technology field. Risk-taking must be one of our core values. The day we stop taking risks is the day we
know that some other O&G Company will take advantage of technology innovation better than we do. We
should willingly take risks in supporting new projects. The tendency is to play it safe when funding is low,
but we need to remember that the greatest risks have the greatest payoffs. In addition, individuals or small
groups should be given sufficient latitude to develop new ideas, which take time and are often only
accepted with difficulty by others.
Cultural transformation has to start at the top. Culture is a function of how senior management thinks
and acts - I say that leadership commitment is the most important element of a culture of innovation. And
this can be as much about what leaders don’t do as what they do. At Google, they are blessed to have
company leaders who are comfortable getting out of the way of the smart people they’ve hired. They’re
comfortable with a degree of messiness.
While leading is important, it’s also crucial to get the right people in the door in the first place - staff who
are flexible and enthusiastic about change. People who innovate should get recognition and appropriate
compensation for what they do, especially young people. We should not allow institutional boundaries to
impede interdisciplinary research. Some of the most important innovations of the future can be expected
from such collaborations. Excessive bureaucracy is distracting, time-consuming, and destructive to
creativity.
The critical ingredient to a culture of innovation is the remuneration and incentive structure. Mr Charan,
the innovation author, puts it this way: “What is company culture? It’s what people do routinely without
being told. Once innovation is integrated into the firm’s main decision-making process, and people are
being evaluated on and praised for their innovative activities on a regular basis, a culture of innovation will
emerge naturally.” Having worked with the CEOs of many of the world’s largest companies, he suggests

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that this is something few companies do well. Just under half listed a mismatch between staff incentives
and operational metrics as either a “very significant” or “significant” barrier to innovation.

Conclusively, I’ve learned that for implementation, below are important criterions;
 Attitude is everything. Ideas implemented enthusiastically by the rank and file get done easily and
quickly, whereas ideas from the top down are slow to communicate and have lower probability of
success. Proactive listening & measured opportunity develops skills that lead to change with the right
attitude.
 100 Employees with big ideas are always more enthusiastic about implementing their ideas than
ideas of a few smart exec’s.
 Employee operations’ knowledge is greater than that of management and leads to better and more
cost effective ideas for improvement.
 A culture of change (innovation) is an overlooked corporate asset. When change in a culture is
sustainable, new ideas become more and more sophisticated over time. All employees feel compelled
to continually find new ideas for productivity improvement and internal growth (new product and product
enhancement innovation). Intellectual property (know how and corporate agility) grows from using it and
disseminating it.
 Innovation is a Team effort - Over and over again, we have seen the team excel. An individual may
initiate the idea but the team makes it work.
 Learn by doing - This grows "know-how" and intellectual properties, the real value asset.
 Common purpose generated – the Company create a sense of belonging, achievement, status and
recognition from the boss, peers, family & friends. And this work environment is fun!

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Appendix 1:

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 Figure 2: Innovative Process
(Adopted from Michael Stanleigh, http://www.bia.ca/articles/inno-vision-to-reality.htm )

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References:

Matthew Shinkman, "The innovators;How successful companies drive business transformation," An

Economist Intelligence Unit briefing paper Sponsored by SingTel, 8 (2008), pp. 10-20.

Michael Stanleighy ., 2008, From Vision To Reality: The Innovation Process

http://www.bia.ca/articles/inno-vision-to-reality.htm Accessed 2010-03-13

Ram Charan., 2008, The Game Changer; How You Can Drive Revenue and Profit Growth with
Innovation. Crown Business pp. 115-121

Peter F Drucker., 1999, Management challenges for the twenty-first century. Harper Business

Gary Hamel., 2007, The future of management, Harvard Business Press, 4(3): 80 - 98.