Despite decades of research into the constructs of innovation, few practical sources of sustained innovation have proven causal to organizational success. A cursory examination of innovation theory fails to provide concrete evidence that innovation, in itself, is key to long-term success; most innovation theories rely on post-hoc analysis of firm performance focused on successes, rather than failures (Buisson & Silberzahn, 2010; Burke, van Stel, & Thurik, 2010). The term innovation is just as difficult to articulate being equally evaluated through ex post selection of successful innovation rather than innovative efforts in general. While innovation may not guarantee firm success, it is clear that organizations failing to adopt to the pace of the modern, global marketplace will flounder (Reeves & Deimler, 2011); the chances of success increase dramatically if organizations are positioned to innovate and change in response. As such, understanding the models, systems, and approaches improving an organization’s ability to innovate are increasingly important even if they are not proven to promote long-term success, or even successful innovation. This is the basis of the Innovation Strategy Framework, which attempts to combine multiple theories of innovation into a single construct.Today, we are going to look at the importance of people to innovation strategy, what those people do, where they come from, and why they are important to innovation.
Human capital, or the knowledge, skills, abilities and other characteristics (KSAO’s) of the people associated with the organization are the source of innovation. Human capital is a critical starting point and requirement for the development of organizational knowledge and innovation capabilities (Choong, 2008; Ployhart, Nyberg, Reilly, & Maltarich, 2014). This is not just the employees of the organization, but also the knowledge resources of partners and other collaborators. The greater the diversity and density of these knowledge resources, the greater the potential for organizations to achieve innovative outcomes (Dell’Era & Verganti, 2010; Phelps, 2010). Clearly, the depth, breadth, and quality of the people in the organization are critical dimensions of innovation capability.
The three main groups of people necessary for successful, serial innovation capability are: the people with innovation ideas, the people nurturing and developing ideas into successful innovation, and the organizational leadership fostering innovation.
People as the Source of Ideation
The largest group of people involved with innovation is the infinite sources of innovation ideas (left side of Figure 1). This group of people, including customers, partners, employees, and others, are the heterogeneous sources of knowledge providing innovative ideas and solutions. These resources are both internal and external, creating the depth, breadth, and diversity of knowledge to supply the organization with innovative fuel (Dell’Era & Verganti, 2010; Phelps, 2010; Rothaermel & Hess, 2010). The composition of an organization’s knowledge ecosystem (employees, partners, customers, and others) significantly contributes to the ability of an organization to successfully innovate (Dell’Era & Verganti, 2010; Engel & Del-Palacio, 2011; Kim & Ployhart, 2014; Phelps, 2010; Rothaermel & Hess, 2010; Sandmeier, Morrison, & Gassmann, 2010; Wilson & Doz, 2011).
Interestingly, while this is the largest group of people directly involved with innovation efforts, they are not necessarily the most important. Yet, many organizations embark on innovation efforts by encouraging their employees to “be more creative”, or “be innovative”. To the contrary, research suggests most organizations have far more innovation ideas than they can possible deal with; the problem is selecting and developing ideas into real-world solutions. While organizations need to encourage innovation and creativity, making it the primary focus of innovation efforts will fail more often than succeed. The belief that innovation stems from the rare, perfect idea is a pervasive myth.
Ideation is essential, but completely useless without the other people necessary for innovation success.
People Strategically Selecting and Developing Innovation
On the right side of Figure 1, people in the strategic domains represent the knowledge resources responsible for taking innovative ideas and developing them in alignment with organizational goals and strategy (Ramírez, Roodhart, & Manders, 2011). This group of people is arguably the most important innovation resource in the organization as they are often able to achieve innovation in the absence of well-defined innovation strategies or formally defined roles to direct innovation. Unfortunately, in the absence of a strategic innovation practices, innovation success is less than assured, becoming the victim of conflicting responsibilities.
Instead of relying on happenstance, organizations should create specific job roles whose entire function is to surface, develop, and promote innovation ideas specific to one strategic organizational goal. While the strategic goals themselves may change from year-to-year, or be longer term, these strategic innovation specialists are charged with all aspects of taking ideas aligned with their strategic focus from ideation all the way through market release. These individuals are like innovation product managers, with a portfolio of potential innovation ideas.
The caveat here is that each individual (or team) should be focused solely on one strategic organizational goal, and must have the appropriate resources (outside of existing product management) to develop and mature their innovation portfolio, which leads us to the last group of people necessary for succesful innovation.
Developing an innovation capability within an organization takes substantial effort (Barreto, 2010; Wilson & Doz, 2011). Accumulating the vast knowledge resources to drive innovation and implementing the systems and processes to integrate knowledge into innovative execution takes significant resources, will, and commitment. At the top of Figure 1, innovation leadership develops knowledge networks, provides resources to create innovation processes, and the creation, funding, and direction of strategic domain groups (Brown & Anthony, 2011; Engel & Del-Palacio, 2011; Ramírez et al., 2011; Rufat-Latre, Muller, & Jones, 2010). Without dramatic changes in the way organizations are led, innovation cannot consistently take root (Hamel, 2009).
Innovative management strategies incorporate novel ways of interacting with customers, driving cultures of trust, and opening the organization to honest debate (Abele, 2011; Capozzi, Dye, & Howe, 2008; McGrath, 2011). McGrath argues fear of failure inhibits organizations from achieving great innovation and an acceptance of potential failure can help organizations use failure to achieve success. Capozzi, Dye and Howe report the benefits of challenging the status quo of the organization often presents a springboard to innovation. In much the same way reducing the fear of failure helps to spark responsible risk taking, reducing the fear of challenging organizational orthodoxies helps ensure that new ideas are not discarded simply because they are counter to the way things are currently done. These cultural changes are more difficult than getting the right people or developing systems and processes; they require commitment at the highest levels of the organization. Without leadership demonstrating this commitment to innovative practices, organizations are unlikely to truly capture their innovative capabilities.
Bridging the Divide
Having all the right people is critical to achieving long-term innovation capability. Organizations already have an embarrassment of riches in terms of innovative, creative ideas, but without the appropriate people committed and dedicated to their development, innovation success is only a matter of chance. It happens all the time, but rarely more than once or twice within the same organization. Only the organizations designed and aligned to foster innovation and committed to the process achieve long-term, repeatable innovation success (think Shell, P&G, or 3M). Simply telling your employees to be more innovative or offering a suggestion box is not sufficient.
Even having the right people is not enough. Without the processes governing how these people work together to create successful innovation, success is possible but not guaranteed. In the next Innovation Playbook, we will look at how to manage the innovation process for success.
Abele, J. (2011). Bringing minds together. Harvard Business Review, 89(7–8). Retrieved from https://hbr.org/
Barreto, I. (2010). Dynamic capabilities: A review of past research and an agenda for the future. Journal of Management, 36(1), 256–280. http://doi.org/10.1177/0149206309350776
Brown, B., & Anthony, S. D. (2011). How P&G tripled its innovation success rate. Harvard Business Review, 89(6), 64–72. Retrieved from http://hbr.org/
Buisson, B., & Silberzahn, P. (2010). Blue ocean or fast-second innovation? A four-breakthrough model to explain successful market domination. International Journal of Innovation Management, 14(3), 359–378. http://doi.org/10.1142/S1363919610002684
Burke, A., van Stel, A., & Thurik, R. (2010). Blue ocean vs. five forces. Harvard Business Review, 88(5), 28. Retrieved from http://hbr.org/
Capozzi, M. M., Dye, R., & Howe, A. (2008). Sparking creativity in teams: An executive’s guide. McKinsey & Company, (April 2011), 1–8. Retrieved from http://www.mckinsey.com
Choong, K. K. (2008). Intellectual capital: definitions, categorization and reporting models. Journal of Intellectual Capital, 9(4), 609–638. http://doi.org/10.1108/14691930810913186
Dell’Era, C., & Verganti, R. (2010). Collaborative strategies in design-intensive industries: Knowledge diversity and innovation. Long Range Planning, 43(1), 123–141. http://doi.org/10.1016/j.lrp.2009.10.006
Engel, J. S., & Del-Palacio, I. (2011). Global clusters of innovation: The case of Israel and Silicon Valley. California Management Review, 53(2), 27–49. http://doi.org/10.1525/cmr.2011.53.2.27
Kim, Y., & Ployhart, R. E. (2014). The effects of staffing and training on firm productivity and profit growth before, during, and after the Great Recession. The Journal of Applied Psychology, 99(3), 361–89. http://doi.org/10.1037/a0035408
McGrath, R. G. (2011). Failing by design. Harvard Business Review, 89(4), 76–83. Retrieved from http://hbr.org/
Phelps, C. C. (2010). A longitudinal study of the inﬂuence of alliance network structure and composition on firm exploratory innovation. Academy of Management Journal, 53(4), 890–913. http://doi.org/10.5465/amj.2010.52814627
Ployhart, R. E., Nyberg, A. J., Reilly, G., & Maltarich, M. a. (2014). Human capital Is dead; Long live human capital resources! Journal of Management, 40(2), 371–398. http://doi.org/10.1177/0149206313512152
Ramírez, R., Roodhart, L., & Manders, W. (2011). How Shell’s domains link innovation and strategy. Long Range Planning, 44(4), 250–270. http://doi.org/10.1016/j.lrp.2011.04.003
Reeves, M., & Deimler, M. (2011). Adaptability: The new competitive advantage. Harvard Business Review, 89(7/8), 134–141. Retrieved from http://hbr.org/
Rufat-Latre, J., Muller, A., & Jones, D. (2010). Delivering on the promise of open innovation. Strategy & Leadership, 38(6), 23–28. http://doi.org/10.1108/10878571011088032
Rothaermel, F. T., & Hess, A. M. (2010). Innovation strategies combined. MIT Sloan Management Review, 51(3), 13–15. Retrieved from http://sloanreview.mit.edu/
Sandmeier, P., Morrison, P. D., & Gassmann, O. (2010). Integrating customers in product innovation: Lessons from industrial development contractors and in-house contractors in rapidly changing customer markets. Creativity and Innovation Management, 19(2), 89–106. http://doi.org/10.1111/j.1467-8691.2010.00555.x
Wilson, K., & Doz, Y. L. (2011). Agile innovation: A footprint balancing distance and immersion. California Management Review, 53(2), 6–26. http://doi.org/10.1525/cmr.2011.53.2.6