We’re told twice weekly that Canada has an alarming “innovation deficit” – and it is probably true, but it’s not quite as simple as it seems. There is no shortage of creativity among our researchers and thinkers; there is even plenty of creativity among employees in the private-sector businesses where the absence of innovation is so notable, but we do have a little difficulty translating all these ideas and insights into tangible innovations that deliver new products and services. So we need to do something. Asking for government funding is the worst possible response, unless it is directed purely at facilitating the activities that will contribute to solutions. What is needed is a climate of innovation in the private sector and a propagation of the skills needed to carry a fledgling idea through to commercial implementation. Our challenge is not so much the innovation gap as the absence of dots connecting the innovators who are already here.
This involves two major shifts in Canada. First, we need a top-down commitment from our business leaders, especially in some large corporations, to encourage and experiment with innovation of every size and type – everything from different ways to clean the floor to major technological breakthroughs (no exceptions, please). Second, there has to be hyped-up communication between all the moving parts of our economy; this should include significant, ongoing conversations, engagements and commitments involving universities with business, business-to-business, top management with middle management, all management with workers possessing sparks of imagination, companies with their clients, companies with their suppliers, to name just the principal ones. To put this all in context, we also need to become much more aggressive exporters of things other than resources, so that we are competing with the whole world, not just our next-door neighbours.
The first priority is to create a climate of innovation in the business sector. This can come only from the CEOs, without whose enthusiastic commitment and support, even the most promising signs of innovation will turn into dust. This is easier said than done, since it involves a perspective on a CEO’s job that is not yet the norm. A review of the CEOs of innovative smaller firms (where the management of innovation is less obscure than it is in larger firms) reveals that a climate of innovation flourishes when CEOs have the following characteristics:
- They are not afraid to take chances with their R&D and they treat their mistakes as learning opportunities.
- They see their core competence as innovation – or some synonym of the word, such as problem solving, or customization or creativity.
- They are voracious consumers of information on anything that touches their business.
- They interrogate their customers to establish what they need but they innovate independently.
- They play in the big leagues, but they find niches where competition is minimal.
- They give their employees the freedom to work things out for themselves.
- They are willing to change their own role in the company if necessary; they will let nothing stand in the way of innovating and evolving, including themselves.
It is vital to see any innovation, no matter how small, as part of the broader picture. Every innovation that improves the way a business works or develops its products is an indispensable component of the climate of innovation, whether it be process innovation, the creation of a new niche or disruptive innovation that changes the way the rest of us organize our lives; you can’t have a business that aims for disruptive technologies but ignores process innovation, for example – the absence of the latter will soon corrode the former.
There is, however, more to it than just the climate, which is a necessary but not a sufficient condition for success. Every individual innovation must still be managed. Smaller innovations don’t require heavy-handed management – it’s mostly a willingness to just do it and fix any problems as they emerge. Major innovations, involving the development of new products and services, require more sophisticated management that can be broken down into four stages:
Stage 1 is the development of a viable concept. The time it takes to navigate this stage depends on the complexity of the idea and the research or technology behind it, the difficulty in identifying the concept’s potential to be a “winner,” the state of complementary technology development around it, identifying a market application, the firm’s ability to raise sufficient funding to complete this stage and the difficulty in getting a business structured around it.
Stage 2 is building the prototype. This might take the form of an experimental prototype or a test facility, a market test that establishes an adequate market at the price for which the product or service can be delivered, or a demonstration of the adaptation of some technology to a point where it performs to the specifications set out in the concept or by a potential customer. This stage involves a lot of experimentation as well as trial and error, but the research effort needs to be highly disciplined with the development of technology roadmaps linked to product development roadmaps.
Stage 3 is commercial implementation. At this point, the company often has to change the leadership and management structure, prepare the company for the investment market to raise funds, and strengthen alliances to gain access to the distribution channels, markets and other infrastructure that will enable the firm to leverage its efforts and generate a revenue stream.
Stage 4 is the continuous innovation cycle. The first innovation breakthrough is only the foundation of an innovation cycle that could lead to new products and services in directions that are often unexpected. Substantial and continuous efforts are needed to retain a leadership position in its technology. If the in-house researchers cannot maintain the technological edge, then the company has to buy new technology or hire the people who are familiar with it.
It’s not simple and it is clear why it can work only if CEOs see innovation as their core competence and imbue their entire organization with the same commitment.
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