Saturday, August 28, 2010

The Four Drivers For Innovation

There are four main drivers for innovation:

1. Top Line Revenue Growth. 
Creating new revenue through innovating new or improved products and services

2. Bottom Line Efficiencies
Innovating to reduce costs and create efficiencies to improve the bottom line.

3. Differentiation
Differentiating your company and products and services in a sustainable meaningful way.

4. Relevance and agility
The market is changing and your competitors are innovating ... maintain relevance in a changing market environment by innovating.

All of these innovation drivers are important, and your organisation should be concerned with and address all of them. However, typically your organisation's mandate for innovation will favour one, or some, of the 4 innovation drivers over the others.

For example, in the 1990s, American Airline's IdeAAs in Action program was primarily focused around bottom line cost reductions, and saved the airline $43M in 1996. Apple Computer's innovation around the iPod, iPhone and later the iPad was a differentiation strategy, and was also central to maintaining relevance in a changing market environment.

When in the design stage planning the architecture for your Idea Management processes, being clear about your innovation drivers and objectives is essential as you start making critical design decisions around  your Idea Management System such as governance structure, financing structures and portfolio management for implementing the best ideas, and incentive arrangements for motivating and engaging employees in the innovation process. Different decisions can lead to very different Idea Management System designs.

Takeaway: It is important to be clear about your innovation drivers and objectives when designing your Idea Management strategy and implementation, because different innovation objectives can lead to quite  Idea Management System implementations and lead to quite different innovation outcomes.

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