Every company says that innovation is important, and that they value the ideas of their people.
In fact, creativity is becoming a core skill which companies know they need in the future.
Yet the problem lies in the fact that so few established companies actually know how to go about getting value out of their innovation ambitions, let alone turning it into profit.
In fact, according to some estimates by Doblin, 96% of all new innovations which established companies attempt fail to make a return on investment.
So what can you do about it?
In this article, I want to show you the 15 most important Innovation Frameworks and Theories which your companies need to be aware of and should be using.
Together, they reduce the risk of failure, improve the success rate of new ideas and can help build an organisation which is more resilient to change and able to grow.
Let’s get started:
15 – TRIZ
What it is: TRIZ is a problem-solving, analysis and forecasting tool derived from the study of patterns of invention in the global patent literature. The TRIZ acronym comes from it’s original Russian name, and in English it is often referred to as a “theory of inventive problem solving” or TIPS. At its core, the framework is a collection of strategies and tools for finding inventive solutions to difficult problems.
By analysing thousands of patents which successfully solved problems, researchers determined that there were approximately 40 inventive principles which underlined the majority of these successes. TRIZ suggests that by looking at whatever problem you are facing and comparing it to the 40 principles, you will find a number of ways to approach the finding of a solution.
When should it be used: If you really cannot come up with any solutions to a challenge, it might be worth going through the list of TRIZ principles. It is also useful for everyone in a company who might generate ideas (which in my view should be everyone) to have a basic understanding of what the principles are.
However, there are more effective ways to innovate, as you will see further down this list.
14 – Building a Culture of Innovation
What it is: Rather than a specific theory or methodology, this is a business impetus to make sure that the corporate culture actually encourages innovative behaviour, instead of stifling it. The challenging part of this is that culture is a very personal thing, which will vary between companies, industries and regions. However, in every case, it is beneficial for a company to look inwards and see whether their people, processes and leadership are acting more as innovation enablers, or bottlenecks.
When should it be used: Every company should look at itself frequently to find out how it can build its innovation culture in a way that is right for them. This does not mean copying what “innovative companies” like Netflix are doing (much of their famous HR Culture document would simply not work in many other companies), but instead seeing what impact their own processes are having, and how they can enable and encourage more innovative behaviours, from people at all levels of the company.
13 – Budgets for Micro-Innovations
What it is: Everyone always says that innovation is risky because you are investing money in things that are likely to fail. One thing you can do to fix this is to try more smaller-scale innovation experiments, which means you can run significantly more experiments, a lot faster, but at a fraction of the cost. The secret is to make it as simple as possible for people to try these experiments for themselves.
When should it be used: Any organisation that wants to enable their staff who have an idea to “try it out” or do an initial market experiment. An excellent example, outlined in the video below, is Adobe’s Kickbox program, which gives anyone who has an idea and wants to try it out a box with advice on how to approach the experiment and a pre-paid credit card with $1,000 to be used however the person wants.
12 – Disruptive Innovation
What it is: One of the most important theories of innovation, but one which is usually completely misunderstood. Brought to prominence by Professor Clayton Christensen’s book The Innovator’s Dilemma, this important theory provides an explanation as to why large, established companies eventually get overtaken by smaller ones, and it introduced the concept of disruptive innovation.
Put simply, it theorises that small companies can disrupt the market of large companies by releasing a new version of an offering which appeals more to a subset of the customers. In many cases (especially those listed in the book, such as Computer Storage, Department Stores and Construction Equipment), the small company releases a new technology which is inferior in quality or performance to that of the large company, but makes up for it in another way, like a lower price or convenience. Over time and iteration, this new technology will begin improving to handle more demanding uses.
The important aspect of the theory which most discussions ignore though is that while it is happening, management at the established companies think they’re making the right decision to let the new companies take over the low-end of the market. The reason: The low end of the market is often the least profitable, and by removing it from your customer base, the large companies are actually becoming more profitable (although not necessarily making more profit). Since company leaders have often been taught that increasing profitability is the holy grail of management, it makes perfect sense to allow someone else to take over the low market.
When it should be used: Very seldom! This might seem like a strange thing to say, but the most important thing to realise about Disruptive Innovation is that most people completely misinterpret it. Most startups state that their aim is to be disruptive or to disrupt a specific industry. The problem is that disruptive innovation is a force, not a tool. It has no predictive power. The theory mainly explains how large corporations were disrupted, not how a small company can guarantee success when faced with a larger competitor. Therefore, it is important to understand the basis of the theory from a defensive standpoint, to help prevent them from being disrupted.
11 – Ambidextrous Organisations / Dual Innovation
What it is: One of the most challenging aspects of innovation for most companies is not the generating of ideas, or the development of new innovations. Instead, it is integrating new innovations into the business without affecting the performance of core business operations negatively. This is something a large number of companies struggle with. Even if they have agreed on the importance of innovation and have set up teams or departments to develop new value-adding, innovative products and services, these products may end up never being launched because nobody in the existing business units will take responsibility and take the risk of launching them. They can cite a number of seemingly valid reasons for this, including:
- My team hasn’t got the time to resources or time to take ownership of this new thing
- My team doesn’t have the skills to understand or support it if something goes wrong
- I don’t want to risk showing this to our customers and them not liking it
- It might take sales away from our current offerings
- I’m not putting my neck and job on the line to promote something which I wasn’t involved with developing
- If this doesn’t work, it is going to make me look bad
I go through a whole list of the psychology of why managers don’t like being asked for permission to innovate in another article here.
Ambidextrous Organisations on the other hand are companies which have set themselves up to do three things:
- Effectively run their core business
- Develop, test and validate innovations outside of their core business
- Integrate a number of the best innovations back into the core business in a reliable manner
The process of making this happen is often referred to as “Dual Innovation”, and builds the skills, capabilities and processes within a company to make the transition of innovations into the core business more likely to take hold.
When should it be used: Any company which has or is thinking of building an Innovation Team / Department / Lab / Skunkworks should be aware of this concept of Dual Innovation and make sure your teams have the skills and permission to engage in it.
Suggested reading: There are not that many resources out there about this theory yet as it is quite new. However, I would recommend the blog by one of the people leading the development of it, Dr Ralph-Christian Ohr, who I have interviewed on the topic previously (premium content).
10 – Open Innovation, Crowdsourcing and Idea Management
What it is: Going by many names, this is the process by which a company can set a challenge that they want ideas for, and gather ideas from hundreds, thousands or hundreds of thousands of people, both within their organisation and externally. Historically, companies may have used systems like suggestion boxes or an email address where people could send their ideas, but more often than not, the ideas sent in didn’t go anywhere, leading to frustration in both the leadership (who could not organise and evaluate ideas) and the people who submitted them.
However, recently there have been a number of startups providing a software solution to enable companies to set up innovation challenges, have thousands of people submit their ideas, and then evaluate and manage these ideas in a more structured way. Whether you call it Open Innovation, Idea Management, Innovation Management Systems or Crowdsourcing, the concept is pretty similar.