The Value of Innovation

Knowing, Proving, and Showing the Value of Innovation and Creativity

Jack J. Phillips, Patricia Pulliam Phillips

• Publisher: Wiley-Scrivener
• Year: 2017
• Print ISBN:
  9781119242376
• Edition: 1
• eBook ISBN:
  9781119242420
• Topic: Business
• Subtopic: Management
• Index: Business

Innovation is the life blood of practically every organization. Innovation drives growth, development, and prosperity for many organizations and geographical areas. Sometimes, innovation thrives within a certain geographical location or in certain organizations that are known for their innovative approaches. This outstanding new volume will demonstrate how to measure the success of innovation in all types of organizations.

In the last decade, there have been tremendous investments in creativity and innovations sponsored by companies, cities, states, countries, universities, NGO's, and even non-profits. With the magnitude of emphasis on creativity and innovation, the sponsors and key stakeholders will demand to know the value of these programs. The Value of Innovation: Measuring the Impact and ROI in Creativity and Innovation Programs will show step-by-step how to measure the impact and the ROI of innovation and creativity programs. The process collects six types of data: reaction, learning, application, impact, ROI, and intangibles. Data are collected analyzed and reported using a systematic, logic model. Conservative standards create results that are both CEO and CFO friendly. This proven process has been used now in 5000 organizations and this new book adapts the method directly to this critical area of innovation, showing examples and case studies.

Chapter 1
The Importance and Challenges of Innovation

Clifton Leaf, editor-in-chief of Fortune magazine borrowed a stranger’s silver and orange bicycle and rode it two kilometers. When he was finished riding, he leaned the bike against a street lamp at a city intersection. Clifton was benefiting from the remarkable business model of Mobike, a Beijing-based start-up whose more than 100 million registered users do much the same thing an average of 20 times a day. This is more than three times the rate of use by other types of ride-share bikes. Many cities have bike-sharing where users typically pay to release the bike from a docking station and return it to another docking station within a particular timeframe. Mobike has eliminated the cumbersome docking process entirely. A user downloads an app, finds a bike nearby, and scans a QR code to unlock it. After using the bike, the user drops off the bike wherever they would like, because GPS and other wireless technologies are built into the bike’s chassis, allowing the company to track its whereabouts. A smart-locking system bolts the rear tire in place until the next user shows up [1].

The old dock-based sharing systems are like the first-generation PCs. According to Davis Wang, CEO and co-founder of Mobike, while first-generation PCs were attached to desktops, Mobikes, in contrast, are like smartphones—you can take them anywhere you would like. Today, Mobike has more users than Uber, although it has been in business only two years. While few consumers outside of China have likely even heard of this ride-sharing business, the company has already expanded to Singapore, the United Kingdom, and the United States.

Innovation Hype

Innovation is everywhere and is constantly being brought to our attention. In the media, stories, ads, interviews, chats, blogs, and references dominate. It’s hard to read articles, stories, or see advertisements without the term innovation being mentioned. Everything we see is innovation and everything that is developed is innovative. We even have innovative leaders now.

Articles

Innovation articles are everywhere, dominating the print space. Fast Company magazine, which has been a driving force for promoting innovation, devotes a good portion of its magazine to the subject of innovation, as do other major publications such as Harvard Business Review, Wall Street Journal, Bloomberg Businessweek and Forbes, among others. There is even a Chief Innovation Officer Magazine dedicated to those who are leading this effort.

Books

Innovation books now dominate the business book scene. A few years back, that wasn’t the case. Famed management guru Peter Drucker wrote one of the earliest books on innovation in 1985 when he authored Innovation and Entrepreneurship: Practice and Principles.[2] Tom Peters, legendary best-selling business book author, is another successful innovation author who jumped into the arena with his book, The Circle of Innovation: You Can’t Shrink Your Way to Greatness. This book put innovation on the map for many readers and business people, as he complained that not enough space had been devoted to this important area. Perhaps the person who has contributed the most is Tom Kelley, a partner in IDEO, one of the world’s leading innovation and design firms, who contributed The Art of Innovation, The Ten Faces of Innovation, and Creative Confidence, the latter co-authored with David Kelley. The person who has contributed the most about disruption from innovation is Clayton M. Christensen. His classic book, The Innovators Dillema: When New Technologies Cause Great Firms to Fail, showed not only the power of innovation but also the many outcomes of the innovation process. Even Google founder Eric Schmidt got into the innovation fray with his book, How Google Works. CEOs have also popped into the arena with books ranging from Phil Knight (CEO of Nike), author of Shoe Dog, to Steve Case (former CEO of AOL Time Warner), who wrote The Innovation Blind Spot and The Third Wave. Clearly, the subject of innovation is now one of the most documented and written about areas in the business book market. For example, at Stanford University Press, in the business book category, six of the 23 titles for 2017 were in the innovation area. Amazon now has over 100 pages of books in the innovation category.

Jobs

Job titles have emerged for those responsible for innovation as the responsibility is shifting to one or more individuals. The title of Chief Innovation Officer, VP of Innovation, Director of Business Innovation, and Chief Innovation and Engagement Officer point to a growing desire to have leaders of innovation within organizations. Further down the organizational chain, we have innovation managers, innovation directors, and even innovation champions. A website, www.cio.com, is dedicated to providing resources to these individuals in this job category.

Speeches

You would be hard pressed to see a speech from a top executive recapping the events and success of the organization without a mention of innovation. State-of-the-company addresses and end-of-year summaries are almost always laced with innovation progress, updates, and issues. Politicians from presidents to mayors have proclaimed innovation to be an important part of their campaigns and strategies and have created more innovation for the government. Dubai has made a commitment to be the most innovative city. In Malaysia, there is an appointed Minister of Innovation.

Experience

You don’t have to be reading books, articles, or listening to speeches to be innovative. We all experience innovation every day. Imagine the complete Uber experience compared to the use of a taxi, or the timeliness and efficiency of shopping with Amazon.com, or the amazing innovation that goes into Google’s ability to find all the information we would need, not to mention the innovative efforts of organizations like Facebook, Netflix, and Apple. In our daily lives, we are experiencing innovation in a big way—in almost everything we do.

We love innovation because it often brings convenience. Sometimes it makes an entire process feel seamless, as in the Mobike example presented earlier in the chapter. In many cases, it reduces the cost of what we are doing or buying, such as with Amazon. Sometimes it is environmentally friendly, like the use of a ride-sharing program. At other times it makes us healthy, such as the medical devices that keep us alive. Few topics have enjoyed as much hype as innovation, and we’ve come to expect innovation and appreciate it.

The Realities of Innovation

Although there is much hype surrounding innovation, there are some realities of innovation that point to opportunities and concerns.

Innovation is Not New

Innovation has been around for many years with inventions traced to the ancient Chinese and Greek cultures. Innovation has been progressing for a very long time, but it has mushroomed in the last 50 years. Now, each year it seems to increase at a more rapid rate. Sometimes innovation is older than it looks. For example, Lockheed Martin developed a cargo aircraft, the C5A. At the time of its development, it was the world’s largest airplane, much larger than the passenger aircraft Boeing 747. The C5A is huge, but also very versatile with the capability of tanks and large trucks driving through the front of the plane and out the rear. It has the capability to land and take off on unimproved runways. More impressively, it has the capability of taking off, flying, and landing entirely on autopilot. In 1969, over the mountains of North Georgia, the C5A made its first flight completely automated from takeoff to landing. In most of today’s aircraft, autopilots are common. Still, many are surprised to know that the capability exists to take off, fly the entire plane, and land without a pilot. What makes this story interesting is that this capability was demonstrated almost 50 years ago. So innovation is not new, but the rate of change is rapidly increasing.

Innovation is Necessary for Survival

Figure 1.1 lists several companies that have had a near-death experience or have actually died, based primarily on their failure to innovate. Unfortunately, there are many familiar suspects on the list. In 1935, the expected life span of a company was 90 years. By 2005 this had fallen to 15 years. Yet at the same time, many companies have survived for over 100 years because they have constantly innovated.[3] For example, Johnson & Johnson, IBM, American Express, 3M, P&G, and Goodrich are on average about 100 years old, and they are still going strong. Innovation is essential; without it, it is almost certain that the company will not exist.

Figure 1.1 What is True of All These Companies?

Adapted from: Lead and Disrupt: How to Solve the Innovator’s Dilemma (Charles A. O’Reilly III and Michael L. Tushman)

Innovation is Equated with Success

If something is successful, it must be innovative, and usually is. For example, on a recent flight on Delta Airlines, we noticed that Sky magazine, Delta’s in-flight publication, had a feature on the founder of Delta with the title, “Spirit of Innovation.” In this article, Delta was celebrating its success since its founding in 1929. Delta is now one of the largest, most admired, and most profitable airlines with 80,000 employees. They owe much of their success to what the company describes as the innovation driven by the founding CEO, C. E. Woolman. A review of any list of the most admired organizations, the most sustainable organizations, the most profitable organizations, or even the Best Places to Work have much innovation going on, making success almost synonymous with innovation.

Innovation is Truly Global

Innovation is not limited to the United States or even to pockets of creativity around the w...

Table of contents

• Cover
• Title page
• Copyright page
• Preface
• Acknowledgements
• About the Authors
• Chapter 1: The Importance and Challenges of Innovation
• Chapter 2: Status and Concerns about Innovation Measurement
• Chapter 3: The Case for a New System
• Chapter 4: Introducing the ROI Methodology
• Chapter 5: Aligning Innovation Projects to the Organization
• Chapter 6: Collecting Data Along Chain of Impact with a Toolbox of Methods
• Chapter 7: Measuring Reaction and Perceived Value
• Chapter 8: Measuring Learning
• Chapter 9: Measuring Application and Implementation
• Chapter 10: Measuring Impact
• Chapter 11: Isolating the Effects of Innovation
• Chapter 12: Converting Data to Money
• Chapter 13: Addressing Intangibles
• Chapter 14: Measuring ROI
• Chapter 15: Forecasting Value, Including ROI
• Chapter 16: Reporting Results
• Chapter 17: Implementing and Sustaining ROI
• References
• Index
• End User License Agreement