Achieving growth objectives through innovation

One driver for innovation programs in health, science, and technology organizations is to achieve growth objectives.  Leading business experts note that companies cannot grow through cost reduction and reengineering alone.  Innovation is a key element in providing aggressive top-line growth and for increasing bottom-line results.

A survey across a large number of manufacturing and services organizations found, ranked in decreasing order of popularity, that systematic programs of organizational innovation are most frequently driven by:

1. Improved quality
2. Creation of new markets
3. Extension of the product range
4. Reduced labor costs
5. Improved production processes
6. Reduced materials
7. Reduced environmental damage
8. Replacement of products/services
9. Reduced energy consumption
10. Conformance to regulations

I like this list of goals because it shows the breadth of improvements possible to products, processes and services.  Also because it runs counter to a prevailing impression that innovation focuses mostly on new product development.

These goals also demonstrate the variety of disciplines and departments that must be engaged to realize measurable impact of innovation.  A debate triggered by the book, Freakonomics, is whether we should be measuring the process of innovation or the results of innovation.  One point of view says, innovation can be measured by the additional profit it generates and expressed as a return on the investments made for that purpose. At the level of the industry or even economy as a whole, economists should use the concept of “total factor productivity.”

Others say what’s important is the journey to the end result. They argue that the focus should be on the means rather than the end — organizations shouldn’t think of innovation as something they can buy; rather, they need to put in place structures to support the process of innovation.