50 Shades BookIt seems I can’t be on line for a day and not see somebody talking about innovation. Companies say they want to innovate and plenty of consultants want to tell them how to do it. But what is all the talk about? Why are companies trying to innovate?

According to the dictionary on my Mac, innovation is “the action or process of innovating.” Synonyms include: “change, alteration, revolution, upheaval, transformation, metamorphosis, breakthrough, ingenuity, inventiveness,” and more. It strikes me that the range from “alteration” to “revolution” is pretty wide. And that’s what I see in terms of how different organizations view innovation.

Recently, while listening to a new radio show called In Process by Trusted Counsel, I heard Richard Humphrey, CEO of The Ride tell how his company created a new line of business by looking at their current assets and how they could increase the utilization and profitability of them. After some creative thinking, his team developed a whole new offering with lower price points, enabling them to appeal to a wider audience.

For other companies, innovation is core to their brand. Take Apple, a company which continuously recreates its products and designs and builds new products which break consumer adoption rate records. Or Google, a company that is fearless enough to venture in to unrelated areas like driverless cars and practical enough to call it quits when something doesn’t work: anyone remember Google Notebook?

Let’s look at organizational design for innovation. Many larger companies like Coke and Citigroup believe that the best way to truly innovate is to incubate innovation. These entities form a separate organization, typically outside of the business units and devoid of day-to-day delivery of the numbers. This approach is all about concentrated focus. Innovation incubators often hire people with “innovation experience” and rely on the innovation team to drive ideation of new concepts.

To me, this approach has some drawbacks. First, ideas are great but if they are impossible (or unprofitable) to execute, what good are they? While it makes sense to cast aside reality in a brainstorming session, innovation is much more than just ideas. After all, the very definition is much stronger than that. True innovation is about action.

On the other hand, it can be hard to innovate inside a business unit when there are deadlines and goals to meet. So what’s the answer? First, I’ll argue that good ideas come from everywhere: employees, customers, and even competitors – not just people tasked with “innovation.” Second, business unit leaders are in the best position to determine what is possible given the company’s resources. Third, sales and service associates are in the best position to predict customer interest and acceptance.

While innovation labs work well in certain sectors, my gut says that a hybrid model would work best for most companies. I welcome discussion and input on companies you think are great innovators and why; as well as other organization approaches you’ve seen work.

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