Start Up Blog

When innovation is not really innovation

Posted in entrepreneurship by Steve Sammartino on May 6, 2014

Innovation is an interesting word which gets thrown around lot in organisations. No one seems to disagree that it is the life blood of long term organisational survival, but I think it’s clear that the definition of what it actually is happens to be wrong. The definition tends to be most wrong in large stable industrial companies. I should know, once upon a time I was the ‘head of innovation’ in one such large organisation. I was recently pointed to this article which goes a fair way to demystifying innovation, versus novelty and invention. But for me it doesn’t go far enough. I think the problem with innovation in many large companies is this:

They confuse Asset Utilisation with Innovation.

A colleague of mine works in a large industrial concern heading up the product innovation area. Here’s a bunch of constraints they’ve placed upon him:

- All innovations must be able to manufactured in their existing factory.

- All innovations must use the existing machines in the existing factories.

- All innovations must focus on the existing core users of the brand.

- All innovations need to be able sold in the existing sales channels and retailers.

- All innovations should have a price point in and around the existing price points their range of products are already sold for.

- All innovations have exactly 13 weeks to prove themselves in market, because that’s what the reseller demands.

Clearly constraints like this prove that the core task is not at all about innovation and much more about business management within a set set of structured parameters. In simple terms it’s an asset utilisation program. There’s nothing wrong with asset utilisation. It’s a valid, profit centric, strategic imperative. It’s what companies must and should do to reach their financial potential. What’s foolish though, is confusing it with innovation. Such confusion can only lead to a long term displacement of brand relevance.

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