We examine the management practices which contribute to innovation and set out measures for tracking whether innovation is working. The idea is to remove barriers to creativity in a corporate setting.

1. Corporate Innovation Online
In this presentation we de-construct and re-build an
organization’s management practice to focus on innovation.
We set out measures which can be used to assess whether
innovation is working. Releasing creativity from its
‘surrounds’ is the challenge!
Web site: http://www.corporateinnovationonline.com
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2. The ‘surrounds’ of
corporate innovation
Table of Contents
Leadership Overview
De-constructing
Organization and
management of innovativeness
day-to-day affairs
Management practices
Idea generation
and realization impacting innovativeness
Measurements of
innovativeness
Creativity
Stages of innovation
management
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3.  Creativity, as a key part of the innovation
process, remains mostly a mystery, and will likely
remain so for some time to come. Creativity is at the
centre of innovativeness and yet is the least
understood.
 While creativity remains much of a mystery, other
aspects of corporate innovativeness are much better
understood and yet, remarkably, often missed in
practice.
 De-constructing a corporation’s innovativeness can be
part of a process which ultimately provides an opening
for creativity.
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4.  The toughest nut to crack is creativity and there is no
solution to this aspect of innovation except for having
the right people and more specifically, their brains.
 The ‘surrounds’ of creativity are, however, more
amenable to understanding and therefore able to be
restructured and improved upon.
 Measurement is the best way to start to really
understand if innovativeness is working.
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5.  Other aspects of innovativeness are much more open to
modification than creativity. There are at least three themes to
understanding the management practices which encourage
innovativeness – the ‘surrounds’.
 First, obviously is leadership, nothing happens unless top level
support for innovation at Board and CEO level is evidenced.
 Secondly, there are better and worse ways of organizing and
managing a corporation and each practice, by itself or with other
practices, can impact innovativeness.
 Thirdly, and specifically concerning the movement of ideas
within the corporation, there are practices which can stimulate
or retard the flow of ideas. Without ideas - the only evidence of
creativity at work - there is no innovation. Innovativeness
becomes marginalized.
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6.  A recent study has shown that innovation per se cannot
only be studied and measured but also nurtured and
encouraged.
 Creativity, as Einstein put it ‘is the residue of time wasted’.
 Examples provided are drawn from the corporate practices
of highly-innovative companies such as 3M; which we have
researched at length (see 3M profile on the web site).
 Part of measurement – and nurturing – is to know which
management practices lead to innovations.
 The Economist, March 17, 2012, a review of a new book by Jonah Lehrer, Imagine; How Creativity Works, published by
Canongate
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7. Management
practices
impacting
innovativeness
We segment
management
practices into three
themes;
• Leadership
•Organization and
management of day-
to-day operations
•Idea generation and
realization
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8.  Emphasis on short versus longer-term profits – F#1
 Extent to which management explicitly looks for
innovation – F#2
 Planning emphasizes opportunities and not just cost
reduction – F#4
 Use of career ladders and recognition of innovators –
F#7
 Tolerance for risk in the planning process – F#9
Leadership plays the key role in setting the ‘surrounds’. Five management
practices, if recognized, can make a big difference to setting the climate - the
culture – for the organization.
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9.  Emphasis on management of people and their interactions –
F#6
 Degree of formal communications in the organization –
F#10
 Use of independent work groups – F#11
 Management decisions with input from a broad cross
section of employees – F#12
 Formality of the decision process – F#13
 Planning versus action orientation – F#15
 Decentralization versus centralized hierarchy – F#18
 Staff versus line involvement in the decision process – F#20
Simple practices ,which are well known, can be improved upon to create a
climate which encourage people to share, trust, and engage in the process of
innovation. Finding the right balance is the key!
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10.  Tolerance for mavericks – F#3
 Tolerance for failure – F#5
 Tolerance for variation from a corporate norm – F#8
 Mechanisms in place to reward innovators – F#14
 Resources generally available for new ventures – F#19
 R&D budget levels above the competition – F#23
Priming the ‘innovation pump’ is brought about by demonstrating
tolerance on a number of fronts and by judiciously funding new ideas
whether big or small.
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11. What happens when
management and the Board F#19; availability • F#5;tolerance for failure takes a hit
of resources for and the company becomes more risk
shift emphasis to profit new projects is averse
improvement – short term! seen to be • F#23; R&D budget put under heavy
The degree of ‘shift’ is as constrained scrutiny and likely constrained
important as the new focus.
• F#12; management restricts input from
staff overall in order to make difficult
decisions
• F#18; organization becomes more heavily
F#15; managements' centralized
focus shifts to more • F#13; decision process taken to a new
careful analysis - level of scrutiny and formality
less action • F#11; authority granted to independent
groups is curtailed
• F#10; communication within the
organization becomes more carefully
spun and less frequent
F#4; management • F#2; employees question managements'
shifts emphasis to real interest in being innovative
rationing resources
and less on looking • F#9; tolerance for uncertainty in the
for opportunities planning process drops
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12.  By breaking down the 19 management practices which
impact innovativeness and innovation, we can assess the
relative importance of each Factor and whether the
organization has best practices in place; i.e. understanding
the ‘surrounds’.
 The climate for change is dictated by the focus and
statements from management and the Board.
- stimulating innovation – because it is missing?
- creating shareholder value – if the shares have been
depressed?
 Knowing the current situation is basic to making a decision
on what to improve and what to leave alone.
 The next step is to measure, as best one can, whether
innovation is working – or not.
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13.  Many corporations use as a measure of innovation the
percentage of new products which have been introduced
over the last 5 years and seek to keep this figure at 25% or
better (see P&G profile on the web site).
 The hypothesis is that the product line is continually being
refreshed, new business platforms established (See DSM
profile on the web site), and that change will bring about
growth and profit.
 The percentage of new products is an indication of
product-inspired innovation but is, in reality, only one part
of the answer to the question; is my corporation’s
innovativeness in place and working well?
 Innovation goes beyond the introduction of new products!
 http://www.corporateinnovationonline.com.
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14. • New Products • Business
• New business Process
models/platforms Continuous
Improvement
High risk Low risk
Investment in Investment in
creativity in reward systems
new and to capture and
Every innovation emerging implement new
technologies ideas
requires an
investment of
Low risk
funds, time, and Medium risk
Investment in
emotion and common
Investment in
technologies and
comes with risk. technologies to creativity to
keep up to date differentiate a
product or service
• Product Line • New
Extensions industries
and penetrated
Enhancements
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15. New products, business Business Process and
models and platforms continuous improvement
•Patent applications •Reduction in cost per unit
•Patents achieved •New technologies adopted
•Ability to hire SMETS personnel •Service levels improved
•Number of ‘breakthroughs’ •New customers added in existing markets
•Rewards from external sources •Revenue per employee
•Publications in prestigious journals •Revenue per units of production
•Licensing fees derived •Measurable quality improvements
• New products as a % of current offerings
•Dropping under- performing products
Product line extensions and New Industries penetrated
enhancements •Number of collaboration linkages
•Stakeholder (employees, suppliers, customers) surveys
•Ideas generated and in the pipe-line •Results of ‘exit’ interviews with innovators
•Ideas generated and implemented •Risk profile at target level
•New markets entered
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16.  Surveys that provide customers opinion of your company’s innovativeness and its brand
image – as compared to the competition.
 Financial analyst rankings and feedback from investor relations broadcasts to the media.
 Stakeholders’ (in this case suppliers, investors, etc.) opinions on the ‘innovativeness’ of
your company compared with their opinion of the competition.
 New sales to new customers - marks the rate of new customer acquisition reflecting the
efforts to enhance the brand.
 Measurements of incidence, or rate of increase, of attractive, internally generated
investment opportunities (the size of the pipe line) which come under review by senior
management and the Board.
 Increase in the value of intellectual property generated from internally-sourced ideas;
augmented by acquisitions of IP from other organizations. The information could be
broken out by IP for existing versus new product initiatives.
 Share price premium attributed to the company’s reputation for innovativeness.
 Conducting an analysis focused on employee retention and ease of attraction.
 Collaborations and partnerships reflecting the company’s reputation for its
innovativeness
 The percentage-of- time key executives/Board members spend on innovation as a specific
topic of a meeting, seminar or workshop.
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17.  The on-line survey, one of the tools used to measure
innovativeness, addresses employees and stakeholders’
opinions regarding 25 Factors which provide metrics for
corporate innovativeness.
 Respondents are asked to provide their opinion on what
would be an ‘Ideal’ situation and then asked for their
opinion on their ‘Reality’. The difference is a measure of
their concern
 The answers to three of the 25 Factors can indicate the
presence of a problem. The answers to the remaining
Factors provide a direction for making changes.
Factor # Means of measurement Explanation
Innovators are leaving the company – or not. Factor #21 – a huge gap between the ‘Ideal’ and ‘Reality’
21 indicates the presence of an issue.
Company has an innovative tradition – or not. Factor #22 – a tradition established and still exists? Establishing a
22 tradition is more difficult than keeping one!
A sense that innovation is increasing or Factor #24 – probing in which direction innovation is trending?
24 decreasing. 17

18.  Do all or most employees appreciate the importance of
innovation to the future of the company?
 Is management’s message regarding innovation getting through?
 Is what we do as managers, encouraging innovation thinking?
 What is the employee attitude to innovation?
 Are innovative people leaving the firm? Why?
 Is the starting point that the company already has an innovative
tradition or is the view that this has yet to come?
 How do we identify our innovativeness? How broad and how
deep is our innovativeness?
In summary, the idea is to remove constrictions which interfere with the
release of ideas for improving productivity and shareholder value.
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19. Stages of innovation and innovation management characteristics
Innovation
Start Up Rapid Growth Growth Mature Aging
management
Establishing credibility Developing a strong
Management’s competitive position Maintaining a strong Maintenance of profit Exiting the business
overall attention Entrepreneurship competitive position and market position Ongoing survival
Survival Market share
Specific new product
development tasks Business model establishment Product enhancements
Innovation effort Setting in place the New product quality and support and modifications Opportunistic only
seeds of a culture for Customer feedback for success Search for innovation
innovation
Simple idea
Non existent
management system Full-fledged idea management system System maintenance
Innovation Reward is skewed to
Rewards migrate to Sophisticated reward system for full range of
management systems share value
other forms of innovation spectrum
appreciation
recognition
Loose and informal, Some organizational
Group performance
Management lack of definition of definition required
Decentralized
structure responsibilities Individual and group
Well defined responsibilities and accountabilities
Individual performance performance
Management’s Bordering on Open and non-
Open and ad hoc Formal, delegation and control
innovation style participative hierarchical
Seeking outside
Collaborative Virtually none outside collaborators; research
Mainly Internal effort Managing outside collaboration
initiatives the enterprise institutions etc. for new
ideas
Risk profile shifts from
Likely casualty Cost reduction and continuous improvement, cost
risk taking to more New products No new products
during stage containment
conservative
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20. Revenue Per
Employee/Store
Unleashing creativity $800,000
$700,000 John Deere (per
Revenue per unit
$600,000 employee)
is the goal $500,000
$400,000 Starbucks (per
$300,000 store NR/Total
$200,000 Stores)
$100,000
3M (per
$-
employee)
2007
2010
2009
2011
2008
2006
Leadership
Organization and
management of
Selecting the appropriate
day-to-day affairs measure(s) is a most important
step. The choice will dictate the
Idea generation approach taken at all levels in
and realization
the organization and impact the
climate and the culture for
innovation.
Creativity
The measures chosen then
become the target for
objective setting.
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21. CorporateInnovationOnline.com
Benchmarking innovativeness
Building and sustaining innovation
Articulating innovation
http://www.corporateinnovationonline.com
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