Three-second summary: Historically, innovation has been seen as a strategy. Rather, it should be seen as a dialogue, a process. The home run innovation is less important to business success than continuous innovation that touches all business processes. Innovation is not a revolution; it is evolution and execution. It is the successful implementation of creative ideas within an organization. It is about challenging whether the business has the right business model. Consistently successful organizations have clear processes around innovation.

In the business world, the distinction between innovation, value creation, value extraction and operation execution is blurred. This has led to the acceptance of a number of myths as conventional wisdom. We have scoured the best thinking on business innovation and found some consistent, albeit unexpected, themes.

Myth one: The breakthrough idea is key to innovation.

Rarely… We can all identify companies that have become industry leaders due to a breakthrough, transformational idea. We also know that these companies are few and far between. Indeed, the established business models of many organizations are somewhat less than optimal. Increasingly, executives recognize that their companies’ long-term successes rest on the ability to better understand future trends and to identify their impact on existing operations and strategies. Their mantra is innovating is better than waiting. Executives cannot move fast enough to find the solutions they require in the constantly changing global economy. They search for new ideas, methods and techniques. They create new experiments, new pilot projects and new networks of collaboration. In short, they are searching for seminal ideas that will drive transformational innovation.

This type of innovation is disruptive in nature. Disruptive innovations either create new markets or reshape existing ones by delivering relatively simple, convenient, low-cost innovations to a group of customers who are ignored by industry. From a technological perspective, disruptive innovation is most often the domain of small companies that are new to a market. Typically, established companies will avoid disruptive technologies and products that lower profits and, they fear, kill the market. This opens the door to entrants who offer products that are simpler and less expensive. Their success leads ultimately to a paradigm shift within the market sector.

Disruptive innovation doesn’t just occur. It is messy and halting. Disruptive products frequently take a number of years to realize their full potential. All the while, companies must continue to hone their new business models and innovate beyond their first products.

Disruptive innovation ultimately restructures the very essence of what has existed previously. It reflects a change in the very nature of an institution, concept, method or technique. The challenge for managers is that while transformational change is essential to new growth, organizations must not neglect their core offerings. Profits generated from the core offerings are essential to fund initiatives leading to transformational change and sustainable profitable growth. The key is to put in a set of processes that can simultaneously balance disruption and attention to the core.

Myth two: Creative chaos is the cauldron of innovation.

Creative yes, chaos no… With revenues of over $10B USD and a market capitalization of some $150B USD (November 2006), Google is undoubtedly one of the most successful companies of recent years. Google sees ambiguity, chaos and mistakes as fodder for innovation. Mistakes, even million dollar ones, are part of the learning, growing process.

Ah, but Google is the exception, not the rule.  Research conducted at the Industrial Performance Center at MIT reveals that two fundamental processes are central to innovation: rational problem-solving and interpretation. The former dominates corporate policy-making while the latter is the source of much creative output. They are radically different from each other and require different managerial approaches. Yet both are needed to sustain the creative output of companies.

Perhaps a better example to follow is 3M, which has consistently innovated into market after market through five generations of management. Founded in 1902, the company is today a diversified technology multinational with revenues exceeding $22.9B USD. Its history is characterized by a constant stream of growth-generating innovations. Indeed, approximately 25% of its sales come from newly introduced products. A key to 3M’s ongoing success is its 15% rule. Numerous employees are given 15% of their time each day to devote to new growth opportunities. The company funds trials for these opportunities with a broadly dispersed capital budget. Internal and external selection processes follow. Ultimately, every manager is expected to create something of substance. But it is not chaos, it is focused creativity. The 3M example suggests that chaos is not a stepping-stone to ongoing successful innovation; it is an obstacle.

Myth three: The Creative individual is the catalyst for innovation.

Infrequently… It is important for organizations to recognize the creative thinkers in their midst and to take advantage of their deep insights. Creative thinkers often bring meaningful ideas and new approaches to problems bedeviling an organization. Yet promoting the creativity of individuals within the organization as a way to foster growth is difficult to manage and often inefficient.

More and more executives are realizing that no one process of strategic and business planning will suffice. They are starting to bring together the best minds from a number of fields to help them shape their future innovation strategies. Their mandate is to focus on breakthrough opportunities that are at the intersections of emerging technologies, markets and consumer needs. Many things will have to be done simultaneously. We have to learn to think differently. We have to be able to create new ways of economic development, new ways of governing and new ways of learning. Successful organizations need the whole organization to be mobilized, interconnected and accountable.  They must have a clear direction for innovation that looks into the future. Indeed, some corporations are now looking at a time frame of between five to 10 years.

Myth four: Only the young can innovate.

No… The notion that innovation and creativity is the domain of youth is one that has surprising durability. Employers show a preference for bright younger employees with the very latest know-how. They frequently view older employees as less productive, less flexible and less innovative; they also resent their relatively high wages. However, there is a consensus among many researchers that older individuals can, and frequently are, highly innovative.

One classic example is Steve Jobs. After losing a power struggle and leaving Apple in 1985, Jobs founded Nextel and developed Pixar into an animation power house. He then made a triumphant return in 1997, with the ailing company becoming profitable in 1998. Now in his fifties, Job’s genius for innovation continues to impress. After the highly successful launches of iTunes and iPod, he announced in January at the 2007 Macworld Expo the long awaited iPhone and AppleTV products. 
                       
As the Jobs example illustrates so poignantly, innovation is not a biological gift of younger age groups. Indeed, the boomers, executives now in their late careers, may be part of the most innovative and creative generation the world has known, at least since the Enlightenment, some 300 years ago. Innovators are making increasingly important contributions at older ages. Wisdom often matters more than unbridled energy and experience matters more than inspiration. Instead of focusing on the young, some executives see diversity in hiring as a better route to bringing fresh thinking into the organization.

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Why are these myths so pervasive? Because they are intuitively appealing. It’s easier to wish for the big breakthrough than to methodically work toward greatness. We have worked with companies to build a successful innovation capability – including process reengineering and appropriate innovation metrics. It is hard work, but it is possible to transform organizations into innovation machines.

Two-second profile: James is an accomplished consultant and media executive with more than 25 years of experience in publishing, e-publishing and information services. He has a successful track record in strategic planning, business improvement and coaching. James has a Ph.D. in literature from the Université de Montréal. He reads, writes and speaks English and French fluently.