Innovation can be managed

It is important to dispel the myth that innovation is something magic and therefore can not be managed. However, to be able to manage innovation, a systemic approach is required. It has to include the process, culture and underlying systems and structures within the organisation.

The Australian Business Excellence Framework is a proven framework that outlines "best practise" within the field of contemporary management. It is based on 10 Principles which represent the core of sustainable business excellence:

• Effective leaders provide direction and create a supportive environment
• Effective organisations are plan driven rather than event driven
• Organisations benefit from decisions and actions based on facts and data
• All systems and processes exhibit variability, which impacts on predictability and costs
• All people work in a system; improvement happens when people also work on the system
• The most important resource of any organisation is people – especially their creativity and knowledge
• Continual improvement relies on continuous learning
• Quality is determined by the customer
• In order to improve the output, improve the process
• Impact on the community and the environment are key influencers of future sustainability

The ABEF challenges an organisation to think and question the assumptions they are using to run the organisation. It provides guidance as to what the organisation should consider, but it is not prescriptive about how these things should be done.

The ABEF consists of seven interlinked categories as shown below:

Leadership and Innovation

The leaders of the organisation have to determine the strategic direction of the organisation and what role innovation is going to play. It requires the leaders to understand what types of innovation are desired, how they link with the strategic plans and how to create a supporting culture which enables the intention to be carried out. Leaders have to be able to communicate what areas require new ideas to ensure the creative energy is focused on areas that matter to the organisation. It is further vital that organisational values enable innovation. These values have to be agreed, communicated, role-modelled and reinforced. Sharing the vision, direction and living the values are extremely important since, studies into innovation have highlighted that one of the keys to innovation is that people feel aligned and committed to the organisation and its goals.

Leadership throughout the organisation is crucial for innovation to occur. It is therefore important for the organisation to ensure all systems support the overall strategy and that individuals are empowered to make decisions and use their creative ability within a defined context. Research suggests that management should keep administration power (eg approving where to allocate funds), but ensure employees have a high degree of empowerment in relation to execution of a project.

Strategy and Planning Process

The organisation has to understand its environment to be able to focus its innovation effort. The ABEF requires the organisation to focus on understanding its business environment and to use this understanding to feed the planning process.

The ABEF requires the organisation to have a planning process which turns strategic imperatives into actionable plans. This includes developing directions for the innovation process and portfolio management process. The outcomes of the planning processes have to be communicated to ensure people know where to focus their creative efforts. The ABEF further requires the organisation to review how it manages its resources and assets with a focus on increasing its value into the future. Commercialisation of the intellectual property is a vital aspect of this part of the ABEF.

Data, Information and Knowledge

Use of data, information and knowledge is critical to the success of the innovation process. It impacts how the organisation focuses the collective creative effort. It is also vital for progressing any initiative through the innovation process. There is a famous quote from Edward de Bono that creativity has never harmed an organisation, but bad judgement has. This category is about ensuring the organisation is clever in its way of applying judgement through collecting relevant data and turning it into information and knowledge.

The organisation needs to decide what data it requires to assess projects as it passes through the gates in the innovation process. It will also need to define how this data is going to used as part of the decision making process. The same issues are true for how data will be used as part of the portfolio management process.

An innovative organisation is always changing and as a result needs people with a systemic view that can progress innovative initiatives in the best interest of its stakeholders.

It further emphasises the creation and management of knowledge. It recognises that creativity is built upon combining thoughts into something new. It therefore highlights the importance of knowledge management.

People

The organisation has to determine how to get involvement and commitment from its people who have to be able to network across boundaries and be encouraged to use their full potential. It is also important that there are communication channels between the layers to ensure employees have an opportunity to identify and get sponsors for any of their initiatives.

The organisation has to consider how people are rewarded for participating in the innovation process. This assessment should be wider than just the people who are directly involved with innovation projects. It includes all behaviours that impact on an innovative culture like sharing information and giving constructive feedback. It also includes determining how to encourage individuals’ creativity and at the same time reinforce the need to work as a team to be successful. Some research claims that innovation is more likely to thrive if the culture relies more heavily on intrinsic rewards than extrinsic rewards.

It is important to realise that thinking skills are something that can be improved. The development of, for instance, lateral thinking skills should be included in personal development plans.

The organisation has to think through how to acquire knowledge for the future. It needs to develop existing staff as well as acquire knowledge from the outside to ensure core competencies are developed for the future.

It is proven that employees who feel healthy and full of energy will be more creative and able to apply discretionary effort

Customer and Market Focus

It is through understanding the customers and the markets that the organisation can come up with innovative solutions that provide value to the customers.

The majority of an organisation’s innovation initiatives will impact the external customers. In fact, a large proportion of the innovation initiatives have the external customers as the main focus. This category is therefore very important to innovative organisations. The ABEF requires an organisation to focus on understanding the needs and expectations of present and potential customers and markets. It is about creating a future for the customer. Many innovations were never requested by customers, but as soon as they experienced them, they could appreciate their value. Good understanding of the customers and their environments are pivotal for estimating customers reaction to an innovation they had never thought of.

The ABEF highlights the importance of good customer relationship management. It believes frequent customer contact and thorough understanding of the customer’s world will assist the organisation in coming up with innovative initiatives. It involves being able to "walk in the customers shoes" and understand the total experience in interacting with your organisation and its product and services. This is supported by many researchers like Leonard and Rayport (1997).

Involving customers in the organisation innovation initiatives will also assist in achieving customer focused innovations. Involving customers early in the process will also speed up the commercialisation process.

ABEF further emphasis the importance of being able to measure customer perception to learn about the customers’ views and to focus future innovation initiatives.

Processes, Products and Services

An effective and efficient innovation process is critical to any organisation that wants to be innovative. This process allows employees to know how they can get ideas progressed and how their potential is evaluated.

The process ensures the organisation doesn’t take on more than it can handle and that the initiatives undertaken fit with the overall strategy. A well managed process ensures timely innovation since it avoids over commitment of resources and reduces risk through only approving a gate at a time.

This category further emphasis that suppliers can be a very valuable partner in the innovation process. The combination of knowledge acquired through the supply chain can lead to the development of new concepts. This thinking also applies to other forms of business partners. For instance, teaming up with other organisations for joint development is one way of being able to access new knowledge.

The ABEF further recognises that if the organisation has a culture of managing and improving processes, it already has the fundamentals for driving innovation in place. It is already:

• Looking for a better way
• Questioning
• Understanding data
• Knowing how to problem solve and bring about change

Business Results

The ABEF outlines two different types of results, "Indicators of Success" and "Indicators of Sustainability".

The first type focuses on the organisation’s key performance indicators which help to determine if the organisation is achieving planned results from the innovation initiatives. It will also help the organisation’s ability to take any required corrective action and plan for the future.

The second type of business result is intended to ensure the organisation has a formal approach to monitoring sustainability. A well functioning innovation process is a key component for creating sustainability indicators.

The ABEF has been developed over ten years with input from leaders of industry, academia, government and subject-matter experts from around the globe. It is well known and user friendly. Different forms of organisational self assessment and support are available, as are interpretative guidelines on the use of the ABEF with a specific focus on enhancing innovation capability.