The 7 Habits of Highly Innovative Organizations

Modern market research techniques can be used both to better understand the key factors that are associated with innovation in organizations; as well as to drive the development of innovative products and services.

In this article we will examine the key drivers of and barriers to innovation in organizations based on a recent (2008) National Innovation Research Survey of over 350 Australian organizations to identify the underlying organizational “habits” that lead to improved innovation outcomes.

Innovation takes many shapes and forms and there is no single formula for successful innovation. In many cases the introduction of a (successful) innovative product or service owes as much to good fortune, or the unique talents of a specific individual, as it does to sound planning and the application of rigorous methods. However, on deeper examination, there are underlying behavioral factors (“patterns”) that have a significant impact on the process of innovation.

An understanding of these “patterns” of innovation can provide useful insight into how organizations can implement policies, processes and cultural change to foster innovation, and to increase their likelihood of achieving sustainable (successful) innovation in the development of products and services.

Key Survey Insights

• Innovation doesn’t happen in a vacuum. Universally, organizations identified having a deep and broad understanding of the customer and market needs as being essential to the process of innovation. Without an established knowledge base of customer needs, market trends and the competitive environment, innovation efforts lack direction and are less likely to lead to the desired innovation outcomes. The most innovative organizations were those where product and service development is driven by a broad and deep understanding of the market and competitive environment; and where there is a “wholistic” view of the customer that is research (i.e fact) based.
• Innovation requires fostering and leadership. Innovation thrives best in an environment that is culturally diverse, that supports and rewards risk taking and where “failure” is treated and as opportunity to learn. From a practical perspective, innovative organizations implement a funding and resource model that encourages a balanced portfolio of short term and long term “bets” on R&D expenditure. To accomplish these goals usually requires visionary leadership, or at the very least, an executive management team that is fully committed to the process of innovation.
• It is important to understand the organization’s “pattern” of innovation. The relative importance of; the drivers /barriers to; sources of information used; and desired outcomes from the process of innovation vary markedly by industry type (technology orientation, services vs. product orientation), business nature (commercial vs. not‐for‐profit), and the overall size of the organization, but exhibit a common set of patterns. An organization’s strategy for innovation must explicitly recognize and adapt to the pattern of innovation that best applies to its particular situation.

The 7 key Habits of Innovative Companies

1. Deep understanding of the customer and market needs: Engage with customers; Understand industry trends and competitive environment; Big picture perspectives

2. A “Culture” of innovation: Vision; leadership; Executive support; Openness to new ideas; supportive/encouraging of innovation; commercial imperative to innovate; Flexibility.

3. An Open Innovation model: Open collaboration model and having global partnerships

4. An appropriate funding model for innovation activities: Willingness to invest in R&D activities; Balanced investment in future versus current needs.

5. Ability to execute: Commitment of resources dedicated to innovation; Continuous development/improvement processes; Benchmarking; Clear goals/deadlines/strategy; Best practice evolves over time (dynamic); Flexible and quick to move.

6. Human intellect/creativity: Development of skills; Knowledge base; Talented Educated individuals; Willingness to learn/change.

7. Management of Intellectual Property: Ability to manage/protect IP that is generated through the innovation process in a practical manner.

Where from Here

The national Innovation Research Survey was developed By Adair Communications and AusInnovation , in association with Philology Pty Ltd. The next stage is a more in-depth research study in to each of the key patterns of innovation, to better understand the organizational processes, culture and internal factors leading to improved innovation outcomes.