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Don’t Invent, Innovate

You’re a leader and you want your company to be more innovative. Well, if you want to start a religious debate, ask someone to define the word innovation. Few terms seem to engender as much fervent diversity of opinion.

Innovation is clearly turning into the new corporate mantra. If you’re a leader and you’re not singing its praises it’s because you’ve been in a coma. Well, welcome back. The fact is that anything elevated to this level of discussion is subject to a quick and precipitous decline, leaving the pundits, consultants and authors looking for the next big thing.

Yet, jaded as I am by the dashed promises of every preceding “new and glorious” paradigm shift in management, innovation strikes me as something more than a faddish phenomenon, and you need to pay attention. Although innovation, unlike other paradigm shifts, is not new, certainly not in the way the Internet was, it is a fundamental part of human nature, perhaps the most fundamental. So why make a big deal out of it?

The answer lies in the collision of myriad catalysts that have suddenly created an ability to invent beyond our wildest dreams. Manufacturing is a global commodity, the Internet allows us to share ideas and to build on them in ridiculously short time frames, capital moves much more efficiently to fund new ideas, micro markets can easily be targeted and fulfilled with well oiled supply chains.

As a result we are surrounded by more useless inventions than at any other time in history. Affluence seems measured by the number of things we can accumulate and then drag to the nearest landfill. You only need to skim the pages of any in-flight SkyMall catalog to see the sorts of ridiculous gadgetry being created. Invention is rampant. There is even a TV show called American Inventor, which showcases the mythology of the lone genius inventor. Our culture of invention worship is the root cause for most of our confusion around innovation. The problem is that we confuse invention with innovation.

I’ve seen far too many people and organizations get wrapped up in the premise that quantity of invention is what drives progress. It’s not. Innovation is about a imposing a discipline of value creation in an organization. It’s about a tangible process for vetting invention and measuring every change in terms of the value it creates, no matter how slight. Most importantly it’s about connecting that value to the people who create it. That doesn’t mean that innovation isn’t without investment and risk. But these are risks taken with the mechanisms and intentions to weigh them against returns. Simply put, innovation is change with a purpose and a vision. Invention is simply change, the age-old battle between quantity and quality.

So, as a leader, stop and think about what this means to your organization. Do you measure the value of each innovation, do you track it back to its creator, do you reward the creator based on the value of the innovation, and can you quantify the investment in and the payback from innovation? These are tough questions for most organizations. But they can and must be answered.

At Partners HealthCare, which runs a group of very large hospitals in the greater Boston area, a Research and Ventures Licensing (RVL) group has been established that is dedicated to identify, nurturing, investing in, measuring, and tracking all new ideas. There is a process in place for assessing the ideas in a transparent and open manner, then developing the ideas with the creator in order to pick a path for commercializing the idea, finally any value derived from the idea is put back into the organization, with a specific amount flowing directly back to the inventor. These are all missing links in most organizations that try to go from invention to innovation. By the way, the RVL reports directly into the CEO.

The result at Partners has been enormous value creation and the institutionalization of innovation as a core part of the organizational landscape. The RVL has resulted in a 30 percent year over year increase in new inventions, a dozen new startups, and $327M in revenues from the innovation of these ideas. While some of the innovations coming out of Partners through the RVL are blockbuster ideas, such as the new drug Embrel, the vast majority of ideas the RVL commercializes are incremental changes, but changes with measurable value. That’s an important point because if you can’t measure the value of incremental innovations you end up in the predicament of depending on blockbuster ideas to prove you’re innovative. That’s a huge mistake that causes your perception, as well as the markets perception, of your organization as an innovator to suffer.

Look, the truth is that innovation in a free market economy is always relative. There are no absolutes; you need only innovate faster than your competitor. But what has changed in today’s world is that your biggest and most innovative competitors will come from the place you least expect. As you look to the left they will pass to the right, with your former best employee behind the wheel. Ideas flow much more freely than they ever have. The last thing you can afford is to let good ideas, however small, however different, bleed out of your organization by frustrating and alienating their owners.

Innovation can be incremental or it can be radical. It can be tactical or it can be strategic. As long as it is a change that adds some value it qualifies as innovation. If that value is measured and the people who create it are rewarded, innovation can become part of an organization’s culture and systems.

It’s simple, innovation cannot exist in the absence of value that is recognized and reward. Invention can. So, you’re a leader, make a decision, your organization can invent a hundred things today that have no value whatsoever, even get them patented and let them sit there in a frame on your wall, or you can innovate.

What’s it going to be?


Thomas M. Koulopoulos, an internationally recognized authority on the subject of knowledge management, is the author of four books, president and founder of The Delphi Group in Boston, professor of Knowledge Management at the Boston College Wallace E. Carroll Graduate School of Management, and one of the industry's most influential consultants. He may be contacted by e-mail at tk@delphigroup.com.

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