Innovation is coming into its own as a business discipline of the 21st century.
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Just as Marketing and Finance emerged as business disciplines in the 20th century, innovation is coming into its own as a business discipline of the 21st century. This burgeoning organizational function is developing its own:
- Key principles and concepts
- Processes and methodologies
- Best practices
- Cultural norms
- Leadership roles and principles
- Academic research and teaching programs
Innovation is no longer a random phenomenon relying on visionary CEOs, company brainstorming retreats, and employee suggestion boxes, nor is it solely the purview of R&D. It is, however, more than product innovation and product line extensions. Major innovation can now occur in any element of an organization—its strategies, business models, mission, and operations. Even an organization’s core competencies, once the sole domain of humans, are increasingly innovated to include artificial intelligence.
More than ever, today’s organizations are exploring ways to build repeatable systems for discovering new opportunities.
Marketing, Finance, Human Resources, and Innovation?
Organizations are beginning to view innovation as a capability and not a sporadic activity. Many have designated leadership teams, initiatives, and even innovation departments with responsibility for conceiving, spotting, and helping to implement new opportunities. Focus areas can include identifying markets, evaluating emerging technologies, adopting AI, and partnering with startups. Innovation departments are beginning to echo the way Marketing, Finance, and Human Resources departments have operated for years.
C-suite leadership teams are expanding to include Chief Innovation Officers (CINOs). Mastercard, for example, maintains a CINO to champion enterprise-wide innovation, and research suggests CINOs are most successful when they have companywide reach rather than operating in silos. This shift is further indication that innovation is evolving from a series of initiatives into a core business discipline.
Strategic Innovation: An Organization’s Dive into the Unexplored
Strategic innovation is major, longer-term innovation that leads organizations into uncharted waters. Unlike incremental innovation, where a situation is proven within a paradigm where the business currently operates, strategic innovation helps move the business to a new paradigm, the next S-curve, if you will. Strategic innovation is an increasing necessity driven by rapidly changing times, and companies that fail to innovate continuously will fall behind.
Twentieth-century organizations innovated through operational excellence in quality and efficiency. Continuous improvement programs such as Lean Manufacturing, Six Sigma, Business Process Reengineering, and Total Quality Management were designed for improvements within the existing paradigm. Back then, business schools and consultants encouraged companies to surround their competitive advantages with “moats,” such as scale or switching-cost moats, to defend against the competition. Twenty-first-century moats are increasingly ineffective because competitors innovate around them.
Organizations must periodically reinvent themselves, and the time allotted for that is rapidly decreasing. While decades ago it could take several management generations for a company to reinvent itself, today’s companies often spark multiple reinvention efforts within just one generation.
Strategic innovation is the key to reinvention and the primary tool for taking businesses from disrupted to disruptor. Today’s companies are more aware of that fact than ever.
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