Why CEOs Should Focus on Innovative Over Entrepreneurial Thinking
A Case for Innovation
Innovators and entrepreneurs have different records of accomplishment and varying returns on their energy. Businesses looking for new ideas that turn to the entrepreneurial community for their inspiration and startup principles may find they are better served by examining the practices of larger innovative companies. While entrepreneurship is the development of business from the ground up, innovation is the main engine of growth for companies already in business today.
According to the Product Development Management Association, the top 25% of product innovators outperform the bottom 25% by 12 times. The question a business leader should be asking is, “How does one become a top innovator even beyond product innovation?”
Innovation — defined as discovery, invention or transformation that results in business value — can produce predictable results if managed as a function and process.
The first person to develop the process of innovation into a flexible flow production system was Thomas Edison, history’s greatest innovator. Today’s top innovative companies like 3M and Samsung design processes and frameworks that drive continuous innovation results. For them, it is a robust discipline managed similarly to sales or operations.
The failure rate in the entrepreneurial community is immense in comparison to the innovation failure rate in larger companies. Chief executives may extract greater learning and higher value from examining established innovative company practices than following the noisy entrepreneurial pack. Remember, it took a lot of energy to elevate out of this troubled asset class into a financially viable business. Studying successful innovators provides a better track to accelerate your innovation performance.
Mastering how to innovate effectively needs to be a top priority for companies.
Erik Roth, director of global innovation for McKinsey & Company, identified that a recent McKinsey study revealed that “84% of global executives believe innovation is extremely important to the future of my company but only 6% are satisfied with their innovation performance.” In defining innovation, he stated, “Innovation must create products, including services, processes and business models over time that sustainably create financial meaningful results.”
Do you have a model in place for innovation? We'd love to hear your thoughts about putting processes around innovation.