6 myths about innovation.

In today's competitive environment, you are either different, or you are the cheapest. And innovation is necessary to be
different.

That is why innovation has
become one of the strategic priorities of major companies. Year after year
we see how budgets in this area are rising; however, many companies are facing
a harsh reality: The investment is not
translating into results.

Traditional companies, designed to think about operational efficiency, are now forced to move on to a new terrain for which they are not prepared: the grounds for change.

What is to not innovate?

Few executives from these companies understand the concept and it is
very common to encounter some of the errors included below.

NO = R&D

The most traditional R&D problem is that it happens "in a
laboratory", far away from customers and disconnected from the company's
strategy. Innovation must take place
close to customers and the business.

NO = creativity

Major companies have normally already made dozens of hackatons and
encounters with Start-ups; the least they lack are ideas. The problem is that
these ideas do not come to anything. Innovation
is turning these ideas into business models.

NO = new technologies

We love technology fashions, but technology is just a subset of
innovation, which must use technology to
create value.

NO = invest a lot of money

Innovation is expensive if you only use the traditional budget
management model. Properly understood, it must serve to quickly and cheaply
test ideas. Then escalate (in this order).

The budget allocated must function as a venture capital, making
incremental investments in subsequent rounds depending on the maturity of the
companies it invests in.

NO = great risky idea

This mentality does not imply betting on a single idea, of those
that can mortgage your company if it goes wrong, nor does it necessarily imply
gobbling your current business. Innovation
involves trying many ideas assuming that many will not go anywhere.

The choice of ideas must operate as a venture capital diversifying
its portfolio to minimise risks.

NO = department

Innovation is not an isolated group of persons within the company,
it is more about attitude. Although we can say that it requires specific
profiles to drive this attitude throughout the company.

What is to innovate?

But then, what is innovation? I like this definition I found in the book The Corporate Startup:

The creation of new
products or services that bring value to customers. And the ability to do so
with a profitable and sustainable business model.

This definition includes three essential conditions:

1. We are not just talking about disruptive
   innovation, but it has to be something new, at least for the company.
2. It has to be useful to customers, we are
   fed up with spending money on things customers do not need.
3. It has to be a profitable business and
   sustainable business model over time. Not from day one, but it must become
   a new source of revenue for the company in the long run.

With this vision, we can say that innovation in established
companies does not need any more ideas. In these companies, ideas and talent
are commonplace. Where they usually fail
is when turning these ideas into reality,
and what they need is:

• A dedicated process.
• Specific change metrics; not
  execution.
• Autonomy to decide quickly.

Because**, if innovation does
not turn into money, there will not be any money to finance it.**