Exploring Management Buzzwords: Innovation

This is the twentieth in a series of essays that addresses management topics. The first ten explored "hot button" issues; the next ten explore management "buzzwords." I base these essays on countless provocative lectures and irreverent discussions as a nutty professor of Business Administration.

So many buzzwords, so little time. The contemporary management lexicon is so full of terms, it is hard to address all the buzzwords that are in common use. I have addressed nine in previous essays, and in doing so, touched upon more. Here I address a word that is so central to business success, it has commanded an immense amount of scholarly and practitioner attention, and never goes out of style. So in one sense it is not a buzzword at all, but here I address some misuses and misunderstandings.

The word innovation has several formal definitions, all good. Without resorting to any one in particular, the essence of all definitions of innovation captures several themes.

One theme is obvious. Innovation involves newness. However, we obsess on technological innovations, and forget that newness can happen anywhere. Worse, we obsess on only a few of the thousands of technologies that exist. We use terms like "mature" and "emerging" to describe technologies that are in different stages of their life cycles, and it is true that the opportunity for innovation wanes and differs in kind as the life cycle of any technology progresses. But don't be fooled, newness can and does come from anywhere, not just in a couple of newsy technologies.

Since an innovation is an act of creativity, there is something of a Catch-22 in trying to apply this criterion to the future. More specifically, innovation is one of the most difficult things to forecast, on any level of analysis. We cannot really tell you what future innovations will look like - but we do know where the promising frontiers are, and where there is much consumer, industry, government, and military demand. So researchers like to classify innovations in another way - whether they are pulled by demand, or pushed by research. For present purposes, let's accept that the reality is a very mixed bag.

One of the big misunderstandings of innovation is that since it is an act of creation, it is the province of inherently creative people. Many of us believe that some people are natural-born innovators and others just aren't. That implies that innovation is a matter of luck or genius, which further implies that it cannot be systematically managed.

The business atmosphere is also full of anecdotes of innovations that have occurred practically by accident. Maybe the most famous is the story of the chemist who came up with the glue on the back of those little yellow notes that have been endlessly adapted. He was trying to come up with one kind of adhesive and came up with entirely another, and the rest, as they say, is history. Well, anecdotes tend to exemplify exceptions, not the general rule. Watch out for the fallacy of confusing an exceptionto a rule for an exampleof a rule.

Today we know enough about innovation processes to make them manageable phenomena. There are certain organizational structures and cultures, certain market conditions, certain human resources practices, certain kinds of external environments, certain kinds of national policies, and certain ways of managing these things that make innovation a lot more likely than under other conditions. We can manage innovation successfully. That doesn't make innovation a nice neat process though. It is still, and perhaps always will be, partially stochastic or probabilistic. There is nowhere else in the practice of management. where the words "efficient" and "effective" seem to be as difficult to optimize.

Next, innovation goes beyond imitation or copying. It is perhaps here that I find the concept of innovation most abused, and used as a buzzword. An innovation is something new. An imitation is just that, an imitation. In my own experience, it seems that the clear majority of claims to innovation are really just imitations. However, newness does not necessarily have to be any big deal. In fact researchers are also fond of classifying innovations by whether they are incremental or radical. Incremental innovations are small advances on existing innovation trajectories. Radical innovations present something of a leap of one kind or another, and bring us around to the worst buzzword of them all, "technological breakthrough." This term is bunk.

If you understand scientific research, you know that it is a slow and painstaking process. What usually happens is that over time, science, technology, industrial, economic and market conditions sometimes "conspire" and allow the successful commercialization of the existing state of a technology, and any "suddenness" is entirely from point of view of the consumer. From the standpoint of the producers, these "breakthroughs" are years in the making, and not much sudden happens at all.

That being said, one final criterion of an innovation is that it involves successful adaptation by a user. I am simply acknowledging that "markets" for innovation are all over the place, and quite often they are right under your nose, within your own organization. Many of the most important innovations have been internal, to become trade secrets or some other form of proprietary knowledge, and the basis of sustainable competitive advantage (I wrote a previous essay about this buzzword.)

On the grandest scale, one of the things we know about innovation is that it is critical to economic progress. This has been theorized for about a century and a lot of great research convinces us that this is true. Innovation and productivity, are key mega-measures of how well we are doing as an overall economy, hence society. Almost 100 years ago the word "entrepreneur" was borrowed by an economist named Joseph Schumpeter to exemplify the kind of person who was the key to it all. Understand that an entrepreneur is a kind of person, one who is willing to go against convention and see new ideas through, despite great odds and even organized resistance. Entrepreneurship has nothing necessarily to do with the size or newness of an organization. We need entrepreneurs everywhere, and just about all organizations will thrive (or not) to the extent that they manage entrepreneurial types and processes well.