The Future Of Innovation Depends On Craft & Art

Dr Ulrich Weihe

the future depends on crafts and art for growth and innovation. Most companies, which demonstrated overproportional growth over an extended period of time, showed superior portfolio momentum. Besides focusing on the right market segments, innovation is the key to maintaining portfolio momentum. However, many companies struggle to innovate continuously and successfully at scale. Many executives actually still perceive innovation as somewhat of a mystery. Indeed, it is very complicated to excel at innovation and it needs to be tackled holistically by addressing many levers. Actually, McKinsey research in the chemicals industry has shown that >40% of businesses investigated have failed to create value from their innovation investments in the past 5 years – a more than alarming sign.

We are convinced that innovation is most successful in a "craft & art" approach.

Craft means getting the basics right: Install disciplined process management throughout the innovation process. Conduct rigorous analytics before starting the journey since success depends on systematically generating insights with the right tools and frameworks along the way. However, Craft alone will not ensure success.

Art means getting the magic to work: The truly successful innovators among companies foster creativity and routinely break company orthodoxies. They challenge and enrich ideas and plans by bringing in the "street-smarts" of experienced managers. Art means to systematically build commercial judgment across the company, particularly in R&D department where a focus on technologically-driven innovation and "push" to the market is still all too abundant

The most successful innovators integrate "craft & art" along the entire process of innovation management and set up a well-functioning innovation engine. Starting from setting an aspiration on what they want to achieve with innovation, they systematically translate these aspirations into a strategy with suitable focus areas or search fields, which are both intrinsically attractive and suitable for the company's own capabilities (technically and financially). From ideation through commercialization, many best practices of innovation can help companies tackle the difficulties of becoming a successful innovator.

Reaching beyond. A notion, which is still not very common in many industries is collaborative and open innovation. Reaching out beyond your own R&D department and – more broadly – beyond your own capabilities, making use of the knowledge of others has proven tremendously valuable in the consumer goods and high tech area. Several examples immediately come to mind such as Procter & Gamble's "Connect & Develop" platform, the 3M Lead User Approach, and Lego's Mindstorms. Some examples also exist in the basic materials sphere already. Goldcorp successfully employed open innovation to discover new sources of gold on their mining territory. However, almost 90% of managers in the basic materials industries indicate that collaboration with academic institutions on specific projects and R&D partnerships/alliances/JVs between companies are still the predominant models they apply. The biggest concerns about using open innovation models are around the integrity of intellectual property. However, several models exist of how open/mass innovation can be used and basic materials companies should think intensively about how to most effectively leverage the vast ideation and problem solving potential outside of their own firm.

Getting a well-functioning innovation engine to work is difficult, no doubt. However, innovation is and will continue to be one of the most critical growth drivers of our industries and companies are well advised to further build innovation capabilities. This is particularly true during the economic downturn, when the basis for future success will be laid.

Energy, metals, mining, chemicals, construction industries

Article © 2009 Dr Ulrich Weihe. All rights reserved.

about the author...

Dr Ulrich Weihe

Dr Ulrich Weihe

affiliation:   McKinsey & Company Inc.

position:  Engagement Manager

country:  Germany

area of interest:  Innovation management, innovation process

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