Finding new ideas is easy, choosing right ones isn't
The clamor for innovation is rising. With the economy on the mend, and companies scrambling to boost their sales, the call has gone out for new ideas.
But, truth be told, ideas are plentiful. For businesses, the hard part is choosing the right ones, turning them into products or services, and bringing them to the marketplace before their competitors do.
"What we find missing is not the generation of ideas, it's the generation of cash from ideas," said Hal Sirkin, senior vice president of Boston Consulting Group. "Most companies are choking on ideas. At the same time, the CEO is saying, `Why can't we innovate?' The biggest barrier is they don't think of innovation as a process."
A survey released by the consulting firm last week sets the context starkly. Taking part were 236 business leaders, all senior executives at top companies in 30 countries. Nearly two-thirds said they planned to spend more on innovation in 2004, while just 4 percent said they intended to scale back. But a majority were disenchanted with the results of their past efforts, with 51 percent conceding their ability to turn innovation into cash was the same or worse than their rivals'.
Raising the return on innovation requires a new way of thinking, contended Sirkin, who leads the operations practice area for Boston Consulting Group. In particular, he said, executives need to shift their perception of innovation from a creative brainstorming exercise to a goal-oriented process. And the goal is profit.
Innovation needs a driver, Sirkin said, and more often than not it should be the CEO. A telling nugget from the survey: Fifty-two percent of participants said there was no single executive in their companies with the responsibility for driving innovation from start to finish.
"One mistake a company often makes is the guy with the idea is given the task of bringing it to market," Sirkin noted. While a few versatile visionaries might be able to pull that off, most would be well advised to turn over the ideas to the executors, he said.
Thomas Davenport, a Babson College technology and management professor who authored a 1992 book titled "Process Innovation," said many change-weary companies retreated from investments in innovation during the recent economic slump.
"Right now we have an innovation deficit across the board -- product, process, managerial, business model," Davenport said. "It's a very conservative environment. People are pursuing incremental improvements. It's kind of a backlash from the go-go days of the late 1990s when there was too much innovation to get your arms around."
Innovation sometimes involves the application of technology. Post-it Notes emerged from adhesive research by 3M Co. chemists. But just as often innovation grows out of a market insight, such as the recognition by Gillette Co. of Boston that women shave differently than men -- a recognition that spawned a line of Gillette for Women shaving products. Companies also innovate by applying a business model to a new market, as Staples Inc. of Framingham did by embracing the superstore concept for office products.
When global business leaders were asked by Boston Consulting Group to name the companies they considered "most innovative," 3M topped a list that also included Microsoft Corp., Sony Corp., Nokia Corp., and Apple Computer Inc., among others.
3M, a 102-year-old company based in St. Paul, plows about 6 percent of its annual sales into research and development -- roughly twice as much as the average US industrial company. It retools its technologies, such as reflective materials and prismatic film, for use in new products from license plates and highway signs to laptop computers, cellphones, and flat-panel television sets. W. James McNerney Jr., its chairman and chief executive, exhorts his troops to screen ideas, set priorities, and accelerate commercialization.
"What you're talking about is managing creativity," said 3M spokesman John Cornwell. "The key is matching a technology with a product idea, and then knowing how to get products to market."
Once an idea has been approved, speed is of the essence. Sirkin of Boston Consulting Group cited the success of Seagate Technology LLC in supplying disk drives for personal computers. "If you can get a disk drive to market two months faster than your competitor," he said, "you can make a tremendous amount of money."
Robert Weisman can be reached at weisman@globe.com. 
