Wednesday, July 2, 2008

Innovation is an investment, not a cost, not a luxury

In case no one else has told you, the sky is falling. According to an article in the New York Times today, we're going to hell in a hand basket, at least for the time being. This puts people like me who work in the innovation field into a bit of a bind. I whole-heartedly support (actually vehemently encourage) employers to consider how and how much each member of a team adds value. I've seen too many companies burn money in the street because they're uncomfortable with asking every team member to articulate how they add value. And companies are worse off for it.

What I do object to is the idea that areas such as innovation, product development, and research are luxuries. Prada shoes are a luxury. Gourmet meals at 5-star restaurants are luxuries. Innovation, product development, and research are a company's lifeline to the future.

Paull Young from Converseon sent me a blog post yesterday that is so good, I have to pass it on. http://bankervision.typepad.com/bankervision/2008/06/innovation-is-a-luxury.html
In the post, James Gardner, who works in innovation at a UK bank, talks about the five ways that innovators within companies add value. And suggests that if we wants to preserve our place within our companies, we should develop each of these five areas: invention, influence, entrepreneurship, thought leadership, and sponsorship.

The trouble I see is that areas like innovation are viewed purely as a cost - a nice to have if you can get it for $0. Bad idea. Innovation is an investment. Over time, it generates cash flow and does wonders for getting the best and brightest minds to beat down your door to play a part. And with tough times ahead, that talent is the only way a company is going to save itself from going under.

Picture above can be found at: http://www.aqua-aerobic.com/images/aquaology_innovation.jpg

2 comments:

aditya said...

But there is one major problem with considering innovation to be an investment. You need to justify an investment (in terms of returns or ROI) and in the absence of any accurate measuring process that cannot be done.

That’s a good point you mentioned about how a company that focuses on innovation can attract better talent and therefore will be more successful in the long run. In fact we at Mahindra recently started a corporate blog (mahindrauniverse.com) where innovation is one of the main topics of discussion. I would like to get your views on it. How effective do you think this would be in shaping the way not just prospective employees but also our customers perceive the brand?

Christa said...

Hi Aditya,
Thank you very much for reading my blog and leaving this comment. I appreciate you raising the issue of ROI. It is actually possible, and I think preferable to measure and track the ROI of innovation. Here are a few articles that discuss measuring the ROI of innovation efforts. http://www.informationweek.com/blog/main/archives/2007/08/the_roi_of_inno.html
http://www.fiercecio.com/story/the-roi-of-innovation/2007-05-08
I am happy to read mahindrauniverse.com and give some feedback.

All best,
Christa