Innovation, Yes! But How?

By David Silverstein

Innovation. Everywhere you turn there is another article espousing its benefits, its challenges and the recommendation that everyone everywhere needs to do more of it. So why is nobody talking about “how” to innovate?

Gone are the days of neon colored walls and pinball machines in the cafeteria, all designed to foster a more “creative” environment. If a company really seeks to drive stronger innovation, they need to dig deep and implement reliable, predictable and replicable approaches to innovation inside their business.

In a recent edition of Business Week Online, GE CEO Jeffrey Immelt said: “I look at Six Sigma as a foundation on which you can build more innovation.” Right on, I say. We need more structure to innovation, without sacrificing the necessary soft side – just like Six Sigma brought structure to quality improvement.

Immelt would agree that Six Sigma works best when it’s deployed through a structure and under conditions that build improvement culture along with improvement skills. It appears he’s also saying that Six Sigma is a great stepping-stone or springboard for structured innovation.

The structure?
It is never enough to simply state that you have a goal of innovation. You have to define the chain of causation that enables you to achieve your goal. So what is the critical X-factor that can make innovation happen at your company? Why do so many say they value innovation yet don’t have systems in place to drive, manage, achieve and control it?

The basic problem and the basic solution is that companies need to develop their own innovative capabilities and systems (insource innovation), rather than do what too many do now, which is outsource innovation to third parties or even third world countries.

Outsourcing innovation takes on many forms. One form is hiring a consulting firm like McKinsey to “think out of the box” for you and write a new business strategy. Or you could outsource the full spectrum of new product design and implementation to a firm that operates much the same way Accenture operates in the IT arena: full service at full prices. Or you could hire an individual consultant to come up with a creative solution to a specific problem you’re facing.

But if all the voices of modern business, from GE’s Jeff Immelt to Proctor & Gamble’s A.G. Lafley, are right, the ability to innovate can’t remain just an area of expertise, like accounting or engineering or IT. The innovation process has to become a core competency for every individual and every company, and it has to span the entirety of the value chain, not just one department.

If this sounds nebulous to you it is. The truth is there is simply no way to become inherently “more innovative” without structure, which again takes us back to a need for a process or methodology.

Finding a model?
Here’s the good news: an effective model to follow has already been developed. It’s called Six Sigma. While the principles of process improvement have been around for more than 50 years, not until about the last 20 have they touched everyone. Six Sigma is not relegated to one department and, in successful companies, world-class quality practices are a core component of the way they do business.

Initially considered a process improvement methodology for the manufacturing sector, today Six Sigma is applied across all industries, from pharma to financial. And in many companies, Six Sigma is deemed as the best path to operational excellence, and a prerequisite for promotion into senior management.

Strangely enough, the global community has converged on a finite set of productivity and quality methods but is still regressed when it comes to innovation. The truth is that innovation drives growth and profitability. What companies need to do to put the “how” behind innovation – is put a systematic innovation engine into place that lives inside your organization. This engine should be built on a structure that is similar to the five-phased DMAIC (Define, Measure, Analyze, Improve, Control) approach to Six Sigma.

Doing this will allow you to integrate systematic innovation with your other corporate competencies, measure your innovative capability, connect innovation practice to strategy, monitor and gauge your progress and give you a much improved competitive advantage – especially if you already execute quality and performance improvement on a systematic basis in other ways across the organization.