The Innovation Value Chain
The Idea in Brief
Beware conventional wisdom about how to boost
your innovation capacity. Every company has unique
innovation challenges. So another firm's best innovation
practice could become your worst nightmare.
One firm—convinced that intensive idea generation
would revive its ailing innovation efforts—established
formal brainstorming sessions. But the company, already
skilled at surfacing ideas, was inept at evaluating
them—so ideas languished. Brainstorming only overloaded
an already broken innovation process.
How to avoid a similar fate? Hansen and
Birkinshaw recommend viewing innovation as a value chain
comprising three phases: idea generation, conversion,
and diffusion. Six linking tasks are performed across
those phases: internal, external, and cross-unit
collaboration; idea selection and development; and
spread of developed ideas. Any weak link can break your
innovation efforts, so focus on pinpointing and
strengthening your deficiencies.
Tailor your innovation practices to your
company's needs, and you unleash a stream of profitable
products, services, and businesses.
The Idea in Practice
To strengthen your innovation value chain:
Pinpoint Your Weakest Links
For each phase in the innovation value chain,
Phase |
This link |
Is weak if |
Idea generation |
Collaboration within units |
People within units can't generate good ideas on |
Collaboration across units |
People collaborating across units don't produce |
|
Collaboration with outside parties |
Your company doesn't source enough good ideas |
|
Idea conversion |
Screening and funding of new ideas |
Your screening and funding criteria are so strict that |
Developing ideas into viable products, services, or |
Ideas selected for further development languish in parts |
|
Idea diffusion |
Spreading developed ideas within and outside the company |
Developed ideas don't get buy-in from customers, |
Strengthen Your Weakest Links
Your capacity to innovate is only as good as the
weakest link in your innovation value chain. The
select practices that strengthen your weakest
links.
If your company has difficulty |
Consider these practices |
Examples |
Generating ideas |
Build external networks |
At Procter & Gamble, in-house product developers |
Build cross-unit networks |
P&G has communities of practice, each comprising |
|
Converting ideas |
Provide cross-unit funding |
Shell Oil's GameChanger unit funds development |
Create safe havens |
A technology firm established a separate, autonomous |
|
Diffusing ideas |
Designate "idea evangelists" |
Sara Lee's Sanex shower products encountered |
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Copyright 2007 Harvard Business School Publishing Corporation. All rights reserved.
Further Reading
Articles
Harvard Business Review
November 2006
by Rosabeth Moss Kanter
Relying too much on other companies' best
innovation practices isn't the only innovation
pitfall you need to consider. Kanter identifies
additional common mistakes that fall into four
categories: 1) Strategy mistakes, including
rejecting opportunities that at first glance seem
too small and assuming that only new products
count—not new services or improved processes; 2)
Process mistakes, such as strangling innovation with
the same tight planning, budgeting, and reviews
applied to existing businesses; 3) Structure
mistakes; for instance, isolating fledgling and
established enterprises in separate silos; and 4)
Skills mistakes, including allowing innovators to
rotate out of teams so quickly that team chemistry
doesn't have an opportunity to gel.
Harvard Business Review
April 2007
by Michael Hammer
Hansen and Birkinshaw present innovation as a
key business process. And like all business
processes, it can be transformed to improve quality,
speed, and profitability. In this article, Hammer
presents a model that can be applied to enhance your
innovation process. Using the model, you diagnose
the strength of your innovation "process enablers,"
which include people who know how to carry out
innovation as well as information systems supporting
innovation. The model also helps you assess your
"enterprise capabilities," factors that cultivate an
environment where high-performance processes can
flourish. Enterprise capabilities include values of
teamwork and personal accountability as well as
process-redesign skills. The stronger your process
enablers and enterprise capabilities, the higher
performing your innovation process. Hammer's model
helps you pinpoint the enablers and enterprise
capabilities you need to improve and strengthen
innovation in your firm.