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Question & Answers

Which is he first step that a leader should take in order to strengthen his company´s innovation management ?
Wentz: He should define the role that innovations shall play in his company, and above all he should set quantitative innovation objectives. Because: “You get what you measure!” Conversely, this means that any progress in the innovation management will be more modest if the progress is not regularly monitored based on quantitative innovation objectives.

What are good innovation objectives?
Wentz: E.g. the percentage of the company´s sales 3 years from now that result from the innovations of the next three years. Or simply the number of innovations which you plan to launch in 1 year, 2 years or three years from now. The best innovation objectives are output goals like those which define the desired result of your innovation activity. 3M e.g. pursues the output goal that 30% of the firm´s sales shall stem from products that did not yet exist four years ago. And Pfizer, the world´s largest pharmaceutical company, has set the target to launch six new drugs each year starting in 2010.

Which single action will contribute the most to the innovation activities of a company?
Wentz: The innovation success of a company depends on a system of multiple components which must all be present at a certain level in order to develop a company into a true innovator. A single action will not suffice. In a simplified description of this system there are five components that are decisive: innovation strategy, innovation process, innovation structure, innovation capabilities, and innovation culture.

But if a company is just starting to emphasize innovation management, where should it start?
Wentz: Under these circumstances I would recommend the definition of the innovation strategy and the definition of a simple innovation process as the first two areas to tackle.

Will small companies really be able to benefit from the world´s top 10 innovators?
Wentz: Absolutely. Top innovators such as Apple, Google, Toyota, 3M, and Procter & Gamble offer many valuable lessons that help small enterprises, too.

Which other companies can serve as role models in innovation management?
Wentz: There are many small and medium-size companies, many of the so-called „hidden champions“, which are also great innovators. The recommendation to learn from the world´s best innovators certainly does not mean that small companies can and should only learn from them.

If a company wants to start emphasizing innovation management should it start with a radical innovation or an incremental one?
Wentz: Both types of innovation are important. The radical one as well as the incremental one. What is important is that the company simply starts to launch its first innovation in the market-place, irrespective of whether this is a radical or an incremental innovation. However, incremental innovations are principally easier to manage. Because of this the launch of an incremental innovation is a good starting point.

 

And mid-term?
Wentz: Mid-term a company should strive to have a good mixture of radical and incremental innovation projects in its portfolio. The fact is that nowadays incremental innovations on the average represent 85% to 90% of the innovation portfolios of companies. The remainder are radical innovations.

How do creativity and discipline go together in a company?
Wentz: Both are of critical importance. And they do not contradict each other, different from what some people think. The best innovators combine creativity and entrepreneurship on the one hand with discipline on the other hand.

Should a company not postpone its innovation activities if it still sees big improvement potentials in its cost structure, in the expansion of its distribution, in its global expansion into new territories, and in acquisitions?
Wentz: Not at all. The innovation capabilities of a company are of critical importance for its survival as a company. They must be trained and developed through use. Procter & Gamble´s CEO Lafley has stated very succinctly that organic growth is better because it exercises the company´s innovation muscle. And the more this muscle is used the stronger it gets. Improvements in cost structure, distribution, global expansion and through acquisitions only carry you some while.

How can a company go about finding innovation ideas?
Wentz: There is a huge number of different innovation sources. Usually we distinguish external sources such as competition, other industries, suppliers, customers and trade from internal sources. In the end it is only a function of your creativity how many idea sources you discover, and it is a pure question of diligence to explore all these sources.

How can a company tap into ideas that perhaps are already available externally?
Wentz: Externally more and more companies access existing ideas through so called lead users. Lead users develop breakthrough ideas on their own. They typically are leading market trends. 3M has noticed that ideas of lead users on the average result in eight times higher sales compared to internally generated ideas.

Can you offer an example of an innovation through lead users?
Wentz: Take Microsoft. Microsoft´s Xbox 360 game console involves lead users in its innovation activities through the XNA Game Studio Express. Users can download Microsoft programming tools from the website, and with their help they can develop new video games for the Xbox at home. After finalizing their games these hobby programmers will upload their creations to the Xbox Live website and present them there to the public for sale.

Lead Users are real innovators. They develop innovations to launch them in the market. What about external inventors? How can companies tap into the richness of their ideas?
Wentz: Procter & Gamble´s Connect + Develop organisation e.g. demonstrates how that works. The 60-person Connect+Develop team procures external ideas and solutions offline. These P&G employees are travelling worldwide to establish their personal networks with scientists and inventors. Connect+Develop complements its offline activities with organizational solutions that supply external innovation ideas and solutions online. For this it uses the online services of companies such as Your Encore, NineSigma und InnoCentive. Via these external platforms P&G seeks solutions to well defined technical problems.

How important is innovation culture?
Wentz: Very important. Innovation culture is one of the key components of the system of innovation. A company like 3M has developed an extremely strong innovation culture over more than 100 years. Similar to a venture capital company 3M facilitates the birth of new businesses from the bottom of its organisation. 3M makes a conscious effort to get out of their employees´ way. Its technical employees are allowed to spend 15% of their time on their pet projects. They find it easy to organize themselves across functional boundaries and to form teams. Or take Google. Google only exists since 1998. Its founders have noticed early on how important it is to preserve its unique start-up innovation culture and to take care of it like a jewel. They have made this their personal top task.