Measuring Your Ability to Innovate

Peter Flentov
Founder
20/20 Innovation LLC

Globalization has opened up new markets to U.S. companies, but has also increased competition here and abroad. Aggressive European and Asian competitors are eroding revenue and profit margins in many sectors. Ed Zander, CEO of Motorola Inc., talks about the 15/5 paradox - how do you maintain 15% profit growth when revenues in an industry only grow 5%?

It is becoming increasingly difficult to sustain a competitive advantage in today's competitive business environment Core competencies such as quality and process excellence are becoming standard. Business capabilities such a design, manufacturing, distribution, marketing and even sales are increasingly being commoditized as outsourced services. Companies increasingly realize that innovation is an essential to sustaining long-term competitive advantage. Organizations will need to significantly improve their ability to innovate in a repeatable and reliable manner.

The innovation capability of an organization can be mapped to one of five levels of maturity:

• Ad-hoc: Every company has the ability to innovate - it is just a matter of being at the right place and the right time. This level is the baseline starting point for the organization.
• Repeatable: Companies that have attained this level are able to innovate more than once. The company innovates by throwing enough resources at opportunities. Many efforts fail, but through sheer volume of efforts the company is able to succeed more than once.
• Defined: At this level companies have a defined process for innovation. A variety of methods are deployed and are used. An environment for innovation promotes experimenting and lessons learned. The emphasis is still on innovating specific solutions.
• Managed: Methods that actively control and maximize the outcomes of the innovation process are widely deployed and used. The organization is forward looking and actively strives to create the future rather than react to changes. The emphasis is on innovating in order to own specific spaces in the market.
• Dispersed: Innovation has ceased to be the responsibility of a central marketing, development or IT group; everyone within the organization contributes to identifying and realizing innovative new solutions. Organizations at this maturity level manage innovation value chains that extend the innovation capability well beyond the organization itself.

Our experience has shown that approximately 70% of all organizations are currently at the Levels 1 and 2 (Ad-hoc or Repeatable). Organizations will need to be able to reliably operate at levels 4 or 5 (Managed and Dispersed) to succeed in the future.

This presentation will walk through the competencies needed at each level in the Innovation Maturity Model, and will help attendees make an initial assessment of the level that predominantly describes their innovation capability.

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