Business mentor: Recognising worth of innovation

Q. I've heard a lot about innovation and knowledge waves. Does this mean I have be a nuclear scientist to succeed in business?

A. Chad Wilkie of Ignition Partner replies:

Obviously the short answer is no. But your question raises some interesting issues. For example, what is meant by innovation and how does it differ from science and invention?

Innovation is the commercial realisation of ideas, and includes new products, services and processes. For innovation to be successful, the product or service must have a market. There must be benefits for the buyer and a competitive advantage over competing products or services.

On the other hand, science and invention occur earlier in the R&D cycle, back where ideas are explored under laboratory (or home garage) conditions, and long before prototypes, market potential, and product trials take place.

So how can you tell if your company has an innovative culture?

Here are some tips: in innovative companies some risk taking is encouraged and some failure is regarded as a learning experience.

At 3M, practical risk taking is encouraged and the company supports good tries. It follows the Fletcher Byrom credo - make sure you generate a reasonable number of mistakes.

At Texas Instruments, every worker is seen as a source of ideas, and the company seeks volunteer product champions.

Closer to home, CHH has actively sought ideas from within the company to support and feed its i2b ideas accelerator; several of these have become established independent businesses.

In innovative businesses, innovation is included in the business plan and an adequate budget allocated. Time is allocated to innovation in the budget. An innovation project system is in place and project teams are set up and disbanded regularly.

Try this measure of innovation in your own company: your innovation index is defined as the percentage of this year's sales which have resulted from new products introduced in the past three years.

If the answer is under 10 per cent your company is a bit of a sluggard.

If the answer is over 25 per cent then your company is definitely innovative. If the answer is over 30 per cent then watch out for speed wobbles. If the answer is 100 per cent then you must be a start-up!

* Chad Wilkie and John Cunningham, of Ignition Partner, help innovative companies to commercialise and grow.

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