June 12, 2007

News & Opinion: (2 of 7) Payback: Making Innovation Pay Off by Rebecca

By: 800-CEO-READ @ 4:00 PM – Filed under: Management & Workplace Culture

(from James Andrew, author of Payback)

Payback is the result of a simple insight – we saw that innovation matters to leaders, and we saw that it isn’t working.

It isn’t working because leaders don’t recognize innovation for what it is – the process of transforming knowledge into profitable growth. They romanticize it, fall in love with ideas, and think that the critical test of innovation is whether they’re generating enough of “big” ideas. In fact, most businesses have too many ideas, not too few. In the survey, only 17% of executives said “not having enough ideas” was a barrier to innovation. What they need to get better at is managing the ideas they already have.

Innovation isn’t an art form – it’s a business process. The goal of any business is to generate incremental profit. And that should be the goal of an innovation program as well.

Innovation needs to generate cash payback – and to do so in a strict timeframe. Companies that succeed at innovation – like BMW and Samsung – are doing exactly that.