4 Innovation Strategies That Actually Work

by drjim on September 16, 2009

CIO's Looking For Innovation Need To Find The Four Techniques

CIO's Looking For Innovation Need To Find The Four Techniques

Innovation, innovation, innovation – everyone wants it, but nobody seems know know how to get and keep it. CIOs are under a lot of pressure to do more with less these days and being able to nurture an environment of innovation sure would help. The trick is HOW to do this…

The Problem With Innovation

One of the big problems that CIOs have is that when they start to think about innovation, they start by imagining a big blank sheet of paper and then they try to figure out how they can be innovative. This is exactly the wrong approach.

It turns out that how to innovate is NOT a blank sheet of paper – what techniques work is well known and now what techniques work together is also known. Two professors, Dr Frank Rothaermel and Dr. Edward Hess have taken a close look at what innovation techniques work, and they’ve discovered the four that work best.

Four Types Of Innovation

The first thing that CIOs need to realize is that there is no one-size-fits-all solution to finding an innovation strategy that works for a firm. Instead, there are four different approaches that seem to work the best. Just to make things more complicated, each of the four different approaches can be be combined. However, not all combinations result in more innovation. Let’s take a closer look.

The four different types of innovation that work best for firms are:

  • Recruiting & cultivating human capital,
  • Spending more on internal R&D
  • Strategic alliances,
  • Acquiring technology ventures

It is important to note that all four approaches can be pursued individually or all at once. However, going after more than one approach can allow a firm to achieve a higher level of innovation, but some strategies don’t mix well and can cause a firm to end up wasting both time and money. The key is to know which techniques work well with each other.

The Best Way To Foster Innovation

You knew that I was going to say this: the research shows that the best way to achieve continuous innovation over time is to hire and cultivate talented people. As always, this is something that is easy to say, but very hard to do.

The reason that taking the time and investing the money in your staff is the best way to foster long term innovation is because this approach allows an IT department  to to have more control over their IP and creates a steadier pipeline of innovation since no outside partners are being relied on.

To improve the odds of this approach working, the best IT departments build teams that are made up of both star and non-star employees. This allows the stars to look for new ideas while the non-stars turn ideas into successful products. Once again, you can see that although this is a powerful idea, it takes some serious CIO management skills to make it happen.

How To Combine Innovation Techniques

When a CIO decides that innovation must be boosted, all too often they will start throwing money at a variety of different techniques without fully understanding how they will (or won’t) work together.

For example, investing money in creating alliances is often done to create the same type of knowledge that companies can get from investing in their own people.

CIOs that invest in both approaches end up wasting money because of the overlap. The key question that a CIO needs to answer before perusing an alliance on top of developing star and non-star employees is to understand what key assets will be gained through the alliance that he/she can’t get from  their own employees.

Dr. Rothaermel and Dr. Hess have discovered that the two approaches that work the best together are alliances and acquisitions. CIOs that take the time to  form a joint venture with a vendor partner company before trying to buy it gives the CIO critical inside information on the target firm.

It turns out that both alliances and internal R&D spending also complement each other. Internally developed knowledge allows CIOs to better understand what market areas will become promising and this allows them to invest in the most promising alliances.

Final Thoughts

There is saying that goes “there is nothing new under the sun.” This holds true for CIOs that are seeking to boost the innovation in their departments.

It turns out that studies have shown that there are four innovation techniques that work the best. These four techniques can be combined and used together; however, CIO should only pursue multiple innovation strategies if they complement each other. CIOs who can grow innovation within their departments will have found a way to apply IT to enable the rest of the company to grow quicker, move faster, and do more.

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What We’ll Be Talking About Next Time

With a little luck we can all agree that storage is a boring topic to talk about – I mean when you store something, it’s just sitting there not doing anything.CIOs prefer to talk about data in motion – reporting new sales or opening new markets. However, it turns out that storing data is the foundation that the company is built on and CIOs need to do this the right way…

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