"Research is the transformation of money into knowledge. Innovation is the transformation of knowledge into money" - G. Nicholson, 3M (ret.)

Innovation is one of the most used, and overused, words in business. An Internet search finds more than 6 million ‘innovation’ pages. Amazon lists over 8,900 books with the word ‘Innovation’ in the title. Such ubiquity often renders a word meaningless, even one that is as popularly recognizable as innovation.

But the term innovation is not meaningless. It describes a wide range of activities that are characterized by creativity and uniqueness, and are recognized as both useful and valuable.
If innovation is used to describe everything from a new product feature to the most fundamental society-changing creation, how can we know what the word really means and use it effectively? Inovo defines innovation very precisely, in a way that captures the richness of its meanings. We see innovation as a covering a ‘space of newness’ whose dimensions represent the fundamental nature, or essence, of what is new.

The Innovation Space (shown below) illustrates one way in which the word ‘innovation’ can be applied to fundamentally different activities. The two dimensions of the space capture the essence of the type of innovative work being done. The space itself shows how virtually any endeavor creating something new or unexpected can be innovative.

Scope and Focus

Two dimensions define the space. The Scope of Change dimension is the measure of the breadth and impact of the innovation.

Incremental Change – the new feature, configuration, function, or version.
Institutional Change –alternative solutions to known problems or needs.
Enabling Change – the ability to do something new or differently.
Transformational Change – a fundamental and qualitative change in the way people spend their time.

The Organizational Focus dimension defines the nature of efforts for current or future business activities.

Focus on Operations – Serving existing markets, focusing on best practices.
Focus on Expansion – Creating new technologies and markets, focusing on growth.

This space acknowledges that the term ‘innovation’ is used to describe many activities and events that are different in significance, but which are all truly innovative. Innovative behaviors and activities are fundamentally different depending on where they lie in the space. Not recognizing these differences can lead to dramatic mistakes in creating, developing, and exploiting innovations as they occur.
Distinguishing among the innovation dimensions does not imply that one is more valuable than another. An outstanding organization recognizes the need to develop competence throughout the entire space to dominate its markets.

As the Innovation space shows, innovation can be used to define both incremental improvements and fundamental, society changing creations. For example, in any engineering program, there are numerous ‘innovations’ made through every day work as people figure out new, interesting, and unique ways to solve specific design and implementation problems. These are innovations and they have value. A company could not survive if they did not occur on a regular basis.

With only that type of innovation, however, an organization can innovate its way to extinction. The small, incremental improvements, even if they lead to proprietary intellectual property, and have a major influence on a product, cannot alone propel a corporation to a leading position. Incremental and institutional innovations are required for competitive survival, but are insufficient for disruptive expansion.

In the future, every sustained, successful company will need to aspire to disruptive expansion. This comes at a price, however. Disruption must be followed by consolidation and execution. At the early stages of disruptive expansion a company is ill-served by additional disruption. Expansion success (market share and profit) depends on the ability to translate the disruption into operational innovations. While the space defines the nature of innovative activities, it does not define the process of innovation or its natural cycle from disruptive expansion to operational excellence.

Disruptive expansion requires a different type of innovation than other corporate endeavors. Organizations must be aware of the unique aspects of achieving excellence in this upper right quadrant. Disruptive expansion requires a different mind set, different practices, different people and different goals and rewards than the operational excellence region of the space.

This view of innovation as a space of related but distinct human activities, allows an exploration of the various aspects of innovation that are important and distinctive.

Examples

The following examples illustrate the focus of each innovation quadrant.

I – Product and Operational Excellence – a necessary condition for survival for any company.
II – Operational Reinvention – Corning with continual transformation of processes and business. Intel, with its focus on process dominance, is a prime example.
III – Product Reinvention – Nokia with their use of design to lead a market, or Johnson & Johnson with their ‘innovation through acquisition’ approach.
IV – Business and Organizational Creation –Sony with their walkman, or Sealand with containerized shipping. These innovations caused fundamental changes in the way people did things and spent their time.

A lot of energy is required for consistent excellence in quadrant I, but all successful organizations must do this to survive. Within a generation, the best companies regularly plumb quadrants II and III.
Few companies have found the formula to exploit quadrant IV. A single, significant disruptive innovation requires significant efforts in quadrants I, II and III to succeed. It is difficult for companies to return to quadrant IV time after time.Periodic success in quadrant IV has become an imperative for organizations wishing to sustain their leading position.

Exploring the Space

The Innovation Space organizes the various activities and results that people assign to the word ‘Innovative’. This space can be explored by looking at decision making, organization, goals, processes and outcomes that people and institutions deem important. Examining these attributes uncovers a number of factors that make a difference in innovation.