Croatia fell down from rank 76 (2011) to rank 81 of 144 countries in this year’s Global Competitiveness Ranking. (World Economic Forum, Sept. 2012) One of the key factors that need improvement is innovation in the market sector. And that is a point where CEO’s can make decisions to focus their strategy upon.

Of course there are more important factors but innovation seems key to me and I will explain why.

Government has a task in creating conditions for companies to be successful. But companies cannot wait till bureaucracy act. What companies can do is to focus their strategy on innovation, which will improve their turnover and market share, their profitability and competitiveness. And that is necessary with the EU-accession coming closer and closer. So, CEO’s, don’t waste time!

Why Innovation?

Today, for several reasons more than ever, businesses have to be innovative to be successful. And… Innovation is a core task of every CEO, which makes a CEO actually a CIO: Chief Innovation Officer.

In many companies you see a CEO and a product or marketing manager. The CEO runs the company and his core task is to sell the company to the market where the product/marketing manager is responsible for a certain product and to sell this product to the defined target group.

Innovation however is a process that should be a flow throughout the entire organisation.

If you look at a product or service, it has a standard lifecycle, and it is inevitable that all products and services, at a certain moment, are over their top. This means that a company that wants to stay in business and wants to stay successful needs to re-invent itself.

Where can you innovate or re-invent?

Innovation can be done at many levels. Just think for a minute about your products and services!

• Where can you add something new to the existing products or services you deliver?
• What new products or new services can you create?
• Where can you create new customer satisfaction?
• How can you create a higher customer satisfaction with your offer so to create more customer loyalty?
• How can you innovate in your production or delivery process?

And so we can go on for a while with similar questions.

To make it practical: if you, being the CEO, go into a store, a supermarket, a restaurant; what do you see? What do you experience? What do you feel? Especially if it is about your own product or service! 

Just think for a minute!

Are you feeling good with the service that is provided? Are you satisfied with the way they treat your product or service? Are you satisfied with the way you are treated as a customer? Are you willing to spend your money here?

The task for the CEO is to develop a mission and strategy in his company that is completely focused on innovation. And, budgets, measurements and rewarding systems should have a direct relation to the innovation.

What is innovation?

Trompenaars (2010) says innovation is taking creativity and transforming it into something that has added value for your customers. Yes, it is about your customers!!

Innovation is the key to enabling companies to be competitive through tough and tumultuous economies. Innovation comes from creativity.

For an organization to unleash innovation it must first tap into its own resources of creativity. To transform a company or to innovate on a large scale requires creative thinking. Or require thinkers that are able to potentially change the market game. The primary goal then becomes how to find and unleash creativity within your organization.

This must start with organizational leadership, with you, the CEO!

Creativity is not something you look for only when times are bad. Creativity should be an asset which is alive and working all the time in an organization. For any organization to be able to tap creativity consistently, they must be open to diverse thinking. One of the difficulties for most management teams is that managers like to surround themselves with so-called ‘yes-nodders’. Because of this, it is highly unlikely that the typical management team in need of creative innovation would be able to generate the right kinds of ideas for your company. You need to think about this!    

How to apply innovation?

There are several rules for innovation that every CEO should apply to make innovation work. A few of them are:

Recognition

Recognise and admit to yourself that you, the CEO, cannot know everything. Your employees work with your customers daily and they know all about them; their needs, wishes, their complaints, their compliments and their ideas. And it is that what counts: your customers and their experiences!

Openness

Create an atmosphere in your company where people can ask and say what they think, what they really think and feel. That is the basis for trust and from there for generating ideas. Create an open dialogue atmosphere. Open communication is the basis for a great performing company.

Inspire

The CEO must lead and inspire his staff to be creative and innovative. Once a month the CEO and his staff could critically look at their products and services, adjust designs and decide which new ideas should be worked out into new concepts. The CEO should be the inspiration to the company and invite everyone to come up with new ideas. And… it is stimulating and motivating to have a brainstorm session once in a while with your staff, top-down and bottom-up, to find new ideas.

New product development process

The most important thing is to create a ‘structured repeatable process’. For instance, your innovation cycle should not be too bureaucratic because you will lose too much time. And in every organisation you find people that are focused on details. Sometimes, as a CEO, you have to say ‘we just do it and we take the risk’.

Many organisations have a great idea for a new product and then hope they can sell it to the market; but many organisations miss the entrepreneurial feeling to ‘just do it’ and spend too much time to find a leading customer before launching the product, and then find out that the competition already gained a substantial market share with a similar product.

And logically you give top priority to just a few ideas for new innovations which become your top projects. You can have 50 new ideas but your resources are limited. You always have to choose and decide.

No risk, no innovation

You have to have the guts to take risks, without this there will, of course, be no innovation.

To limit risks and costs you might have a small test group, a test market where you can receive honest feedback on your ideas. But even after testing a new product it can fail in the market as 80% of new products and services do fail. Important is however to see failing as a learning experience.

Ownership & Accountability

Ownership is a challenging process which goes together with accountability.

You have to give people the responsibility but…people also have to accept this responsibility. That is not always the case for different reasons. Applying a ‘trust with verification’ approach is necessary.

As a CEO give your trust but do not forget the control.

Training & coaching

This is in most organisations a forgotten rule. Many companies that pay attention to their ‘new product development process’ and invest a lot in this process, unfortunately forget to invest in training their staff. All employees need to be trained in understanding the innovation process but also in the features of the new product so they are able to sell it. All innovative companies like e.g. Google, Apple, Huawei, Lenovo, 3M, Heineken etc. use this rule as one of the most important rules in their innovation cycle.

That is why they are so successful!

Idea management

Knowledge and idea management is about generating new ideas. The key is that you make sure to receive input from every employee in your company by involving them directly in the innovation process. Employees always have the best ideas because they have direct contacts with your customers and know exactly what your customers think and want. The CEO in general has no idea. So you need to talk and brainstorm with your employees about customer service, administration, marketing, sales and finances.

In fact you apply the ‘innovation approach’ that shows that innovation is more than just product innovation, brand innovation, customer service etc.  

Observe & measure

What often happens in companies is not measuring the key performance indicators regarding innovation.  If people look at the list with most innovative companies they always look backward. Then you look at costs for Research and Development, how many new products are invented and how did they sell.

Actually you should measure forward. How many idea-sessions did you have? How many hours are spent? How many ideas were generated? Or how many patents are requested? If you do that you are continuously improving your innovation process instead of wondering if it is worthwhile to do what you are doing. Looking backward is never a good innovator.

If you take these suggestions as a start in your approach you will become much more innovative.

JohnLodder M.A., MSc.
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