Sunday, April 08, 2007

Communicating the Business Value of Innovation

Innovation affects all aspects of a business, from operational procedures to strategic goals. Because of the widespread, often dispersed nature of innovation projects, it can be quite difficult to establish methods of communicating the business value of successful innovation projects. Innovation projects may have delayed costs or benefits, sometimes have unexpected effects on other aspects of the business and can change the culture or use of resources at an organization in ways difficult to measure and difficult to communicate. While working on an innovation project, new knowledge may be discovered that is not immediately usable to the project but which can lead to future efforts and open up new markets. For instance, Pasteur was working on a solution to prevent beer from becoming stale when he discovered the principles underlying fermentation, which led to understanding of microbiology and eventually antibiotics, one of his major contributions to science. Innovation projects can also lead to a culture of energy and high enthusiasm which can stir creativity and increase the likelihood of the firm to hire new talented people -- the most common example of this is the environment at Google.

In addition, strict return on investment (or ROI) measures are notoriously bad at uncovering the true business value (or BV) of innovation. ROI evaluates resources allocated to a project and the return upon those resources, but innovation rarely has easily identifiable returns. Innovation often affects many aspects of a business and can underlie perceptual shifts as well as altering levels of efficiency and sometimes competitive advantages. For these reasons, accurately measuring the resources saved, gained or developed because of innovation projects is nearly impossible. In addition, innovation projects involve a degree of uncertainty and adaptation. Discussions of innovative projects usually revolve around promises, risks and opportunities, not around concrete examples or assurances. For this reason, communication about innovative projects needs to be carefully thought out to encourage innovation while hanging onto a healthy dose of skepticism and evaluation.

We will be presenting our findings from the BVI research project at the I3M symposium on April 16 at the University of Washington. To learn more about how to successfully communicate the business value of innovation, please stay tuned for our research paper and we also look forward to seeing you at our symposium [see].

1 comment:

John said...

While people may have different views still good things should always be appreciated. Yours is a nice blog. Liked it!!!