Innovation: Making Inspiration Routine

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It's not about brilliance. Valuable new ideas are the product of hard work and smart, disciplined processes.

Scott Menchin

 

In April, A.G. Lafley, the chairman and CEO of Procter & Gamble (NYSE:PG), and Ram Charan, adviser to such business leaders as Jack Welch and Robert Nardelli, published an insider's guide to innovation at P&G and other top corporations. The Game-Changer: How You Can Drive Revenue and Profit Growth With Innovation argues that innovation -- like learning -- must be continuous and pursued at all levels of the organization. The book describes dozens of mechanisms for keeping the idea pipeline full, such as P&G's customer-immersion programs, which send employees to live in consumers' homes, and innovation "hot zones," facilities where product teams spend weeks on creative exercises.

It's a great book, but for owners of small companies, it's a little like reading about Disney World when all you have to play with is a backyard swing set. We wondered: Could P&G's approach to innovation be made to scale for businesses with a tiny fraction of P&G's resources?

We asked Lafley and Charan to imagine they were the founders of a company in an industry of their choice, with $4 million in revenue and 30 employees. What would they do to make their business as innovative as possible?

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How to Outsource R&D

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R&D isn't just for big corporations. Here's how you can use innovation to build your business, from selecting projects to tax advantages.

The objective of research and development (R&D) in a small or mid-sized business is to obtain new knowledge, applicable to your business' needs, which can eventually result in new or improved products, processes, systems, or services that can increase your business' sales and profits. R&D can be conducted in-house, under contract, or jointly with others. While in-house R&D commands a strategic advantage in that the business is the sole owner of the know-how created and can protect it from unauthorized use, the rise in popularity of outsourcing business functions in the last several years has increasingly included R&D.

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The Bootstrapper's Guide to Launching New Products

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Discovering the value of lean product development and minimum viable product.

 

One of the most gut-wrenching moments for a company is the rollout of a new product. A significant swing and miss can break a company's momentum -- and maybe its bank account. Unfortunately, after months or even years of development, many companies discover that customers aren't willing to buy their new wares. That's why some entrepreneurs are trying another approach to product launches: marketing a product online before spending much on research and development or inventory.

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WSJ Outsourcing Innovation

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It's a question many companies are facing these days. As budgets tighten, businesses are outsourcing research and development and the creation of new products as a way to slash costs, speed development time and tap into top talent outside the company.

But it can be tough to strike the right balance between internal and external efforts at innovation. How much outsourcing is too much, or too little? What amount produces the best results?

To find an answer, we studied the sourcing habits and innovative performance of 359 companies based in the U.S. and reviewed existing research on outsourced innovation.

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Business Insight, Keep Your Vision Keen

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A business without a vision is a business without direction. Far too many design consultancies are reactive in their development and, even if they are growing and profitable, they have arrived where they are by accident.

Opportunities are pursued without sufficient challenges about their usefulness; projects appear from design-buyers and are accepted, whether or not they are a good fit; senior people with specific skills and experience join or leave and change the company’s capabilities.

Like boats without a destination and without navigation charts, businesses like this are drifting, subject to sudden arrivals in ports they never wanted to visit in the first place.

Now, I’m all for pursuing unexpected opportunities, and it can be wonderfully exciting to set sail on new high seas. But I am also a believer in Louis Pasteur’s observation that ’chance favours the prepared mind’. Where does preparation come from?

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