Introducing perspectives on innovation

Innovation is an evergreen topic in the business world. Although its salience waxes and wanes with the intellectual fashions of the day, it is never far from anyone’s mind, and is always seen as something worth pursuing. (Has anyone ever said, “I’m against innovation”?)

Unfortunately, its ubiquity and motherhood-and-apple-pie status undermines its utility. There is a tendency to label anything new as “innovative,” even “disruptive,” in the hope that the words alone might serve as a shibboleth that guarantees commercial success.

A more sober view is that innovation is not a talisman but a tool for creating and capturing new value in rapidly changing and increasingly competitive markets. To that end, Deloitte is putting forth a specific but highly inclusive definition of “innovation” that we believe will rescue the concept from the refuse heap of management jargon.

Innovation is not “anything new,” since lots of new things simply fall in the interstices of what we already know. Black marshmallows or white headphones might prove highly valuable and speak to unaddressed customer needs, but new modes of strategic differentiation available to all, even if pursued by few, do not rise to the level of innovation.

Neither is innovation “anything new that creates value,” since then we’ve built success into the concept itself, and surely the notion of a failed innovation is meaningful. Nor is it clear what constitutes a valid timeframe by which to measure success of failure—history offers us many innovations deemed failures at the time that, in hindsight, rose to the level of being disruptive.

So what’s innovation?

An innovation is any combination of activities or technologies that breaks existing performance tradeoffs in the attainment of an outcome, in a manner that expands the realm of the possible.

In this series of monographs developed in conjunction with the ON Innovation roundtable at Deloitte University, we explored the concept of innovation, as defined above. Our survey revealed consistent themes across industries: driving innovation by creating new production frontiers tied to specific opportunities to address unmet needs in large and growing end markets; forging new frontiers of opportunity by both building upon and expanding beyond traditional mindsets; developing new functional solutions into differentiated offerings; breaking constraints that hinder the effectiveness of existing programs; developing new relationship architectures within and across institutions to break existing performance trade-offs and expand the realm of what is possible; and challenging organizations to see if they have what it takes to break the constraints to true innovation and move confidently toward a profitable, successful future.

These themes reinforce and validate our definition of innovation. I realize this isn’t the kind of definition that is going to get us national media attention or a standing-room-only press conference. For soul-stirring prose, Churchill is better. But then again, this is management science, and if you are looking for a way to think about innovation that allows you to manage it effectively in the service of competitive success, we may have something useful to offer.

Join the conversation and the journey, #oni.