What’s the link between innovation and company performance?

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Martin Gunnarsson, Product Director & ERP Evangelist at IFS, shares his view about the IFS World Conference 2016 panel discussion on the link between innovation and company success.

During a panel discussion at IFS World Conference in Gothenburg, we discussed and shared experiences about the link between innovation and company success. Jon Briggs, moderator of this panel, guided us through discussions that touched on a broad spectrum of innovation, for example, innovation culture, how to know what innovation is worth investing in and the link between instant revenue and innovation. Participating in this panel discussion were Joacim Damgard, CEO Microsoft Sweden; Christian Sandström, Associate Professor at Chalmers University of Technology; and Martin Gunnarsson, Product Director and ERP Evangelist at IFS R&D. In this post, I’m pleased to share my view on some of the questions we discussed.

Q1 – Being innovative seems to have a lot to do with attitude in general. Would you agree with that statement?

Being innovative is neither a gift nor a talent, it’s a skill. A skill is something you can learn and develop through training, inspiration and dedication. Being innovative is, therefore, very much about your attitude toward learning how to become more innovative.

Being innovative doesn’t mean your skill is to come up with lots of wild ideas—that’s easy—but rather the ability to realize them. The road from idea to final product is a bumpy one and requires 1) communication skills to secure buy-in from peers and sponsors in your organization who allocate resources, and 2) passion and stubbornness to never give up from start to the very end.

Being innovative means allowing yourself and your team to make mistakes. It’s only through mistakes that you learn. But mistakes can hurt, which is why passion, courage and attitude are important ingredients in becoming innovative.

Great ideas are always challenged—attitude and passion are what keep you going.

Q2 – During the conference, we have talked about the butterfly effect; the idea that small changes can turn out to be paradigm shifters. Is there a butterfly effect when it comes to innovation as well?

Most innovations start small. It might be a “plug-in” to an existing need or behavior. Only if this “plug-in” manages to change and tune a current behavior on a mass-scale can you claim to have created a paradigm shift. Change means that people will move away from an old habit or behavior and instead start using this new experience.

So far I haven’t said a word about technology. However, technology can be the trigger and accelerator of a new behavior that ultimately leads to a better experience for the general population.

Let’s illustrate with a few famous examples

Some of these innovations are generating impressive revenue streams, still not making profits (however highly valued), but causing a shift in the entire market (Uber, Spotify). Some have already forced a paradigm shift, are profitable and generating multi-million revenue streams (Facebook, Snapchat).

When Evan Spiegel, Snapchat Co-Founder and CEO, pitched the idea for a mobile app that permanently deletes photos and texts after opening them, his classmates at Stanford balked and thought it was a terrible idea. Four years later, Shapchat has become one of the hottest social media apps on earth, drawing in millions of daily users and a valuation somewhere around $15 billion.

Most founders of a new innovation tell the same story; how they believed in their idea even while people around them did not, how they started small by developing a “plug-in” to an existing behavior and how this new behavior created a paradigm shift.

Snapchat just slightly tweaked the way we communicate using social media, and the entire world loves it! But only until the next big change happens.

Let’s take an industrial example using 3D printing technology. Today’s technology of 3D printing has moved from prototyping capabilities to a technology that soon offers high-volume production and with materials such as concrete and steel (and even food!). I’ve even seen ground-breaking projects involving a printed bridge.

Research shows promising results to print with graphene, the new magic material that is flexible and transparent, yet 200 times stronger than steel. Scientists are now producing the first versions of 3D-printed graphene batteries.

My conclusion is that the many small steps taken since 3D printing technology surfaced in the 80s will result in a butterfly effect creating paradigm shifts. It’s not a quick fix that happens over the night, but instead an evolution over time that suddenly peaks and revolutionizes the world. The same goes for the internet of things (IoT), cloud computing and mobility. If in the near future you can print parts in high-speed, on-demand and in any material, there will be several business constraints you can reshape, such as managing inventories, transportation and production.

At IFS, we see digital transformation as the fourth era of enterprise resource planning (ERP) and we have talked about it during the keynote presentation at IFS World Conference 2016. There will be several paradigm shifts in the future that started with a small change for a few but reached the masses and changed entire industries.

70% of Fortune 1,000 companies have vanished in the last 10 years. Changed or disappeared. For a product company to survive, you need to offer your customers a platform for innovation over time. A platform that enables users to benefit from new technologies and opportunities. One clear link between innovation and company performance is to manage continuous change instead of risky big bangs.

Q3 – What separates a good idea from true innovation?

That’s easy. Well done beats well said.

Good ideas come and go but true innovation remains. The reason for this is that the author of true innovation believes in it until death does them part.

A good idea becomes a true innovation when the masses give up their old behavior and preferences in favor of this new innovation experience.

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