In a recent Harvard Business Review article, researchers Peder Inge Furseth and Richard Cuthbertson discuss their findings from a review of innovation case studies from corporate leaders such as Borders, Amazon, Apple, Xerox, and Kodak. They’ve found that oftentimes, companies spend more time and resources building out their innovation capacity, but not actually building out new abilities that will create more value for more people. In that way, companies like Nokia fall by the wayside as they build small variations on products for consumers, but don’t build out systems that add value for more people (like the developers building apps on their phones or the variety of experiences customers could have through those apps when you’re considering Apple’s business model).
They conclude the article by stating “the thinking and practice of innovation should start from the premise that successful innovation is driven by the shared value created. Innovation should be value-driven; corporations, and governments, need to create value for a network of stakeholders: customers, suppliers, and the firm — maximizing value solely for the owners is not enough.” This recommendation is powerful for organizations that are looking to evaluate promising ideas. Perhaps ideas that provide value to the maximum number of audiences are the ones that you should prioritize?
So to make innovation work, for whom must you create value? Here’s a list of starting point:
Owners and Stakeholders
Most organizations never leave this one out, but it’s worth mentioning that most ideas ought to provide value for this group, since they’re unlikely to flourish if they’re not generating rewards for your main stakeholders, as well. These leaders are the ones that control resources and strategy decisions, so finding some value (even intangible value) is paramount to grow a new idea.
Your employees are one of your most valuable company assets. They can be advocates, evangelists, and even frontline researchers, but they can also be disengaged and liabilities (after all disengaged employees cost the US up to $550 billion every year). Finding value for your employees is a great way to maximize the value of new ideas. Maybe it’s improving work life or finding new ways to make their job easier or creating purpose on the job – all of those can create value for your employees.
Customers & Citizens
Obviously, the public is one of the key places that you need to create value. Even if they’re not your customer, but they have a positive association with your brand – that can add indirect value. If a new idea aligns with what the public cares about or needs, then you’re far more likely to create a halo of value for your company.
This could be strategic partnership, suppliers, or anyone related to your supply chain. After all, your organization exists in a cooperative ecosystem, can you create value for others who are part of your extended team?
The Community (or World)
Recent studies into impact investing show that it is at least as profitable (sometimes more profitable) than investing in organizations that aren’t prioritizing a mission or positive social impact. Many investors in this space make the point that Millennials in particular want to work for companies that are making a difference in the world, so these companies have a better capability of retaining talent so finding ways to make a positive impact on the world can provide a virtuous cycle of value.
Can you think of other groups to whom a company should provide value?