Innovation is about payback
What we quickly found out is that there is a plethora of ideas - everywhere. We've learned a lot about the innovation process from those early days and James Andrew and Harold Sirkin tackle many of the things we've learned in their new book titled, Payback: Reaping the Rewards of Innovation.
From Wharton, "Podcast, BCG's Harold Sirkin on How Firms can Reap the Rewards of Innovation ". (reg req)
Knowledge@Wharton: Why is it so hard for companies to generate returns on their investment in innovation?
Sirkin: It's very hard because most companies think about the idea -- the invention, as opposed to the innovation. By innovation we mean an idea that is driven to the profitability of return on investment. Most companies focus on invention. They focus on the ideas. They spend a lot of effort looking at ideas, sorting through ideas and trying to generate ideas.
But very little of the process that they go through is focused on [then] turning those ideas into something that delivers payback. They spend little time screening those ideas for the ones that would be commercially viable or technically feasible before they move forward with them. They spend little time focusing on how they're going to develop them. And they spend very, very little time thinking about how they're going to manage them over the life cycle.
Cash traps show up in many companies in other ways as well. You can find them in industrial goods companies. You can find them in consumer goods companies where someone is enamored of a particular product or technology, often at a very senior level, and people feel that they can't touch that product. And because they can't touch it, the investment continues and you get a cash trap.
What we do today is focus more on the whole process of innovation - connecting, creating and collaborating via social network systems. These system enable a new type of process for weeding and filtering out duds. In many cases we are using prediction markets with our social network software.
Note: We'll be launching a new social network platform in the next ten days for the pharma industry with prediction markets. So, you'll be able to see it live since it is a public site.