The global economy and new business normal caused by the pandemic have sparked a lot of discussion about how companies will be able to grow and compete. On top of that, today’s war for talent – and related staffing shortages in the technology industry, specifically – is seemingly at odds with expectations for growth. Many business leaders are turning to “innovation” to both help them weather these tumultuous times and capitalize on new opportunities. In fact, 75 percent of CEOs said innovation is among their top three priorities (BCG, 2021). But what, exactly, is “innovation”? While there is no one right answer, companies can sometimes overlook the differences between “innovation” and “invention.”
In my world, as a technology leader, an innovation is a concept that both reaches production – is “turned on” and made available to users – and is economically viable for a company. The latter is particularly important because not all ideas are sustainable; they can cost more than they deliver in terms of revenue or savings. If the concept doesn’t, or hasn’t yet, reached production or isn’t economically viable, it can instead be considered an invention. Clearly, innovation and invention are symbiotic concepts and we have all benefited from their close relationship. Invention provides the building blocks for innovation, and oftentimes an innovation includes several inventions or other innovations pieced together. The internet is an obvious invention that has fueled innovation for countless companies and entire industries. Likewise, the smartphone is an innovation that optimizes several existing inventions and innovations.
The difference between innovation and invention matters for several reasons. First, buzz or not, innovation is inspiring for employees and potential new-hires. Even in recent, pre-pandemic times, a survey by EY found that a majority of respondents (69 percent) would leave their current position for a similar role at a company that is recognized as a leader in innovation (EY, 2018). As engineering talent shortages become increasingly urgent today, employers who showcase their innovation track record may be even more attractive and have higher retention.
Second, investing in innovation programs is good for business. A 2020 BCG study found that large companies that outperform their similarly-sized peers invest more in their innovation programs – 1.4 times more as a percentage of sales. The payoffs from their investment in innovation programs are bigger too – four times as much as a percentage of sales. Of course the companies from BCG’s study likely have budgets to support innovation programs that operate more like accelerators and for every dozen concepts, if one becomes an innovation, it’s worth the investment. Not all teams have the budget or resources to invest at this scale, and it’s worth noting that innovation can come at a steep price. Many concepts simply die and never deliver a return on a team’s time or company’s resources.
Strategically striking the right balance between innovation and invention mindsets is critical for today’s technology teams to effectively support their business. Does your company demonstrate an innovation mindset or aspire to do so? In my 15+ years leading global engineering teams and experience overseeing the launch of three startups, the following behaviors can help create and foster an innovation mindset among engineering teams.
Today’s pervasive product-centric mindset allows technical teams to hyperfocus on optimizing everything they build. This hyperfocus fuels the potential to evolve one or more concepts or internal tools into new revenue channels, enabling them to seize market gaps and create a multiplier effect for their business. The ability to productize anything and everything is innovation in action – bringing concepts to production for real-world use and to deliver business value.
Build for the Market
Teams with an innovation mindset build with their users front of mind, whether they are employees or customers. They build to solve a problem or meet a need. Innovation hype can sometimes cause companies to prioritize a cool idea vs. a solution to a problem. Technical teams supporting these types of aspirations can find themselves with little to show for their effort if what they build never makes it to production. To avoid building for building’s sake, it’s key for technology leaders to help prioritize projects based on customer needs, new use cases and total addressable market, and to specify build constraints so their team can better understand the challenge they are tasked with solving. Constraints such as a budget and timeline help fuel urgency, creativity and effort to identify a solution that can reach production.
Empower Employees to Lead
Companies that foster an innovation mindset empower their teams to operate as mini, autonomous companies and without the fear of failing. These teams are free to select the tools they use to create a user’s solution and what development methodology they adopt. This ownership and confidence enable teams to push boundaries, try novel approaches, think about problems differently and to experiment.
If It’s Not Innovation, Why Bother?
If innovation is the key to support employee retention, fuel business growth and inspire teams to excel, shouldn’t all companies prioritize an innovation strategy? Yes, but innovation cannot exist without invention, and the successful pursuit of innovation requires acceptance that some inventions never become innovations. Further, innovation and invention would not exist without creative and passionate teams that listen intently to their users’ needs, work tirelessly to uncover new ideas, challenge industry norms and closely observe market changes and opportunities. While a company’s ability to innovate will be credited for helping it get through tough times and grow, it’s the individuals and teams fueling innovation that should be applauded.