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Why Innovation Is Necessary

Why Innovation Is Necessary


The Conference Board of Canada defines innovation as a process through which economic or social value is extracted from knowledge—by creating, diffusing, and transforming ideas—to produce new or improved products, services and processes. In short, a key reason as to why innovation is necessary is that our nation needs the value generated to ensure growth and prosperity for our people.

Written by Janice Francisco

Despite the obvious importance to our nation’s growth and prosperity, Canada’s innovation score continues to slide. According to the annual Conference Board of Canada’s “How Canada Performs: Innovation” report card, we have dropped from 9th place among sixteen peer nations in 2017 to 12th place in 2018. (View the report card here, along with the individual scores for provinces and the full explanation of the indicators, in this article by the Conference Board of Canada.)

Why Is Innovation Necessary to Canada's Well-being?

Does Canada get why innovation is necessary to our nation’s growth and prosperity?

I think we get it; I certainly hear from many leaders “we get why we need to innovate… the challenge is, we’re unsure of how to do it.”

According to a CBC interview with Paul Preston, Director, Science, Technology and Innovation Policy of the Conference Board of Canada, there are some positive indicators regarding innovation in Canada. For example, we are seeing more people going into business for themselves. Venture capital has doubled in Canada since 2011. We certainly seem to have the will to innovate.

Mr. Preston also outlined Canada’s continued innovation challenges. Government investment in innovation (Public R&D) is healthy in contrast to investment by business. Canadian business investment in R&D, an indicator of our innovation activity, is last among all the OECD sixteen countries ranked in the innovation report card. As Paul Preston says, “We need our businesses to invest.”

Why are Canadian Businesses Reluctant to Invest in Innovation?

In talking to business leaders, my takeaway is that the same organizations that have acknowledged that innovation is important to their future, haven’t defined what innovation means within the context of their business. If they lack clarity around what innovation “looks like” in their business, it’s difficult to bridge the gap to understanding how.

This conundrum—we have to innovate, but we don’t know what that looks like or how to start—is due in part to how organizations think of innovation.

When leaders think of innovation, they often picture huge breakthroughs, new products and life-changing services that have the potential to transform society. The Conference Board calls this type of innovation “radical innovation.” Considering the nature of radical innovation—quantum computing, rockets to Mars, Uber, the iPhone—it’s no wonder business leaders are unsure how this type of innovation (something akin to a “moon shot”) applies to their organization. So, when they start talking about where and how to start on innovation—and at what cost—well, for many companies, that’s where the conversation about innovation ends.

The Value of Incremental Innovation

Instead of looking for the big radical win in innovation, an alternative is for companies to first focus their energies on what the Conference Board calls “incremental” innovation, which is similarly important as radical innovation and much more attainable.

Incremental innovation involves smaller internal changes that can result in value for the organization, its people and its customers. For example, while radical innovation involves the creation of new technology, incremental innovation could involve the adoption and use of new technology that results in substantial productivity increases. When you’re new to the innovation game, incremental innovation is a great opportunity to learn to walk before you run.

Incremental innovation might not make the news, yet it does provide value and is just as critical to our economy, meaning productivity improvements, economic growth and job creation. Additional money in the economy means greater resources available for education, health, infrastructure and more.

Incremental Innovation Needs a Culture of Innovation

So, how might a company position itself to improve its incremental innovation?

Building innovation literacy, skill and a culture of innovation within organizations is essential. When a company has an innovation culture, leaders empower team members to look for and act on opportunities for incremental innovation. Innovation involves everyone in the organization; it is not relegated to a separate department or campus, nor is it an annual innovation “Dragon’s Den,” hackathon event or a special innovation lab. It’s everyone, every day, using an innovation toolset to create incremental innovation.

When I'm asked to help an organization build a culture of innovation, we focus on activities that advance the organization's goals for innovation and build skill at the individual and team level. The ThinkUP innovation Framework is our approach and toolkit that helps teams transform how they operate, navigate change, and deliver outstanding results. The goal is to develop an innovation mindset and develop the literacy and skills leaders and their teams need through an innovation toolset they can use consistently as they tackle opportunities for incremental innovation. 

Want to drive more value from incremental innovation in your organization?

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