Most organizations today herald innovation, claiming its value and showcasing “best practices” in their mission statements. Yet when it comes to the overall state of innovation, according to recent scrutiny, “the only way is up.”

In a recent study of 674 full- and part-time workers, 88 percent said they consider themselves creative, but only 63 percent said they are putting their creative abilities to use on the job, according to an Ipsos Public Affairs survey commissioned by the Fairfax County Economic Development Authority. When asked about their company’s creative potential, 39 percent of respondents said they do not think of their company as a creative entity.

Companies, especially smaller ones, often depend on big ideas and a creative team of employees to develop innovative products and services. Moreover, specific combinations of organizational size and styles are steering innovation to success today, according to a recent study by futurethink, an innovation consultancy.

According to the report’s executive summary:

Business publications scream about the latest innovation in their headlines, the calendar is chock-full of conferences that showcase “best practices,” and a plethora of gurus litter the speaking circuit singing its praises. There is, however, a darker side to innovation.

For its report Cracking the Code of Effective Innovation, futurethink conducted a 20-question online survey over an eight-month period. Nearly 250 executives from a cross-section of businesses around the world rated their organizations’ innovation across four capabilities: ideas, strategy, process and climate. Respondents answered the questions in this diagnostic, broken down by each of the four capabilities, to help identify their organization’s strengths and weaknesses. Each answer was assigned a specific score and the final score indicated the innovation capabilities of each organization. Futurethink also asked respondents to indicate their sector and size of their organizations.

When it comes to innovation scores, Aerospace & Defense was the highest, followed by the Education sector, Government and Industrial Products. On the other hand, the lowest performing sectors were Computers, Electronics & Technology, Financial Services. Other sectors that one might expect to be high performers but which scored low: Consumer Packaged Goods and Healthcare.

As for the overall state of innovation, however, “the only way is up,” according to the report: “The state of innovation in organizations today is in dire need of improvement.” In fact, the average innovation score across all organizations was 8.3 out of a possible 20.

The following are a couple of the survey’s key findings:

Size Matters
“Organizational size plays a major role in the effectiveness of innovation,” according to the report.

Perhaps unsurprisingly, the survey found that the smallest organizations (500 employees and fewer) are the most innovative, as they tend to be entrepreneurial, and their size pretty much necessitates innovation. “If they do not innovate, they won’t survive.” The largest organizations (50,000+ employees) shared the highest innovation scores with the smallest organizations. Yet midsized companies (5,000-10,000 employees) are “stuck in the middle,” all falling below the average.

To benchmark against best practices, futurethink’s research suggests that an organization is better off comparing innovation models with similar-sized firms, as opposed to competition within its industry.

Two Styles of Innovation
We see two very different approaches to innovation. One is an informal approach with a focus on generating ideas typified by small organizations. The other is a more formal approach that relies on a robust process for innovation, typified by the largest organizations. The most effective way to innovate would be to blend these two approaches, however, our research suggests that it’s easier said than done.

“Organizations are taking the easy way out,” the survey found. In tending to focus on IDEAS and CLIMATE capabilities that are relatively easier to manage and control, organizations neglect STRATEGY and PROCESS, which are the more difficult and complicated capabilities required to successfully make innovation work.

According to the paper:

Clearly, a pattern has emerged into two very different innovation styles. One is an informal approach with a focus on generating ideas, typified by small organizations. The other is a more formal approach that relies on a robust process for innovation, exemplified by the largest organizations.

Futurethink outlines three immediate actions for organizations that are struggling with innovation efforts:

• Diagnose your firm’s innovation efforts. Take a step back and see where your innovation efforts are strong and weak. (Futurethink offers an innovation diagnostic.)
• Research five firms of similar size. Go outside of your industry and look for successful innovators that are the same size as your firm. Determine what practices they are doing successfully that you can adopt.
• Meet with those who matter. Start talking about strategy and process with your firm’s relevant people. While ownership must eventually come from the top, the conversation about important innovation ideas can begin anywhere.

For details of the findings, check out the free paper, Cracking the Code of Effective Innovation.

For futurethink CEO Lisa Bodell’s eight ways leaders innovate, plus eight excellent tips and tricks for individuals to hone their innovative thinking in everyday life, check out IMT’s earlier Innovation Mastery Wins in Las Vegas.

Also, check out Innocentive, where you can submit your innovative ideas to hundreds of challenges, and those who provide the best solution receive an award ranging from $5,000 to $1,000,000.

Hat tip, futurethink.

Earlier: Innovation Mastery Wins in Las Vegas

Resources

New Survey Points to “Creativity Gap” in U.S. Workplace
Fairfax County Economic Development Authority, Sept. 21, 2007

Get the How to of Innovation
Futurethink

Cracking the Code of Effective Innovation
Futurethink

Diagnosis: What’s Holding You Back?
Futurethink

Solve the Problem No One Else Can Solve
Innocentive