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Make Innovation Systematic and Never Again Ask 'Why Didn't We Think of That?' The creation of innovative products and processes is much too important to companies and entire economies to be left to chance.

By David DeWolf Edited by Dan Bova

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

For decades, our country has been driven by innovation – the introduction of new solutions into the market that fundamentally change the way we experience something and solve a problem at the same time. Think of Uber solving a transportation problem, Airbnb solving the problem of inexpensive and flexible lodging, or Nest addressing the need for remote home appliance maintenance and monitoring.

A study of the top 10 performing S&P 500 stocks since 2000 (as of data compiled last August) shows that the vast majority have not only grown exponentially, but has also introduced a brand new – innovative – product or service to their users over that period of time. Along with Apple and Google on that list are companies like Priceline, Netflix, and Salesforce, each highly innovative service providers that have changed the way we book travel, consume media and manage enterprise sales and marketing.

Related: Why Small Companies Have the Innovation Advantage

Innovation has undoubtedly become the currency of the 21st century. Very few companies, however, have figured out how to consistently innovate. Innovation still seems to be thought of as black magic. However, companies that dominate over the next decade will be those that illustrate an ability to systematize, or make predictable, their innovation efforts.

Systematizing innovation. The problem with innovation today is that it is largely thought of as either a technological solution or a product of happenstance (the light bulb that goes off while you're in the shower). In fact, it is neither of those.

Innovation occurs when an individual or small group collects significant amounts of information about a myriad of topics and identifies trends, gleans insights, and draws conclusions about how a new paradigm might be introduced to fundamentally change an existing market or create a brand new one to solve a basic problem.

In other words, innovation is as much about collecting information and connecting the dots as it is about building a product. It's about mapping market opportunity to technological possibility. It requires both business acumen and technological prowess. It is both creative and analytical. Unfortunately, the focus of most processes within an organization revolve around the most concrete aspects of this process - building product, developing technological expertise, and analyzing data. Processes that promote consuming information, spotting trends, and drawing conclusions are few and far between.

Systematic innovation requires the development of key processes that promote the intersection of these dichotomous ideals. These processes must support five key capabilities that organizations need to systematically develop.

1. Diverse information gathering. Innovation requires a broad understanding of a market, its consumers and the overall landscape. The most innovative organizations will develop systems for ensuring that vast amounts of information, even beyond their core business, are being consumed and shared throughout the organization.

2. Creative analytical processing. Innovation requires the ability to digest information, recognize patterns, spot trends and relate a diverse set of data that otherwise may not be deemed relevant to each other. This is both a creative and analytical exercise that requires constant processing. The most innovative companies will find new ways to both teach and ensure that teams are constantly creating innovative hypothesis.

3. Deep technological understanding. Innovation requires a deep understanding of technical capability. Without this mastery of technology, organizations struggle to push the envelope and imagine what otherwise seems impossible. The most innovative companies put more value on a deep understanding of technology's potential to drive business outcomes than capability to build technology. The former requires mastery, the latter just some level of expertise.

Related: What Really Fosters Innovation (Infographic)

4. Tight cross-functional collaboration. Innovation requires individuals with a diverse set of expertise working together in tight collaboration. The most innovative organizations will figure out how to scale the tight collaboration most commonly seen in startups within a relatively small and diverse team that thinks almost as if they were the same person.

5. Broad product experimentation. Innovation requires the refinement of hypotheses based upon the collection of additional data and the drawing of further conclusions. This requires a fundamental ability to take risks. The most innovative organizations will create key processes around experimentation and learn how to measure smart failures as a means for concluding whether an ROI is likely and appropriate progress being made.

Just as the Industrial Revolution prompted the development of key processes that promoted efficiency and allowed for mass production, so too will the digital revolution prompt the development of key processes that promote innovation and allow for mass innovation. Just as lean manufacturing prompted the development of processes that promote quality, so too will the lean startup prompt the development of processes that promote innovation on an enterprise level.

Innovation will become reliable. It's not a question of if, but when. What are you doing to help ensure reliable innovation is embedded within your organization?

Related: Who Are the 25 Most Innovative Consumer Companies?

David DeWolf

President & CEO

 David DeWolf is the Founder and CEO of 3Pillar Global, one of the Mid-Atlantic’s fastest growing technology companies. In this role he has guided 3Pillar to a leadership position within the Product Development Services sector, establishing 3Pillar as the go-to innovator for content, information, and data-rich companies looking to grow revenue through software. In 2012, David was named one of SmartCEO Magazine’s “Future 50.” In 2011, he was recognized by the Washington Business Journal as one of “40 Under 40” who are Washington, D.C.’s brightest young business leaders. "

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