Project Management in Practice

Beyond the alphabet soup of PRINCE2, MSP, MoP, PMBOK, ITIL, Agile

Is innovation a necessity or a luxury?

Every business has to make constant choices between many factors. One of the most common choices is between maximising revenue and investing in innovation. The difficulty is hardly about the concept. It is almost always a matter of economics. Everyone wants to be innovative. It sounds cool, sends good marketing sound bytes and makes the organisation feel good about itself. There is however a big difference in having the desire and being geared towards innovation.

The biggest asset an organisation has are its people. While the organisation may be proud of processes and tools, it is the people that make those work well. Most times, it is the efforts, judgements and outputs from the people that drive revenue. When the choice is between bringing in some cold hard cash and seeking innovation it is a difficult dilemma. Even organisations that begin their journey as innovators at some point reach this point.

The complicating factor is that innovation itself is the not a desire on its own. The prime reason is to drive even further revenue – that comes with higher efficiencies, increased satisfaction, cost reductions etc. When you can see potential extra revenue by shelving some innovation, it is a difficult argument to sustain in favour of innovation. The argument can therefore only be sustained when you take a step back and review the consequences.

I come from the land of the long white cloud and where cows and sheep outnumber people. So I will use a farming analogy. You can continually milk your entire herd of cows. That will produce a higher yield than if you leave some to grow the herd. Your choice is between maximising what you can get today and to keep a sustainable operation in the long term. The impact in business is the same. By putting all your eggs in the revenue basket, organisations risk their competitors catching up and surpassing them.

I argue that innovation is a cost of business. This true for all businesses, especially the case in the technology area. Each business must understand the level of innovation required to stay ahead of the competition in their domain. The balance may be reviewed from time to time, but commitment must be made to not pull the plug on an operational whim. The only way this can be achieved is by budgeting for this level of innovation in the business plan.

Innovation is a necessity, not a luxury.

Image credit: Vipin Shankar’s Blog

2 responses to “Is innovation a necessity or a luxury?

  1. Andrea Palazzi May 31, 2012 at 7:37 pm

    Innovation is a luxury only if there isn’t a return in terms of money or support.
    Some time you have to innovate your environment because you are moving forward, other more easely you have to move to maintein the Service Provider support level.
    I think that have an open mind is the best answer.

  2. Pingback: Are the days of MS Project numbered? | Management in Practice

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