It’s been established through research that larger budgets don’t necessarily lead to more R&D success. It’s a quality over quantity equation. When departments or business units are given unlimited budgets and money expenditures are not managed, careless spending can occur, which leads to less innovation not better innovation. When budgets are put in place and measured based on performance/results, problem solving innovation becomes more focused on the most pressing needs of the organization. There is no room for innovation projects that will not yield results or be implemented unless unbounded ideas are lacking at your company.
Differentiating Innovation Capacity and Innovation Ability
Nothing illustrates the point that budgeting does not kill innovation better than understanding the difference between innovation capacity and innovation ability. Innovation capacity is widely known as an organization’s potential for innovation. It encompasses the assets and resources (both financial and human capital…the people you have hired or freelancers) the organization has at its disposal and can use throughout the innovation process.
You could say that it’s essentially the “innovation capital” an organization is working with.
Innovation ability (or innovation skill) is the organization’s potential to create value for customers or marketplaces. It’s inventing new products that consumers find useful and want to purchase. It’s refining a provided service that brings greater value to customers. It’s creating new technology that solves a problem, whether that problem affects an organization or society at large.
Innovation ability is essentially an organization’s ability to achieve true ROI through their innovation projects.
No matter how large an innovation budget is (increasing innovation capital), it’s innovation ability that drives ROI. What also matters is investing in tools, people and resources that increase innovation ability, thus gaining better results from getting better solutions for your people to use, implement or refine. In other words, by investing budgets wisely, you can increase innovation ability with more robust, at-will and diverse innovation capitol.
Open Innovation is the Key to Innovation Ability
Nothing increases an organization’s innovation ability more than embracing open innovation. Leveraging the crowd allows organizations to increase their innovation ability by adding a huge external team of prepared minds and unknown experts in a multitude of different fields, all without spending a significant amount of financial capital to acquire them. This is the power of crowdsourcing solutions. By taking specific innovation problems or needs to the gig-economy of intelligence, organizations can leverage the freelance world to accomplish more and obtain better solutions, all while freeing up their internal innovation teams to work on other projects or new better solutions from the crowd.
Invest Wisely with InnoCentive
InnoCentive works with organizations to design innovation problems into thoughtful Challenges that are presented to our global solvers of more than 400,000 prepared minds from a variety of different disciplines. By working with InnoCentive, you can achieve a better ROI on your innovation investments without having to increase your budget or replace your internal innovation team. The process of open innovation is complex for anyone doing this the first time, but that’s not for you to worry about. InnoCentive handles everything from Challenge design to agreements for intellectual property transfer from Solvers to your organization.
Reach out to InnoCentive today to increase your innovation ROI