A common error in many companies is to think that innovation is a target instead of a means. I was an innovation manager for some years and probably I can explain the process. Any serious innovation requires a high budget and high performance manpower for a relatively long time. Although an innovation project can have a defined term, any structure in a company that persists for a long time tends to become permanent (we can name this sentence as “the first Saco’s law on innovation”). This fact is especially important in innovation, and drives to other assertion the higher the innovation project budget is, the stronger the trend to persist (“the second Saco’s law on innovation”).Of course, any company has an opposite force to this trend too: Any control department that does not understand well the mechanisms involved in value creation of an innovation tries always to cut innovation expenses (“the third Saco’s law on innovation”).
The main task of a good innovation manager is to control the forces of these three natural laws, in the same way as an engineer builds a dam in order to hold the pressure of water and to decide when it must be set free.
An innovation project, as its own name is showing us, has a starting point and a finish, but there are some interesting points to consider. From a business viewpoint technology is more than a useful device. It is possible that we can accept this, sometimes, if we are thinking about acquired technology, but if we are considering developed technology the involved knowledge should be preserved. The reason can be seen easily: Innovation is a strategic option, and a strategy deployment can be much longer than a single project, it is not so easy to dispense with the high performance staff and its knowledge. But, what happens when the strategy changes? Then, it would be possible that new technology and knowledge, or other kind of activity (for instance, we could need assign new resources to geographic business development) must replace the old one.
Strategic management is like a chess game. We have some pieces that we need to move, and sometimes, we must sacrifice some of them to win the game. Of course, there are some chess pieces more valuable than other ones. Nobody would sacrifice a queen for a pawn. Innovation staff could be seen as the chess bishops, it can be interchanged in some phases of the game but this should be done only for pieces of the same value, and when doing it gives us an advantage. Innovation management supports the decision of the player (CEO) about this powerful piece.
This analogy has been proposed to explain the third law. If we need cost cuttings, we must do it without forgetting the strategy, because from a strategic viewpoint cost and value are very different terms. Some costs can be equal in monetary units but cutting them can produce a very different result on the chessboard. I know that this sentence can be considered politically incorrect, but it is technical and strategically correct. If you don’t think so, why are the controlling costs increased when a company establishes actions to reduce overall costs?
Finally, we should analyze the limits of innovation. These are defined by the rules of the game and the evolution of the game. Bishops only can move continuously in diagonal and cannot jump over other pieces as horses, or in other words, innovation is a linear process (strongly planned) to reach some strategic positioning without shortcuts. Shortcuts are provided by other strategic pieces as marketing and communication that, sometimes, could be considered more useful than innovation to get a certain positioning, depending on the position of our pieces on the board, and the position of the competence’s ones.