Business innovation is not dependent on creative people

Oct. 9, 2006 -- American companies continue to grapple with staying competitive in the global economy. Increasingly, companies and business gurus are citing innovation as the key to sustaining American business' strength. What's not clear is what it means for a company to be innovative. How can firms foster innovation? Can organizations cope with the changes necessary to produce advancements?

"It's important for Western companies to compete on innovation since they can't successfully compete with the East on price," said Panos Kouvelis, professor of operations and manufacturing management at the Olin School of Business. "The best way to infuse innovation into your company is not by hiring creative people. That's not effective. Organizations need to manage innovation in a systematic way to get employees to think outside the box."

There are methods for inspiring non-traditional thinking, Kouvelis said. It starts with encouraging experimentation, which elicits learning. Experimentation means prototyping in product-service developments, and development systems and technologies that maximize learning

New, Not Trendy

Glenn MacDonald, professor of economics and strategy at Washington University's business school, concurred and added that the key to successful innovation is being able to go beyond the theory.

"It's what a business needs." said MacDonald. "Theory to application is a topic of huge importance."

The need for innovation comes in part from the increasing speed of imitation, he said.

"Used to be, 100 years ago, if you had a good product you could sit back and make money for five or ten years. But nowadays, information moves faster, so entry and imitation happen a lot faster," he said. "It's more difficult to be fat and happy."

MacDonald describes innovation as "a fairly analytical process, an ongoing management activity—not going out into the forest and thinking up crazy new ideas."

He breaks down the innovation process into three steps:

• Determine what important assets you possess.
• Given what you've got, assess what new, innovative businesses, processes or solutions you can engage in.
• Decide how to implement the innovation by examining the issues, the resources required and the planning steps.

Application in the classroom

To help Olin School of Business MBA students learn to think outside the box and manage innovation, Kouvelis will head a six-professor team all teaching a new, cross-functional, semester-and-half-long, six-credit-hour course that itself is "unique and innovative," said Kouvelis.

The course is called "The Theory and Practice of Innovation: From the Creative Process, Through Intrapreneurship, Commercialization, Competition, and Renewal." It aims to demystify and systematize the creative process, teach the theory and psychology of innovation, and give students real-world organizational problems to solve for actual companies and government entities.

In addition to Kouvelis and MacDonald, instructors include professors of economics, finance, marketing and organizational behavior, as well as a professor of education and psychology who'll give an overview of the science and psychology of creativity. A professional improvisational-theater group will guide students through interactive role-playing exercises and games designed to stimulate creativity.

"The course emphasizes three themes: the creative process; systematic management of the innovation process; and dealing with the uncertainty of the future." Kouvelis said. "It responds to a stated need by companies from developed countries for innovation."

Students will have the opportunity to apply MacDonald's three-step process. A critical component of the course consists of student teams working with actual organizations — selected companies and, in one case, the Federal Reserve Bank — to come up with innovative solutions to address existing, real-world opportunities and problems.

Editor's note: Both Prof. Kouvelis and Prof. MacDonald are available for inteviews. Washington University has a broadcast-quality ISDN line and VYVX fiber-optic video deliver in its on-campus studio. Television and radio can conduct live or pre-recorded interviews.