Are these reasons compelling enough for a company to hire innovators? My biased opinion is no, they should use their internal talent, unless the company is large (economies of scale).
Why? For many companies, innovating is a prisoner's dilemma and a zero-sum game (a zero sum game means that for every benefit you get, someone else loses). If nobody innovates in an industry, nobody has to spend more money. If some players innovate, they're taking money from competitors, who will then retaliate. This way, innovation would only be focused on "one-upping" your competition, which can be more costly than productive.
If your company wants to do any of the following, it will need creative personnel and personnel trained in innovation management:
- Create new markets. My favorite recent example is the iPad; it might take some market share from PCs and smartphones, but in reality, most users will also own a PC and a smartphone.
- Innovate for the customer. Amazon is a prime example of this; their focus is on delighting customers, not on what competitors do. Students get it for free, and that is a way to build a very strong and loyal user base amongst youth. It's a big expense for them, you can buy things as cheap as $1.50 and get free delivery, but Amazon focuses on building long term loyalty. Not everything is about making money today.
- Innovating for fun. Many companies let employees use some time to pursue projects they like. It turns out that, it often pays off. Ideo, Bose, and Alarm.com are three successful companies that do this, and their employees love the freedom. In the case of Bose, it's led to using its vibrations expertise in areas unrelated to sound systems. They make shock absorbers and other products that most people don't know about. Additionally, several university projects that started out as fun or a challenge have become large businesses (Facebook!).
- Generate cost savings. I'm an industrial engineer, constantly looking for new ways to eliminate waste. I cut one employee's worth of work from a Central Bank during an internship this summer and decreased consumables use by 5% by innovating on their processes. I generated ideas and executed them, with real results.
There are other ways that a company can innovate that won't be "zero sum" (at another's expense) or a prisoner's dilemma. These are the criteria I feel a company must meet to innovate profitably. Businesses that sell commodities are, by this criteria, much less compelled to innovate than service or technology businesses.
As I said earlier, large companies profit from a strong innovation culture, regardless of their industry. Walmart sells commodities, but they should still hire several innovators to figure out how to improve their supply chain, if only to save them 1 cent for every sale—millions of dollars. It wouldn't make sense for a family-owned convenience store to pay even a bad salary to do the same work, because the benefits wouldn't scale; they could still stay aware of best practices, experiment, and use employee ideas to stay in business, but they shouldn't consider a permanent hire just to innovate and improve their processes.
Ask yourself whether your company really must innovate, if it's innovating for the right reasons, and how its culture aligns itself with compelling reasons to innovate. Is the customer really first? Is fun a part of your environment? Do you pride yourself in finding undiscovered user needs? Like every other business, you still need to innovate; the question is, do you need to hire strong innovators?
As I said earlier, large companies profit from a strong innovation culture, regardless of their industry. Walmart sells commodities, but they should still hire several innovators to figure out how to improve their supply chain, if only to save them 1 cent for every sale—millions of dollars. It wouldn't make sense for a family-owned convenience store to pay even a bad salary to do the same work, because the benefits wouldn't scale; they could still stay aware of best practices, experiment, and use employee ideas to stay in business, but they shouldn't consider a permanent hire just to innovate and improve their processes.
Ask yourself whether your company really must innovate, if it's innovating for the right reasons, and how its culture aligns itself with compelling reasons to innovate. Is the customer really first? Is fun a part of your environment? Do you pride yourself in finding undiscovered user needs? Like every other business, you still need to innovate; the question is, do you need to hire strong innovators?
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