Platt Perspective on Business and Technology

Innovators, innovation teams and the innovation process 6 – applied and blue-sky innovation and innovators

Posted in HR and personnel, strategy and planning by Timothy Platt on June 4, 2013

This is my sixth installment in a series on innovators and the process of innovation (see HR and Personnel, postings 154 and following for Parts 1-5.)

I discussed innovation at the organizational level, and developing systems and operational processes in the business for better identifying and supporting innovative excellence in Part 5: building the innovative organization. And at the end of that posting, I stated that I would turn to consider applied and blue-sky innovation and innovators here. And to openly acknowledge any biases or preconceptions that I bring to this discussion, I begin by admitting that I began my professional career path as a scientist, first working in the field and then at a lab bench and as an active participant in very actively innovative enterprises. So when I write here and elsewhere in this blog about innovation and innovators I do so thinking in terms of what did and did not work in my own first-hand experience, and what I would have wanted to help facilitate my work. And I write in terms of what I have tried and done in actively supporting the innovative efforts of others.

But I really begin this series installment and posting with at least a brief and selective discussion as to what applied and blue-sky research and innovation are.

• Applied research and the innovation that comes from it are deemed to be applied, because they seek to address very specific and generally very immediately practical aims, needs and goals.
• Pure, or blue-sky research and the innovation that comes from that also always develops as an effort to address very specific questions and challenges too: resolving the validity of specific hypotheses and developing tools or technologies on the basis of results found that capitalize on at least something of the possibility that this new knowledge makes possible. But for pure research, it might not be immediately apparent where a direct practical application of new insight gained, would best be found.
• My point is that research and innovation, as organized and systematic efforts are never simply about trying things to see what will happen and without any plan or consideration. This applies to both tightly goals-oriented applied research and to the most open-ended pure research and to all such endeavors in-between.
• So when an organization supports applied innovation and its innovators for that, or pure research and blue-sky innovation and its innovators for that, the primary distinction between them from a practical, organizational perspective is one of how immediately and directly the research and development questions addressed mesh with current and immediate business needs and the advancement of specific products and services offered.
• The difference is one of benefits-realization timeframes, and it is one of levels of risk that investments in support of research and innovative development might not be recovered from increased productive value to the business, and increased returns from sales.
• But all research and innovative development carry at least some risk of loss of investment, or at the very least of failure to create new positive value streams. Specifically, narrowly focused applied research and innovation development efforts simply carry less of this risk as they start out from a more secure and known starting point. They, on the other hand, generally carry less potential for break-away, blue ocean strategy based new business potential too, with the larger profitability potentials that could bring. Pure research and blue-sky innovation might carry greater risks of overall loss but when they do work out they carry greater and even much greater potential for increased market share and value returned.
• And I will add as a final point here, applied research is a process that directly leads to marketable and hopefully directly profitable new products and services. Pure research and blue-sky innovation might too, but they also lead to market-focused applied research where an initial blue-sky innovative potential it tuned and turned into a specifically marketable offering. This, of course, adds to research and development costs and timeframes, even as it offers that greater return on investment potential.

So this posting is in many respects about finding and supporting the right balance of more applied and more blue-sky innovation and the types of research that would go into making them possible.

• What types and levels of resource base are going to be available for research and development?
• The more supportive a cash flow cushion can be developed and maintained within an organization, the more financial wherewithal it will have for being able to afford to innovate.
• And then, looking at total potential costs as a sum of direct cash outlays plus risk of loss of investment costs, what overall levels and what balance of pure and applied research and development would best be supported?
• The more innovatively competitive an industry, the more important this becomes, as competitor innovation creates ongoing risk of obsolescence and long term loss of market share and even business failure, for businesses unwilling or unable to innovatively invest in their futures. But as noted in earlier series installments, every business faces at least some non-zero level of this type of risk and even if they function in a fully mature industry.
• The more competitively innovative the competition, the more important it is that any business in that marketplace devote significant levels of its innovation effort toward developing distinctly New, and not just applied innovation tweaks to products and services already offered.

I have been focusing here, in this discussion on in-house research and innovation development. I am going to turn that around in my next series installment where I will consider some of the options and costs for acquiring and bringing in innovative excellence from the outside:

• Through collaborative and supportive relationships with outside researchers and developers such as university labs, or third party small business owner innovators,
• Through acquisitions of smaller, innovative businesses that hold innovative potential of specific strategic value for the acquiring business, and
• Through purchase or licensing of innovative potential from larger businesses or organizations.

Meanwhile, you can find this and related postings at HR and Personnel and also at Business Strategy and Operations and at its continuation page: Business Strategy and Operations – 2.

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