• Innovation is the key to survival and growth.
• Innovation is about generating and implementing ideas that provide value to your customers, your company or both.
• The practice of innovation has advanced to the point where it deserves to be treated as a professional discipline.

Innovation is hot. Perhaps too hot according to the Wall Street Journal’s Leslie Kwoh who declared, “Innovation is in danger of becoming a cliché—if it isn’t one already.”

Innovation, she elaborates, was mentioned 33,528 times in last year’s quarterly and annual reports, up 64% compared to five years ago. But for all the talk, there doesn’t appear to be much action. Kwoh goes on to cite a survey in which most executives concede their companies still don’t have an innovation strategy. More to the point for the hotel industry is her mention of a Hyatt Hotels Corporation study. According to Jeff Semenchuk, Hyatt’s Chief Innovation Officer, the company interviewed hundreds of guests and concluded that, as an industry, “We’re all kind of stuck in the past.”

Innovation strategy key for future success

The message applies equally to the hotel industry and your company. In today’s world of global, technology-driven competition, innovation is the key to survival and growth. That’s why many of the major hotel brands have installed dedicated innovation officers. They recognize innovation is the principal driver of the competitive advantage they seek as they jockey for position with one another. They understand innovation is required to compete with industry entrants, such as the online travel agencies that entered the industry and gained control over large blocks of inventory and pricing. They realize 2 billion smart, ambitious, innovative Indians and Chinese have only just begun to compete with the U.S. for customers, capital and commodities.

In short, they know innovation matters and that it’s going to matter even more in the years ahead. To avoid being left behind, you need to ensure innovation is the focal point of your next strategic plan.

A fundamental first step is to understand what innovation means. One way of defining it is the formula:

Innovation = Ideation + Implementation

Most people equate innovation with the first half of the formula. They think of it as simply dreaming up a new idea. But anyone can have an idea. Ideas don’t do anyone any good until they’re implemented, which is why the second half of the formula is included. And not just any idea will do. Innovation is about generating and implementing ideas that provide value to your customers, your company or both.
  

Innovation adds value

So what’s all this ideating and implementing about? To what sorts of things are we trying to add value? I’ll answer these questions in detail in future columns. For now, remember the 5 Ps: Product and service, Process, Policy, Position and Paradigm. They account for most kinds of innovation.

Product and service innovation is self-explanatory. Process innovation pertains to production processes, marketing processes and so forth. Policy innovation is about things such as hiring and compensation policies, risk policies and decision-making policies. Positioning and repositioning have to do with innovating where, relative to competitors, your company and its products are positioned in the minds of customers and other stakeholders. Finally, paradigm innovation concerns crafting and implementing new or improved business models.

Asking after innovation targets is important, but the more important question is this: How does one go about innovating? Innovation has become a sophisticated and manageable process. All manner of advanced tools and methods exist to provide managers with ways to manage the innovation process and build their organization’s innovation capability. The practice of innovation has advanced to the point where it deserves to be treated as a professional discipline on par with other organizational disciplines, such as operations, marketing, law and HR.

So which way should you go? Kwho or Kao? Cliché or capacity building? Should you dismiss innovation as a trite, over-used buzzword? Or is it better to embrace the idea that innovation matters and start constructing your company’s capacity to innovate? You know where I stand.