The Innovation Hierarchy

How to allocate creative energy to grow your venture

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Every organization faces choices about directing their creative and innovation energy. Your product designers, engineers, programmers, and production employees no doubt have a myriad of ideas about what products, features, and new services to invent or improve.

Without explicit guidance on how to allocate their innovation energy, you may find that the investment of creative energy in your organization is failing to grow your venture.

This article explains how to create that guidance:

1. The first priority in your organization should be solving problems for customers. To paraphrase Peter Drucker, “The purpose of business is to create (value for) customers.” Charging customers for a portion of the value you create is how your venture generates revenues and grows. The challenge is that solving customer problems requires your creative people to empathize with your customers — i.e., to take the customer perspective and understand customers from their own point of view. But after an organization grows beyond a certain size, the people with design authority are often far removed from customers. The sales staff might empathize with the customer, or the marketing team, but the product innovators in the organization are too often removed from direct contact with customers, making empathy an obstacle.
2. The second priority for innovation in your organization should be solving problems in production. Whether you produce software, services, or material products, your production process will encounter bottlenecks and incur costs. Identifying problems in production and applying creative, innovative solutions will reduce your costs and improve your margins, thus generating more resources to further grow your venture. Fortunately, your innovators are often in direct contact with the production team. In fact, a great source of innovation within your company IS your production team. The people who produce your products will often have ideas about how to improve production. If you find that your designers, engineers, or programmers are detached from production, then invest the resources required to put them in direct contact, so that your team can identify, formulate and solve production problems that will speed delivery and reduce costs.