‘Innovation’ is probably the most over-used word in business these days.

It may occasionally be beaten by ‘productivity’ as companies knuckle down in lean times. But throughout periods of growth or recession, in new markets or established industries, across emerging territories or domestic markets, every business wants to list innovation as a core value, include it in messaging, and have a reputation as an innovator.

Despite many surveys pointing to innovation as the single most important factor in success, the term has become so broad – applied to new product R&D, process iteration and the development of both technology and people – that it is creaking under the weight of its own over-use.

This cannot be allowed to continue. It is time to reclaim innovation for what it actually means: the development of something new.

In recent years, new product, process or technology has become even more critical as companies struggle to maintain a competitive edge against increased competition.

>See also: How big data is changing business innovation

Outdated processes have killed companies. Cumbersome software has cost millions. The need for the ‘I word’ remains but the industry response to that need has to drastically change.

In particular, a combination of new market forces and outdated internal processes can conspire to make innovation that produces tangible new business value more important for their survival and yet more difficult to do. There is no longer a margin for error.

As a result, the approaches to innovation that worked in the past won’t suffice in the future. Successful innovation can be elusive, and it is no longer enough to be first to market, the fastest producer or to have a distinctive product. If innovation is to be meaningful, it must be balanced with financial discipline and clear commercial acumen.

One consequence of this is that it makes innovation more expensive. In any industry, it can be hard to create a successful innovation for a market segment, unless personnel have a deep understanding of the underlying issues and opportunities in that new market.

Getting this level of marketplace insight isn’t easy, and it doesn’t happen immediately. And exactly the same applies to innovating new processes or altering existing ways of doing business. Expertise and understanding come with a price tag, but even more so if the end goal is to create something new.

Because of that upfront cost, the new intellectual property (IP) that results from innovation must be protected. The annual losses to all US companies from IP theft are estimated to be the total value of annual US exports to Asia, according to the ‘Report of the Commission on the Theft of American Intellectual Property’.  That is a $300 billion black market built on innovation.

Reclaiming innovation in practice

So how do businesses re-engineer innovation? Firstly, make it pervasive – innovation shouldn’t be confined to research and development activity. It has to be part of the entire company – and that means looking at it from a cultural perspective.

To create a culture of innovation, organisations first need to create collaborative work environments – IT has a key role to play here. A new generation of ERP systems, for example, takes advantage of cloud computing, mobile computing, social business tools and big data analytics.

PwC has pointed out the connection between collaborative work environments and innovation. “Innovation doesn’t just depend on how smart your people are,” the accountancy firm said. “How well those smart people collaborate is just as important. We’ve found that across all sectors, the most innovative companies collaborate far more often than the least innovative.”

Secondly, innovation must be market driven – be it internal to a company or for external customers, innovation must solve a recognisable need.

The graveyard of technology is littered with examples of solutions to problems that did not exist – and as such, died rapidly.

This is critical to enable innovation to satisfy point number three – that it must be financially sound. Innovation can no longer be the last bastion of consequence free experimentation.

A business must measure it against the financial metrics that it applies to other parts of its operations. Given the high cost of innovation in many industries, it’s critical to know what kind of return is being generated.

>See also: The six degrees of innovation

Creating competitive advantage from innovation and optimising investments in this activity are especially pressing in those sectors with close shareholders and government scrutiny.

However, these conditions are never static, so it is also important that innovation is agile. This can be most easily summarised as the ability to identify innovations that aren’t going to meet essential financial metrics and to cut losses quickly so the business can move onto something more promising.

And of course all of this development must be secure. In light of the risk of IP theft, companies need to make sure they have the protections in place to protect their innovations from theft and still actively work with new partners in new markets.

Implementing the right data management structure is an essential part of securing innovations. Protecting IP by using manual processes or by putting the IT department in charge will prohibit companies from creating the vibrant innovative culture that produces tangible business benefit.

These steps recast innovation as a far more disciplined and vibrant business activity, driven by the needs of the market but backed up by technology and processes that can turn new ideas into reality faster.

Sourced from Paul Carreiro, president and managing director, Infor EMEA