Making a Strategic Selection

Use techniques and structures to help you in the selection process

Effective innovators choose projects on the basis of clear ground rules. Use techniques and structures to help you in the selection process, and make sure these are flexible enough to help monitor and adapt projects over time as ideas become concrete innovations.

If a project doesn't perform, you should have mechanisms in place either to rethink it or scrap it altogether.

ACTION POINT: There are plenty of opportunities for innovation, so make sure you have some clear decision criteria to help choose the best options.

Article 8.3 Financial Performance

We must not limit our goals, but invest

Financial performance will be judged by such factors as:

• Sales performance
• Percent sales growth
• Return on investment
• Net profit to assets
• Net profit to net worth
• Profit margin performance
• Net profit to sales
• Gross profit to sales - stock sales - direct sales
• Overall operating expenses
• Total operating expenses to gross profit
• Compensation expenses to gross profit
• Non-people expenses to gross profit
• Functional area expense control
• Selling expense to gross profit
• Delivery expense to gross profit
• Warehouse expense to gross profit
• Occupancy expense to gross profit
• General and administrative expense to gross profit
• Functional cost per invoice
• Functional cost per delivery
• Overall people productivity
• Sale per employee
• Gross margin per employee
• Average compensation per employee
• Functional staffing as a percent of sales

We must not wait for a perfect environment, it won't happen. That ship won't come in. Totally safe bets aren't available for the achievers. We must release our energies. Rather than drift through life, we must pursue our goals. Rather than doubt our abilities, we must trust in ourselves and the principles we hold firm. We must not limit our goals, but invest and give to achieve the success we desire.

ACTION POINT: Invest, give, achieve.

How Open to Innovation is Your Organization

Do you look ahead in a structured way

There are some things you can ask yourself to determine how open your organization is to innovation. Questions include:

• Do you have good relationships with your suppliers and pick up a steady stream of ideas from them?
• Are you good at understanding the needs of your customers/end users?
• Do you work well with universities and other research centers to help you develop your knowledge?
• Are your people involved in suggesting ideas for improvements to products or processes?
• Do you look ahead in a structured way (using forecasting tools and techniques) to try and imagine future threats and opportunities?

ACTION POINT: Consider the questions above to determine your openness to innovation.

Finding Inspiration from Outside

As a manager, you should develop external networks of people who can help provide ideas...

In addition to benchmarking by observing other companies, you may choose to collaborate with them directly to develop new ideas. As a manager, you should develop external networks of people who can help provide ideas--those with specialized knowledge, for example.

You can also work closely with lead users--clients, customers, or employees at the forefront of innovation--to develop new products and services. A final source of ideas are your own mistakes, and those of your competitors. When a project flops, or a team under performs, examine how this came about and consider what innovations could protect you against similar failures.

ACTION POINT: Use customers, competitors and your own mistakes to find new ideas.

Benchmarking for Improvement

It aids you in comparative profiling of products and services.

Looking at what other companies do and comparing them to your own organization can give insights into new directions for product, process, or service innovations. This approach is known as "benchmarking."

It aids you in comparative profiling of products and services. Benchmarking processes can be undertaken between similar activities within the same organization, between similar activities in different divisions of a large organization, between similar activities in different firms within a sector, and between similar activities in different firms and sectors.

ACTION POINT: Compare your products and processes with those of other firms systematically and regularly.