Profiting Innovation:

The final stage of the innovation process involves making it accessible to most users
through market penetration. The benefits of an innovation, both to inventors and to
society, are maximized only when the innovation is efficiently diffused. Some
innovations are easy to adopt while others involve effort on the part of adopters.

By Trent Henry, Canadian chairman and chief executive, Ernst & Young LLP
As the global economy stabilizes, the race is on to chart a path to the next era of wealth and opportunity.
Entrepreneurs have a unique role to play in propelling a new generation of economic growth, creating jobs and
building vibrant communities. And nowhere is that more the case than in Canada, where our mid-sized
economy is powered by entrepreneurs.
After all, businesses with fewer than 100 employees account for a whopping 98% of all Canadian private
enterprises. And while these one-million-plus companies may be small, theyre impact is big. They employ
nearly five million people about half of the labour force and represent 29% of Canadas gross domestic
product. Widen the scope to include businesses with up to 500 employees, and that rises to 45% of GDP.
While no sector has been immune to the economic upheaval of the past two years, Canadas entrepreneurial
community is emerging stronger than ever. Amid the cost-cutting and restructuring of their larger counterparts,
Canadas entrepreneurs have held employment levels relatively stable, with recent Industry Canada figures
now showing net gains above the pre-recession peak. Survival rates show a continued upward trend, and
business confidence among small business owners surveyed by the Canadian Federation of Independent
Business is at a nine-month high.
By all measures, Canadas entrepreneurial sector will continue to drive and shape the countrys economic
resurgence. This is good news, not least because an entrepreneurial economy is an innovative one, fuelling
sustainable growth, increasing productivity and building new market leaders.
Innovation is at the heart of entrepreneurship. Its the drive to create something new, or apply new thinking to
familiar problems, that inspires the entrepreneur.
Whats more, innovation is essential to growth. In a recent survey of global entrepreneurs, EY found 82%
identified innovation as critical to their growth, while 65% of Canadian chief executives polled by the
Conference Board of Canada rated innovation as a very, if not the most, important factor in developing
new markets. Harvard Business Review suggested innovation will be the currency of global competition in the
years ahead.
And yet of all the factors that characterize entrepreneurship, innovation may be the hardest to foster. Of the
global entrepreneurs EY surveyed, 49% said innovation becomes more difficult as their companies expand.
We call this the innovation challenge. We need to learn how to sustain innovation as startups grow and
evolve.
Through its Entrepreneur Of The Year program, EY has long worked with and celebrated the achievements
of entrepreneurs throughout the world. We recently spoke to several winners and finalists of the program about
overcoming the innovation challenge. Here is some of what they revealed:
Dont leave innovation out of strategy. Innovation is the key to market leadership, but many businesses fail to
set strategic priorities for it. The smart ones make it a boardroom issue.
Dont lose your power to innovate, it makes you unique. As entrepreneurial businesses grow, they need to keep
the spirit of creativity alive. It is the responsibility of the leader to foster a culture of creativity.
Good ideas are too valuable to waste. Innovative thinking, and the process of harnessing its power, should be
rigorously managed and be company-wide. Innovation needs to be organized and made predictable and
scalable.
Balance blue sky and bottom line. Fast-growth companies must connect creativity and profit. If new ideas
dont translate into products and services that contribute to the bottom line, the quest for market leadership will
fail.
Rethink how the business works, not just what it does. Entrepreneurs are often adept at thinking up new
products and services. But to stay on the fast-growth path, they need to apply that same innovative zeal to how
the business operates, not just what it does.
The time it takes to turn a fast-growth company into a world leader is shorter than ever. The companies most
likely to achieve market leadership will be those that have embedded innovation into their core business
strategy, ensuring it is nurtured, managed and funded.
If Canada is to benefit from the powerful thrust innovators can provide, we need to cultivate a national
entrepreneurial mindset on multiple fronts. The financing community can play an important role by creating
more allowances for entrepreneurs; educational institutions can implement entrepreneurial and management
studies; and governments can make the economy more innovation-friendly by financing innovative ventures,
implementing favourable tax policies, and eliminating burdensome processes that can discourage developing
businesses.
With continued signs of growth and confidence, a favourable credit environment, and increasing mergers and
acquisitions and initial public offering activity driven by growth companies, there has never been a more
advantageous time to nourish the entrepreneurial spirit in Canada. We are uniquely equipped to tackle the
innovation challenge and chart an impressive course into a new era of global wealth and opportunity
-http://www.ey.com/CA/en/Newsroom/PR-activities/Articles/2011-January-Profiting-from-innovation



Defining Innovation
All these experts say:
Innovation is complex, involves risk, and its outputs are unpredictable.
Innovation is the commercial or industrial application of something newa new
product, process or method of production; a new market or sources of supply; a new form
of commercial business or financial organization. Schumpeter, Theory of Economic
Development
Innovation is the intersection of invention and insight, leading to the creation of social
and economic value. Council on Competitiveness, Innovate America, National
Innovation Initiative Report, 2004
Innovation covers a wide range of activities to improve firm performance, including the
implementation of a new or significantly improved product, service, distribution process,
manufacturing process, marketing method or organizational method. European
Commission, Innobarometer 2004
Innovationthe blend of invention, insight and entrepreneurship that launches growth
industries, generates new value and creates high value jobs. The Business Council of
New York State, Inc., Ahead of the Curve, 2006
The design, invention, development and/or implementation of new or altered products,
services, processes, systems, organizational models for the purpose of creating new value
for customers and financial returns for the firm. Committee, Department of Commerce,
Federal Register Notice, Measuring Innovation in the 21st Century Economy Advisory,
April 13, 2007
An innovation is the implementation of a new or significantly improved product (good or
service), or process, a new marketing method, or a new organizational method in business
practices, workplace organization or external relations. Innovation activities are all
scientific, technological, organizational, financial and commercial steps which actually,
or are intended to, lead to the implementation of innovations. OECD, Oslo Manual, 3rd
Edition, 2005
Innovation success is the degree to which value is created for customers through
enterprises that transform new knowledge and technologies into profitable products and
services for national and global markets. A high rate of innovation in turn contributes to
more market creation, economic growth, job creation, wealth and a higher standard of
living. 21st CenturyWorking Group, National Innovation Initiative, 2004
Source: Measuring Innovation and Intangibles: A Business Perspective, Science and
Technology Policy Institute of the Institute for Defense Analyses (IDA), 3 Dec 2008.
Innovation is
A change in the thought process for doing something, or the useful application of new
inventions or discoveries.
An incremental emergent or radical and revolutionary changes in thinking, products,
processes, or organizations.
Requires a formal process to capture ideas and find ways to implement them


Harnessing Innovation
Ideas are not enough; you must find a way to integrate them into your companys culture, strategy,
processes, and portfolio and make a profit!
Innovation Funnel
7 Steps:
Gather
Conceive
Analyze
Build
Test
Adopt
Deliver
Ideas
Outcomes
Benefits of Innovation
Improved business efficiency through optimized practices
Shortened time-to-market through improved tools
Enhanced market penetration through adoption of disruptive technologies
Superior product delivery and pricing
Increased product value for customers
Improved profitability for your company
Conclusion
Innovation is essential for your companys survival.
Innovation can result in incremental emergence or radical changes in business model, strategy,
processes, technologies, tools, or products.
There are many options to foster innovation while reducing risk.
Innovation can significantly increase your companys value and profitability by focusing on enhancing
your products value.
Sources:-
Association of International Product Marketing & Management
Presentation Slides: http://www.aipmm.com/ProductCampChicago
Website: http://www.aipmm.com
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Blogs: http://aipmm.com/anthropology/
Webinars: http://aipmm.com/aipmm_webinars/
Certification: http://aipmm.com/html/certification/
Product Management Framework Brochure: http://www.aipmm.com/brochures/AIPMM_PMF.pdf