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Why CEOs Need to Invest in Insights and Ideas
In the world of ROI, you need returns on a lot more “I’s” than investment. You need return on innovation.
To get the “new school” ROI of innovation, you need returns on insights. And you need returns on ideas.
I’ve explained before how business intelligence leads to insight, which leads to innovations (business intelligence -> insight -> innovation (BI->I ->I)).
But I didn’t compare BI->I ->I to ROI.
And, frankly, most business leaders’ favorite acronym is ROI – the return on investment one.
Yet I view these multiple ROIs as interconnected, distinct stages of developing something new or improving existing solutions. Ignore one aspect and the whole process falls apart.
When Urgency Trumps Innovation, Businesses Stagnate
Maybe lack of attention to the other ROIs is why innovation is more scarce than investment – even four years after COVID-19.
You would think a world of generative AI and artificial intelligence would possess plenty of innovation. However, as I recently noted, only half of CEOs value employees with AI skills. And only 53% of CEOs show interest in generative AI.
Most people go to work and say, “What is this mess I have to work on today.” Instead of bosses encouraging innovation efforts, people are figuring out workarounds.
They’re like a couple on a cruise ship perusing a list of free wines. In that situation, you can be quite discerning about what you want.
But if the cruise ship hits an iceberg, you and your spouse don’t care about the wine list.
These days, businesses are hitting icebergs and looking for workarounds instead of innovation. The urgent has taken precedence over the important.
That’s not insightful leadership. Nor a recipe for long-term success.
Let’s take single-source supply chains. I’ve been deriding them for years. But it’s easier to source raw materials, components or products from one supplier. But single-source supply chains create urgent problems for the future.
Your decision works fine until your supplier in China says it cannot make the next shipment. If you had faced the important and developed optionality, your organization wouldn’t be in such a fix.
In this case, innovation requires developing a backup plan to cover you for tomorrow’s “Oh, phooey, that supplier isn’t going to deliver.”
Perhaps you look to the Philippines, Mexico or elsewhere. When one supplier fails, you have optionality. You can deliver to your customers while your competitors face bottlenecks from the next global crisis, war, pandemic or geopolitical flare-up.
So let’s examine how you can get that real ROI – return on innovation.
Innovation Pipeline Transforms Insights into Game Changers
Insights are deep understandings or revelations about particular problems, situations or needs. Insights often arise from observation, experience or analysis. They represent a fresh perspective or a new way of seeing things.
Insights typically uncover previously unrecognized, but underlying, issues, trends or opportunities.
An idea, on the other hand, is a conceptual solution or approach that stems from an insight. It’s a possible way to address the problem or opportunity that the insight has revealed. Ideas are the creative responses to insights and can vary widely in their scope and feasibility.
Often, ideas are abstract or theoretical. Sometimes, they’re not even practical or doable.
Innovations take those previously unthought of or unworkable ideas and put them into practice. Your new product, service, process or business model brings tangible benefits – significant improvement or added value.
This is where the art of insights and ideas transforms into practical execution and market adoption. Often, innovation overcomes challenges related to scalability and technology.
In hindsight, here’s an easy insight: Customers keep demanding faster and more personalized delivery services in eCommerce.
That insight leads you to an idea: Distributed logistics, a model that would use localized warehouses to preposition the right inventory closer to customers. Paired with AI-powered demand forecasting, this could allow your enterprise to deliver orders fast and cheap.
What would that innovation look like in reality? Well, if you’re Amazon, Walmart or Target, you build your own and/or use your stores as fulfillment centers.
Otherwise, you would need to partner with the right 3PL and transportation providers for a scalable, AI-driven logistics network that dramatically reduces delivery times.
A few years ago, that wasn’t possible for small and midsized businesses. Now, that innovation project is within your reach.
Mining Your Mistakes Unlocks Innovation
Look, I get it. Everyone is busy.
Everybody – including me – falls into this trap. I run out of time. I do the urgent and never get down to the important.
Rarely do I get the chance to sit down, put up my feet and say, “What did I learn this week. What could I have done smarter.” But that’s when you really get a return on innovation, because you now are mining your mistakes.
I solve that bottleneck by carrying a notebook everywhere. I get some of my best insights when I’m not at my desk solving the “urgent.
Yes, I know it’s old school. But you don’t want to lug your laptop into the weight room, on the jogging track, the hiking trail – wherever you have “down time.”
People have really cool ideas all the time. Not just while they’re at work huddled up with their “innovation team.”
For decades, I have been an innovation facilitator, helping teams and companies move into the future. Reach out, let’s talk and see how I can help your organization create innovations instead of workarounds.
Everybody likes to know their return on each dollar. And businesses have processes in place to measure the performance of ROI.
But developing an innovation process can yield greater impact. Return on innovation can be a much more powerful form of ROI.
Related Reading
- Innovation, A Cycle that Must Become Priority
- CEOs Cannot Afford to Ignore Generative AI
- For Hypergrowth, Cash Flow Often Beats Raising Capital
- Unlocking the Automated Economy through Digital Enablement
Jim Tompkins, Chairman of Tompkins Ventures, is an international authority on designing and implementing end-to-end supply chains. Over five decades, he has designed countless industrial facilities and supply chain solutions, enhancing the growth of numerous companies. He previously built Tompkins International from a backyard startup into an international consulting and implementation firm. Jim earned his B.S., M.S. and Ph.D. in Industrial Engineering from Purdue University.
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