There has recently been a lot of talk about innovation and the benefits associated with being innovative. We all want to lead the team that is coming up with the latest and greatest solutions but there are many costs associated with innovation. In this blog, we are thinking of innovation as a change to the way of doing business or the business model, and with these changes come cost.
One of the more tangible costs of innovation is the purchase of necessary infrastructure, technology, expert personnel, etc. These are costs that you directly see in the expense column of your project. These costs, if you are knowledgeable, can be quantified and anticipated.
Then, there are more intangible costs associated with the change, large or small, that come with innovation. These changes and their impacts are harder to think through and, often, to quantify. One of these harder factors to quantify is how you employees or customers will react. At the end of this project or perhaps in the midst of it will your employees or customers be pushed too far out of their comfort zones and look for alternate work environments or service providers? Along these same lines, you have to think about the cost to communicate the innovation and explain the new changes to your employees and the customers. At the same time, what we are viewing as a cost may be just the change you need to improve morale or retain and expand your customer base.
Another intangible cost to consider is related to your organization’s ability to manage the innovation. If this change is relatively new, is your organization savvy enough to solve any problems that may arise or will you need to hire additional expertise from outside and in how many areas will the expertise be needed in?
The cost of deviating from standards within your organization must also be considered. First, identify what standards you are impacting. Can these standards be deviated from or are they federally, state, or locally mandated. If they are internal standards, will a change to the standard approach result in unrest within the company or is the culture such that employees adapt to change with minimal impact. Intangibles are much harder to gauge cost- wise and, sometimes, difficult to determine if they are a negative or a positive.
We have only hit upon a few of the costs that may be associated with your new innovation. Have you considered them all? Need some change management or transformation expertise to help you figure it out? The team at Artemis is here to help you think about innovation and the impacts from beginning to end.