The crisis that has befallen the Spanish economy has highlighted the importance of a change in the economic model, from brick Spain to innovation Spain. For the change of model to be possible, Spanish companies have to get rid of the pliers that inhibit innovation, and for this it is necessary to start from a correct definition of what we mean by innovation in the business world. Every time an article appears in the press about the topic of innovation or someone from the government talks about what is being done to promote innovation, it seems that we speak exclusively of “R&D” or “scientific research” as a synonym of innovation. This is a worrying confusion because to the extent that innovation is understood from such a narrow perspective, it is difficult to design and implement government measures capable of addressing the real problem that inhibits innovation in companies. Fortunately, companies do not need to wait for government policies to become more innovative. Everything that needs to be done to innovate can be done with the current resources that Spanish companies already have. First of all, we must start from the correct definition of innovation, which is much broader than that of “R&D” or “scientific research”. In fact, many of the most innovative companies on the planet don't even have an “R&D” organization. Innovation, in the field of business, can be defined as “the transformation of new ideas into high-potential businesses”. Logically, R&D can be a source of new ideas, or also a way of finding a way to transform a new idea into a business, but there are many other sources of new ideas and many other ways of transforming them into profitable businesses than through their own “R&D” organization. There are three deep-rooted barriers in practically all companies in the world, not just Spanish ones, that inhibit innovation (understood as we have defined it):
- The conviction that the strategy must be defined by the company's management.
- The fact that companies have deep-rooted capital allocation processes oriented solely to the analysis of incremental investments in existing businesses.
- Rigidity in the allocation of talent.
To innovate, companies have to start by generating as many new ideas as possible. The more different the people who participate in the process, the more ideas come from different points of view and different perspectives. To maximize the process of generating new ideas, it is necessary to access diverse people: with different studies, different backgrounds, different cultures, different sexes, different races, different countries, different languages, from inside the company and from outside, etc. On the other hand, where is there less diversity than at the top of the companies? In order for all these people to contribute new ideas, it is necessary to involve them in the process of defining the company's strategy... thus, the definition of the strategy must flow from the bottom up and the implementation from the top down. Something counter-intuitive perhaps... in a business world where strategy is seen as the fief of the most powerful... but logical and reasonable if what is intended is to innovate, that is to say to convert as many new ideas as possible into high-potential businesses! There is no company worth its salt that does not have a rigorous and structured capital allocation process in place. This is good for evaluating million-dollar investments in existing markets but totally inadequate for evaluating new ideas aimed at developing markets that don't exist... If there is no market, how can we calculate demand, develop a reliable financial model, and calculate a rate of return? Ergo, a rigorous analyst and a manager who does his job well, the first thing they will do is say that it is a highly risky idea, with a small or non-existent market, and therefore not suitable for the company. Therefore, in a company that wants to become innovative, the first thing to do is to create two completely different processes for evaluating projects: a traditional process for incremental investments in the existing business and a completely different process for evaluating innovative ideas. A process much more similar to that followed by venture capital firms to evaluate a project. Finally, innovative ideas, in order to transform into high-potential businesses, initially require more investment in time by talented people than in money. Consequently, a company that seeks to make innovation a true capacity must set up a market for the free movement of talent, allowing the company's best resources to flow to the most promising ideas. This has an extra benefit: the increase in people's motivation and commitment. As we can see, investing in “R&D” is neither a necessary nor sufficient condition to transform a company into a highly innovative company. If Spain is to change its economic model, it is essential to begin to clarify what innovation means and what are the real capabilities that a company needs to develop in order to innovate continuously.
