Global competition is getting tougher. To survive, managers are told that their organisations must get better at innovating. Only by constantly evolving will our economy resist competition from India and China, where hundreds of thousands of scientists and engineers graduate every year.
Innovation is fast becoming the most important aspect of competitiveness among nations the world over. In many ways, the UK has a head start. We are responsible for 5% of the world's research, even though only 1% of the world's population live on these shores, and our pharmaceutical and aerospace industries are regarded as among the most innovative in the world.
In my opinion, there is no such thing as a one-size-fits-all approach to innovation. Innovation is not reflected just in new high-tech 'must haves' for the Christmas shopping season, but also in services that organisations offer and in the processes that help to shape what organisations do. Research and development has a crucial role to play, but organisations can also derive benefits from investing in design, marketing and training, as well as through innovation-related capital expenditure.
In the pharmaceutical industry, new discoveries may well be the key to creating value, but in other sectors a new invention is unlikely to capture significant value in itself. Few firms achieve commercial success purely on the basis of one eureka moment. Instead, innovation tends to be customer-led and it is the connection of innovation with real customer need that creates value.
This may mean saving a customer significant amounts of money, providing them with substantial revenue opportunities or having an immediate impact on their effectiveness. It may also mean providing a 'must have' solution to a government mandate or affecting large numbers of people in a material way.
For me, creating value from innovation means providing innovative solutions to important problems and ensuring that those solutions make a real difference. The think-tank Demos has highlighted a multitude of forces now affecting the UK, from terrorism, the proliferation of weapons of mass destruction, immigration, pandemics and climate change to the impact of fragile states on the global community and the growth of organised crime. Innovation has a key role to play in our reaction to each of these.
Our focus at QinetiQ, the former research laboratories of the ministry of defence, is on solving major problems in security and defence. Our Talon bomb-disposal robots, for example, save soldiers' lives daily; they are so widely used that there are now robot hospitals in Iraq and Afghanistan to repair robots that are damaged.
But new technologies could also be developed to help tackle some of today's other concerns. Climate change, growing energy needs and unsustainable use of resources are issues on a global scale. They are also big issues for individual organisations in terms of reputation, their need to comply with legislation and the potential benefits of resource efficiency.
'Green is good business' may be an overused maxim, but it is also true. The UK environment market alone is worth £25bn. The global energy market is measured in trillions, a figure so large it is meaningless. Yet this is a rapidly growing market and it offers huge opportunities. Grasping them demands talented people with the right skills. At QinetiQ, we recognise that our greatest assets are our people's minds and we strive to provide an exciting environment where the best minds can work on the biggest problems.
To exploit new ideas, employees need to work in multi-disciplinary teams that combine individuals with business skills and technical champions. The current demand for technical skills in particular is high and in the UK supply is not keeping up. Ultimately, this is an issue for policymakers (and I am backing calls for radical action to ensure that supply meets demand), but woe betide any business leader who fails to realise that the competition for talent is hotting up.
To create value from innovation, organisations need to work with others. Innovation cannot be achieved solely in-house and I suggest all managers consider collaborating with external specialists to access their knowledge, skills and ideas. At QinetiQ, we work proactively across the supply chain to bring together winning teams that include universities and SMEs. Stronger links with academia and suppliers can make most organisations more effective.
Of course, exploiting new ideas carries a degree of risk. Americans often refer to the initial period when an idea is taken from a laboratory as the 'valley of death' - a phrase that emphasises the importance of securing the first big customer for a new idea. This initial contract with an early-adopter customer can help attract external funding, secure other sales and provide a platform to develop an idea in the longer term.
In my opinion, it is easier to be successful by developing innovative solutions to important problems than by looking for customers for a brilliant invention. So be a risk-taker - but do so with a genuine customer need in mind.
CV As group CEO of QinetiQ, Graham Love took the company through its successful IPO on the London Stock Exchange in early 2006. Love was previously CEO of QinetiQ North America, where he led an acquisition programme that has created an important new player in the US defence and security markets.