In my opinion - Chartered Management Institute

Chartered Management Institute companion Sir Christopher O'Donnell, CEO of Smith & Nephew, believes in well-managed innovation.

Last Updated: 31 Aug 2010

Ask six people in a room what innovation means and you're likely to get six different definitions. Perhaps Silicon Valley springs to mind - the ultimate preserve of high-tech and a global symbol of rapid innovation.

Or maybe a company such as General Electric, where 'Imagination at Work' still symbolises the innovative spirit emboldened by Thomas Edison. Or Isambard Kingdom Brunel and his part in the design of the first steamship to cross the Atlantic.

For today's business leader, the concept of innovation has evolved. It certainly has at Smith & Nephew, where, over the past six years, the medical device company that I lead has developed innovation as one of three key corporate values, alongside performance and trust. That innovation is at the heart of Smith & Nephew's future, which is why it is such an important topic for the business.

One dictionary defines innovation as the introduction of something new or different. That's a fairly boring description of a concept so full of promises: the ability to propel you ahead of the competition, restructure an industry or shift customer perceptions. Perhaps six years ago we too were guilty of putting innovation in a box, seeing it as the preserve of only those employees who worked in research and development, or perhaps marketing. One of the major changes in developing innovation has been in the definition of who owns it inside an organisation - a big shift from the days of Edison and Brunel, who single-handedly drove innovation.

For a leader, a first step in developing an organisation committed to innovation is communicating the fact that it is every employee's responsibility. Employees must embrace innovation as critical to the company's success and crucial to their own performance.

Innovation is becoming part of the firm's culture. Ownership of innovation has been reassigned to everyone inside the organisation, not just leaders.

Over the years, the definition of innovation has evolved. At Smith & Nephew, it now illuminates our efforts and ability to be customer-driven - to find and meet customer needs faster and more effectively than the competition. After much senior executive discussion, we've adopted as our definition: 'the ability to match unmet customer needs with novel technology solutions'.

We've set key measures to identify the proportion of sales that come from new products within each business unit, and to measure increased productivity and responsiveness to customers. We ask every employee to demonstrate how their actions contribute to promoting performance, innovation and trust to the customer. But that's only the beginning.

The right systems and structures must also be present to encourage focused innovation. There's no use in encouraging employees to develop innovation in products or services that do not fit within our sales channels. We will look at the innovations that we can deliver effectively, but not those that aren't a strategic fit. This discipline makes for well-managed innovation and is the mark of a good company. Within our business, realigning the processes for developing new products and cutting down the number of projects has helped to focus our efforts.

Perhaps one of the key barriers has come from a past perception that radical innovation is the only goal. Yet as Bettina von Stamm writes in the 2003 study Innovation Best Practice & Future Challenges: 'Increasingly, companies have come to realise that it does not matter whether an innovation is incremental or radical, what matters is that value is created.'

A good example of an effort to create incremental innovation in the UK is a study underway by the Healthcare Industries Task Force, a partnership set up by the Government and the healthcare industry to identify steps to develop and stimulate the industry's growth and to maximise the benefit to patients from its products. Identifying barriers preventing the best use of new healthcare technologies is one of its goals. If we can find incremental ways to improve medical technology access and utilisation in the UK we'll have created incremental innovation in the system. And the ultimate beneficiary of that innovation will be British patients.

The crucial final factor is having the right people, individuals motivated by the intrinsic challenge to keep improving, to find a way in difficult circumstances. Innovation is a frame of mind that must be adopted by employees and managers throughout an organisation.

For those unused to this innovation approach, shifts in attitude and behaviour may be required. People need room to experiment, and the organisation must recognise that taking risks can involve failure. Commitment and passion for driving innovation come intrinsically from some people; in others it must be nurtured.

We're still working on innovation inside Smith & Nephew as a continuous improvement process. My role as leader is to encourage innovation, provide the right structure and processes, and build a culture that allows employees to push the company forward, through performance, innovation and trust.


Sir Christopher O'Donnell joined Smith & Nephew in 1988 as managing director of its medical division. He began his career as a graduate mechanical engineer for Davy Ashmore in 1968, later moving to Vickers. He is a member of the Institution of Mechanical Engineers and a Chartered Engineer, and a non-executive director of the BOC Group. In 2003 he was appointed co-chair of the Healthcare Industries Task Force.

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