Does a company really need to innovate? This is one of the questions I am asked on a fairly regular basis. There are many folks who firmly believe that simply by sticking with the basics they hold the key to success. While the basics are important, show me a company that doesn’t think that they have to innovate and I’ll show you a company that will be crushed by their competition, or more likely by the competition they didn’t see on the horizon.

Innovation must be a core capability of any company that wants to sustain an advantage in the marketplace. This applies all the more to successful large companies who despite years of success can’t quite figure out why the old models don’t yield big gains anymore. They feel that they are just as innovative as they used to be, are spending more money trying to invigorate their employees than they used to spend, and yet the dollar volume of sales from products/services launched in the past five years (a standard metric for internal growth) is either decreasing or stagnant.

This is a painful and difficult problem for management to address, however history and research have some effective suggestions. See the sidebar to the right to take a look at two very different companies and the approach they used to take their business in a new direction.

Everyone knows the Google story. It became clear years ago that Google had developed a sustainable and successful business model. Whirlpool is a bit more interesting, as it is a 100-plus-year-old company that makes “white goods” — washers, dryers, refrigerators, dishwashers, you get the picture. Their innovation efforts have been nothing short of miraculous. Sales from new product ideas less than five years old was less than $30 million in 2002, by 2006 it was more than $1.2 billion. In the premium front-loading washer category, Whirlpool went from a market share of zero to more than 20 percent in three years.

1. Research studies repeatedly find that innovation programs have to be pushed from the top down despite the fact that the ideas will flow the other way.

2. Employees left without a mandate that has payroll implications will tend to use activity as a replacement for innovation. It is much easier to simply do what one has always done rather than take a risk on something new.

3. Innovation has to be focused on what the company has as its core capabilities; all innovation is not good innovation. An early unfocused “innovation team” at Whirlpool created an Internet business that would let people race one another on the Internet on stationary bikes. Needless to say, it didn’t draw on any of the company’s capabilities and was quickly shut down.

4. Finally, practical results must be visible and impactful to the company.

Innovation changes the status of the company in the marketplace. YES, every company must innovate. History suggests that those companies that innovate are rewarded in both the consumer marketplace and stock market.

Google

1. Ideas come from everyone in the company — even the finance team.

2. Open information on every project — every idea, every deadline.

3. Favor intelligence over experience.

4. Get a free day a week to innovate — 50 percent of new products come from this time.

5. Innovation, not instant perfection — use small beta tests.

6. Don’t politic for your idea — use data — eliminate “I like” for real data.

7. Give people a vision, rules how to get there and deadlines — creativity loves constraints.

8. Make it simple to use and easy to love — the money will follow this.

9. Don’t kill projects, morph them — there is always a kernel of something good.

Whirlpool

1. Stick with it — it took six years to attain a big payback.

2. Innovation alone is not enough — needed operational excellence as well.

3. Leverage learning — change begets more change — people get better at it.

4. Question orthodoxies — challenge the conventional wisdom.

5. Be highly practical — inventions have to be something someone will buy.