Page 19 - IIA MAGAZINE_March 2017_English

Innovation

Moreover, history is witness to a large Having obtained some background about 9. Most companies are not structured to
number of organizations that “stagnated and innovation, let us now look at defining innovate
terminated” because they did not innovate. innovation?
To name a few: But before we do that, let us first test our 10. Listening to your customers is a great
• Blockbuster video rental company was knowledge about this topic. way to innovate
Answer True or False to the following 10
not able to keep up with changes in questions4. Then compare your answers with As you may have seen, innovation is not
the entertainment industry and how those shown on page 20. quite as simple as many of us think.
it affected consumer behavior such as: 1. Innovation is the act of coming up with Innovation takes place when an
the ability to download videos from improvement or a significant contribution is
the Internet and video-on-demand new and creative ideas made to an existing product or service.
by cable companies. The company 2. Innovation is a random process It is about creating new value and/or
eventually filed for bankruptcy in 2010. 3. Innovation is exclusively for a few capturing value in a new way. As such, Value
• Kodak, did not foresee the innovations is the key driver for any innovation.
brought by the digital age, and naturally talented people In the business sense, innovation is an
continued to rely on conventional 4. The biggest obstacle to innovation is organization’s process for introducing new
technology in the production of ideas, workflows, methodologies, services,
cameras. In 2012, Kodak filed for a lack of organizational resources and products, business concepts, which would
bankruptcy. know-how enable the achievement of goals across the
• Motorola failed to focus on the new 5. The most important type of innovation entire organization, and drive the overall
trend in the phone industry with the is bringing new products and services growth agenda.
introduction of smartphones that to market To further elaborate on the concept, it
have multifunction and provide users 6. Teaching employees to think creatively is worth noting that there are two types
with online access. The company lost will guarantee innovation of innovation. The Evolutionary or
its market share to newcomers like 7. The most powerful way to trigger your Incremental type, and the Revolutionary or
Research in Motion, Apple, LG, and brain is to simply ask it a question Disruptive/Radical type.Ediame
Samsung. 8. Most companies pursue known rather
than radical innovation

Evolutionary or Incremental

innovation involves enhancing competence to build upon an existing concept (knowledge and resources), often
resulting in relatively small changes in performance and usefulness of the existing product or service. It is the more
common form of business innovation, which is generally aimed at existing customers, carries a low risk, and is
adopted with less resistance. Examples of this are the multi-blade versus the single blade razor, or the smart versus
the earlier mobile phones.

Revolutionary or Disruptive/Radical

innovation is directed at future customers, and requires delving into new concepts and knowledge. The performance
of innovation may initially be poor as compared to existing innovation, may not evoke interest of existing users,
and is therefore fraught with risk. Examples include the desktop PC versus the mainframe, or e-learning versus
classroom training.

Traditionally, most internal auditors talk about innovation that they have brought about in their daily operations,
specifically to Planning, Fieldwork, Reporting and Audit Administration areas. This, they believe helps to enhance the
quality of the assurance and consulting services that they provide to their internal or external clients. But most of
these improvements are of the evolutionary kind.

As an Internal Auditor, how can you use this knowledge to “Enhance and Protect Organizational Value” of your
company? Internal Auditors need to explore ways to apply Revolutionary or Disruptive innovations to their operations.
This can be done through focusing on the organization’s “Innovation Governance”.

4 Test Your Innovation IQ – Forbes - http://www.forbes.com/sites/work-in-progress/2011/12/06/test-your-innovation-iq/#2f61e6b63364

19 INTERNAL AUDITOR - MIDDLE EAST MARCH 2017