Graduate Management News

To Teach Innovation, Business Schools Must Innovate

Innovation is a hot topic in business schools, but what does it mean, and how do you teach it? In conjunction with the Ideas to Innovation Challenge, a two-phase commitment by GMAC’s US$10 million MET Fund to bring innovation to management education, Graduate Management News is launching a quarterly series of guest columns on innovation and management education. In this inaugural column, Sir Andrew Likierman, dean of London Business School, explains why it’s important for LBS to teach innovation and how its Deloitte Institute of Innovation and Enterprise is going about it.

By Sir Andrew Likierman

Those of us who work in business schools with innovation in the curriculum will be used to the questions, “What on earth is it?” “Can you really teach it?” and “How does this fit the conventional fields such as finance, economics or operations?” The fact that these questions keep being asked means that there is still more to do in helping understand the role of business schools in the field of innovation. Because we at London Business School just launched our own Deloitte Institute of Innovation and Entrepreneurship, you won’t be surprised to hear that we strongly believe that this is an excellent field to be in. So let me give you our viewpoint on what this is all about and why we have a role.

First we have to agree about what is meant by innovation. A standard definition focuses on novel and creative ways to create value through new products or services, new business models or processes. The Economist has defined it succinctly as "fresh thinking that creates value." A good deal of innovation is linked to entrepreneurship, which is why we have combined the two in the Deloitte Institute. But innovation isn't confined to buzzy, technological inventions or start-ups. It is one of the key drivers of everything that goes on in business and is just as relevant to large organizations as it is in starting a new business. Indeed innovation is essential to prevent large organizations becoming sclerotic. At May's Global Leadership Summit at London Business School, George Buckley, 3M's Chairman and CEO, said that innovation was everything for them. How they devised the Post-It note is one of innovation's great stories. But for 3M, as he explained, the search is never-ending. They have no less than 55,000 product lines.  
Next comes the question of whether it can be taught. Part of our method is to discuss techniques through books and lectures about such aspects as the financing of innovation, allocating scarce resources, marketing ideas, harnessing value, picking partners, engaging and motivating staff and the role of leaders in promoting innovation. But a great deal can be learned from innovative firms and entrepreneurial individuals with practical experience coming to London Business School and discussing what worked and what didn’t in their own innovation journeys. This creates a community in which ideas can be shared with a friendly but skeptical audience. Student projects are also a great way of developing ideas, providing learning for both students and the firms they work with. This emphasis on the practical is crucial to avoid any assumption that innovation is about throwing money at a problem.

Professor Gary Duschnitky, one of the directing faculty of the new Institute, pointed out at the Global Leadership Summit that General Motors invested hugely in R and D in the ‘90s for a negative return, in contrast to healthy returns generated by US venture capital which, as a whole industry, had invested a much smaller amount.   
In addition to innovation through entrepreneurship, again covering large as well as small organizations and start-ups, we believe it's important to cover social innovation─a growing field. We are also just as concerned with services and products. Professor Kamalini Ramdas, another of the directing faculty of the Deloitte Institute, focuses her work on healthcare. And with more than 100 nationalities on campus at any one time, our interest is inevitably on international aspects and the differences between countries. 
The issue of how work on innovation fits conventional academic disciplines is a tough one for institutions unable or unwilling to break conventional boundaries. Innovation is a cross-boundary subject, and this is not easy for those aiming for the main journals in their own established area. At our new Deloitte Institute we have faculty from several different areas collaborating, and we believe that the cross-fertilization will provide what is necessary to make major contributions to the field. 
At a time when countries all over the world are looking to innovation and entrepreneurship to boost economic growth and reduce unemployment, business schools have a role to play. Our new institute is an exciting way for us to do so. 

Sir Andrew Likierman is dean of London Business School.

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