If your company is like the one I work for, your people are talking about the need for innovation. Mine has just announced a new program "that will bring a standardized approach to gathering and evaluating your ideas for generating new revenue and improving our business." An Innovation Team has just formed, with a new electronic mailbox and a contest offering cash prizes for the year's best ideas.

Why do we need innovation?

Three answers seem obvious. First, you need innovation because our rapidly changing technology demands it. You cannot afford to do "business as usual," because what was best in its class yesterday is today's routine and tomorrow's technological dinosaur. You have to innovate just to stay up.

Second, you need innovation because your customers expect it. They are looking to you to provide the fastest, most accurate, and most accessible products and services available in the world today. If you don't deliver, they will go to someone who will.

Third, you need innovation because it sells. In every highly competitive industry (and what industry isn't?)companies tend to look over each other's shoulders and try at least to match what the competition is offering. The result is what Peter Skarzynski and Peter Williamson have labeled "strategic convergence," a phenomenon in which each competitor within an industry moves its practices and procedures close and closer to those of its rivals. This leads to a vicious, downward spiral, aptly summarized by David Crosswhite:

Benchmarking the strategies of the "industry leaders" and then copying them, by definition, leads to convergent strategies. Convergent strategies lead to industry parity, which leads to commoditization of product and service offerings, and indeed, commoditization of value proposition. Commoditization leads to price competition. Price competition leads to declining margins, and a lack of (or a perceived lack of) an ability to invest, which leads to a belief that you don't have the "space" to innovate. If you don't resist the temptation of this thinking right from the start, you plunge into a strategy convergence death spiral.

Innovation has the potential to propel your company ahead of the pack and demonstrate that you are clearly the company your customers should choose and be loyal to.

Two kinds of innovation

Not all innovations are the same. Generally, they fall into two categories: incremental and quantum leap. Incremental innovations are relatively easy and quite common, like the slight improvements you notice in each new version of your favorite software. Quantum-leap innovations, however, move quickly from nothing to something dramatic and substantial, like the introduction of personal computers or WYSIWYG word processing. Your company should be pursuing both kinds of innovation.

What helps innovation happen?

Experts agree that certain kinds of thinking make innovation more likely to occur. Here are a few examples.

1. Breaking set