Climbing the innovation pyramid

July 12, 2012, 7:54 PM UTC

By Joe Adachi, contributor



FORTUNE — When you pick up a product in your home and use it as part of your everyday routine, do you ever stop to think about what life would be like without it? The advances in technology have made all of our lives easier and more comfortable. The pace of innovation has been so breathtaking that technologies from just a few years ago suddenly can become outdated.

Of course, we all can pinpoint groundbreaking inventions that changed the way we think, work and live – the printing press, telephone and camera, for example. Today, most Americans have come to rely on them as the core of how they operate and communicate.

The most innovative companies are the ones that have successfully adapted to the seismic shifts we see taking place in the world today. They’ve created revolutionary technologies that are making a difference in people’s lives. At Canon, we continually seek to utilize our assets as a global imaging leader to produce cutting-edge, innovative technologies for our customers.

In order to be truly innovative, companies should look beyond the product lifecycle level and redefine their motivation to achieve innovation. In that regard, innovation can be looked at as a three-layered pyramid designed to deliver meaningful value.

At the foundation of the pyramid, success is found when companies commit to innovating products or services – not for innovation’s sake but to strengthen a company’s ability to meet and foresee customer needs. In the middle, a conscious effort to foster cooperation and enhance employees’ well-being, because satisfied employees will bring to the market an invigorated spirit and a sense of purpose. And at the very top, innovation requires a commitment to creatively allocate profits to protect the environment and strengthen community ties. This, in turn, will build stronger communities, deeper allegiances and a more vibrant market for everyone.

Canon is a people-first company. Our corporate philosophy is captured by the Japanese word “Kyosei.” Simply put, Kyosei means “living and working together into the future.” We believe truly global companies must foster positive relations, with their customers and the communities in which they operate, and also with other nations and the environment.

The following are approaches to the innovation pyramid that we recommend companies consider when seeking a transformative approach to their business:

1. Rethink Market Needs Through R&D
In tough economic times, companies often overlook the vast amount of money that is left on the table as a result of not investing in research and development (R&D). According to Booz & Co.’s 2010 Global Innovation Study, companies that saw the most successful correlation between R&D spent and innovation success were the ones that struck a proper balance between “pure R&D efforts that lead to high-tech breakthrough innovations” and more “market-oriented activities” of those companies not centered in technology.

Throughout the past 10 years, Canon has spent an average of just over eight percent of net sales on R&D, and the Company has been among the top four leading patent-holding companies in the world for the past 15 years. During the height of the recession in 2008, Canon invested 9.1 percent into R&D. A dedication to research and development helps companies maximize efficiency, lower environmental impacts and increase precision.

With dedicated R&D funds, we are better able to ride out economic lows and thrive in an economic rebound.

2. Innovate Internal Operations To Drive Employee Satisfaction And Productivity
Without a focus on the common good and employees’ quality of life, companies could invest endless R&D funds into “innovation” but miss the point. R&D investment can fuel the fire of inspiration, but the ability to capture and further develop a “big idea” comes from an understanding of how people work and a commitment to an adaptive organizational culture.

Encourage your employees to contribute ideas without the fear of making a mistake. Provide them with clear direction and maintain open, two-way channels of communication. These actions will give them the best chance to grow and succeed. I firmly believe that employees must visit their “front lines’’ to observe what is happening and learn from it. This does not just apply to our sales and service people; everyone can benefit from this approach. People will not get an accurate picture if they don’t get out from behind their desks.

Canon believes that great people and efficient processes produce outstanding results; therefore, we strive for excellence in every aspect of our business. We have a number of awards and programs in place that are designed to recognize employees and teams who stand out for their efforts in key areas such as business development, administration excellence, customer support, environmental sustainability and organizational change.

3. Expand Mindset To Deliver Greater Social Value
An inherent goal of any company – large or small – should be to utilize its resources and influence to help foster the success of the communities it serves. Volunteerism, philanthropic efforts, charitable contributions, environmental conservation; every incremental change a company makes drives local improvement and fosters goodwill among customers and members of the community.

Canon strives to be a company that people want to do business with. We’re happy when potential customers ask what we are doing to help communities and the environment because we are proud of our caring and responsible corporate culture and our commitment to the environment and people’s well-being. We want to leave the world a better place for future generations.

The proposed innovation pyramid – innovation in product, in fostering a cooperative spirit, and in strengthening community ties – has been the driving force behind Canon’s continued growth despite economic variables. While globalization has amplified the need for leaders to focus on sales and churn out products, the presence of inequality on a global scale presents challenges for the achievement of Kyosei. The solution to ensuring excellence and longevity is of equal parts employee satisfaction, business improvement and a commitment to giving back.

Joe Adachi is the president and CEO of Canon U.S.A.