In the run-up to the GreenBiz Innovation Forum, GreenBiz.com executive editor Joel Makower spoke with Robert Shelton, director at the consultancy PRTM and co-author of Making Innovation Work, about the challenges companies face in creating innovative cultures and processes -- not only inside their companies, but in collaboration with a broad range of partners.

Joel Makower: You go into a lot of companies and talk about innovation. When you look at them, how can you tell if a company is really innovative or just talking the talk?

Robert Shelton: I look at several elements. The first is how well they partner and collaborate, because innovation is a team sport. And the first level of partnership takes please inside the company. Do they work well across their organization? Are the technologists and the marketing people and the strategists working together?

The second type of collaboration is how well they partner with folks outside their company. Most companies will tell you that they have lots of partners. But if you dig in a bit you often find that these aren't truly collaborative partnerships they're simply sort of supplier relationships.

But, innovation requires that you capture the billion or so IQ points that know about your topic outside the company, and you pull them in. So, the first one is the measurement of partnership.

JM: What else do you look at?

RS: The second thing I look at is how good they are at the two aspects of innovation: creativity and commercialization. The creativity is the good ideas, coming up with solutions to peoples' problems, or findings ways to create value by meeting their unmet needs. Some companies are very good at that, but some are weak in this area.

The flipside is the ability to commercialize ideas. Some companies are good at creating ideas, but not very good at commercializing, so I look at the ideas that enter into commercialization and see not only how many come out, but how strong they are when they come out.

That brings up another point: To take a mixture of both qualitative and quantitative measurement. A truly creative company will have a vision of where they want to go. They're not someone that says "Bring me good innovations, I'll recognize it when I see it." They go in and they create a vision of where the company needs to go, or the areas of improvement that they're after. And, that's the qualitative side.

On the quantitative side, if you dig in you'll actually find a portfolio that reflects that vision. Too often, companies talk about innovation in big bold strokes -- they're going to be the best, and nothing can hold them back. But, when you look at their portfolio, it's overbalanced toward incremental innovation and they lack the investments in breakthrough and radical innovation that are really going to take them to the new areas that they talk about.

So, it's important to realize that you not only need the vision, but you need to have this portfolio of investments that can translate the vision into reality.

Finally, there's the metrics and motivators. Too often companies talk about their innovation, but they don't measure the right things -- for example, a company that measures only patents, but claims that they want to be the biggest and the best, probably will have difficulty getting there.

So, those are the pieces I look at: The metrics and the motivators, the balance between creativity and commercialization, their vision and their portfolio, and their partnership capability.

JM: Let me ask you the flipside of that question. If a company has those elements, the four things you just talked about, are they going to pretty automatically be innovative? Or are there things that can get in the way?

RS: They're likely to be successful, but just exactly the height of innovation success they'll reach is tied to two other factors. One of them is that how you innovate determines what you innovate. If a company's trying for relatively modest innovations, then they will need to design a system that can deliver exactly that. But if they're trying to create the next breakthrough new things or things, they'll need a system that runs at a higher octane and a higher RPM. That's built to give them a lot more innovations and a lot bigger ones.

My next point, and it's a little counterintuitive, is that companies that are really successful know how to say "No" a lot. And they know how to say no to the right things.

The truth is, companies can generate an awful lot of activity around innovation, but it's important to stay focused. There's a saying that innovations never stop, they're only abandoned. That is, if you iterate something you create a new product. You'll keep working on it and getting it better and better and there's really no end to it. You can always find some way to make it better, smaller, faster, or cheaper, combine it with something else

The flipside is that some innovations are not abandoned early enough. A company needs to say no and stop innovations that are either not going to be successful or provide the returns they want. They may sell them to someone else. They may just stop them entirely. But a company has got to have both the management capability and the good judgment to realize that it can't do everything and it needs to focus.

JM: Let's talk about how all this happens in the world of sustainability. Is sustainability different in any way in terms of how innovation needs to happen?

RS: The basic pieces are there, though there are a few key differences. The differences emanate primarily from the nature and scale of the challenge. Sustainability is a large enough problem that, frankly, it needs a new level of collaboration and partnership. We need worldwide networks of innovators. We need research nodes and commercialization nodes and incubators and a mixture of the academic and the commercial and the government working in ways that we haven't seen.

And while the challenges are interrelated at a large level, a lot of them are separate -- for example, solving the water problems around the world, or energy problems that range from large scale industrial and commercial applications for urban areas to much smaller-scale issues for emerging economies.

These types of scale differences and the multitude of problems mean that we're going to need strong visionaries that can see not only the problems, but begin to see the solutions.

JM: So, what will it take for these networks to form, or are they already forming?

RS: They're already forming, but I think we're at an early stage relative to what we need in order to make it work.

In energy, there are networks built around academic hubs tied to commercial operations. They have a mixture of entrepreneurial, academic, and large-scale commercial development sharing thoughts, intellectual property and capabilities. That's very exciting. But we need more, and they need to be stronger and more robust and not just around energy.

One of the reasons partnerships are so important is that for any given problem you're working on there's probably a billion IQ points out there that you can grab hold of, if you just know where they are and how to get a hold of them. So, you need to stretch your network around the world.

One of the things that's important to realize about innovation is that the people who can solve the problem aren't always the ones immediately near the problem. And, so these networks have got to reach out and be formed.

Now, one of the questions is, how will we provide sufficient incentive for folks to establish collaboration and to work through the challenges of working around the world. The answer is we've seen it done in numerous things, whether it's translating some ancient book, or working on an academic problem, or working on a commercial-level innovation. There has to be some incentive for people to invest their time and effort.

To that end, we need some prizes. I don't mean to sound trite about it. I mean prizes in the form not only of monetary return, but in recognition for a job well done for successes that are made. This needs to be something that is on the level of Nobel Prizes and awards that are given for books, or scientific advances, or for just improving human welfare. We need a concerted set of motivators that will pull forward the talent and actually bring them together at a level of collaboration that we haven't seen before.

JM: You'd think saving the planet would be prize enough, but I guess it isn't.

RS: You'd think it would be, but I don't sense that it is. When it comes to gathering people together in a concerted effort, sometimes the bold vision works, especially for a while, but over the long run you need to provide the reinforcement that says, "We're with you and we're sticking with you, and therefore keep trying to make advancements." It seems to be human nature.