The innovation capability of the firm is increasingly recognised as one of the key determinants of long-run profitability and survival. However, many managers find that achieving an objective and comprehensive picture of their firm's capability to innovate is not at all easy.

One of the main problems is that innovation itself is a complex and multi-faceted process:

• There are multiple ways in which firms need to innovate. Firms clearly need to seek improvements in their current products and services and/or the processes by which these are manufactured or delivered. But they also need to identify and develop new products, services or business models that can take the firm into completely new growth markets - or simply avoid being blindsided by newcomers in their core markets. Firms thus need to think about both 'incremental' and disruptive innovation, each of which tends to require different skills and capabilities.

• The 'innovation process' itself involves multiple steps and functions. Whether explicitly recognised as a process or implicitly part of business as usual, innovation involves a number of activities usually undertaken by different parts of the business. These include the need to come up with ideas for potential new innovations, selection of ideas to receive backing for further development, making technical or other advances in order to bring the new or enhanced product, process or business model to reality, protecting intellectual property (as appropriate), identifying and acquiring any complementary assets that are needed to commercialise the innovation and then exploiting the innovation in the marketplace. If the process of innovation is to work well, there needs to be a backbone of structure and discipline as well as a liberal sprinkling of creativity and willingness to take risks - not an easy balance to achieve. Crucially, most of these steps require the ability to integrate disparate technological, market and business perspectives from inside and increasingly external to the firm - something which represents a significant challenge for most organisations.

• Successful innovation depends both on strategy and organisation. Strategy involves setting sensible innovation objectives, identifying useful performance measures and allocating appropriate resources. Organisation influences what actually goes on in the heart of the business and how effective this is in identifying and implementing valuable innovations. Consequently, innovation spans the organisation not just laterally but also top to bottom.

Corporate executives need a means of auditing their firm's innovation capability so that they can get a sense for the overall performance of their innovation process and where it may be deficient. Such an overall audit can lay the ground for more detailed work to address weaknesses and enhance the overall process.

Think Play Do Group's innovation audit assesses a firm's innovation capability based on our extensive academic knowledge and practical experience of what makes for an effective innovation process. The audit provides a means to assess overall 'innovation performance' and identifies the factors that may be contributing to poor outcomes. As such, it allows subsequent efforts to be focused in those areas most likely to yield significant improvement in innovation capability.

The TPDG innovation audit has been designed to assess whether the firm has the appropriate organisational enablers, resources and strategy to be successful at innovation. These aspects of business capability are evaluated in light of the main building blocks of the optimal innovation process, comprising scanning & discovery, selection, development and exploitation (as shown above).

The audit combines quantitative and qualitative data sources wherever possible, in order to provide the richest possible picture of the firm's innovation strengths and weaknesses. Using interviews, assessment of financial data, review of relevant project documentation and bespoke market research, the audit covers issues such as:

• The firm's innovation performance to date
• The capability of the business along a number of innovation-related activities, including scanning & discover, selection, development and exploitation
• Key aspects of what actually goes on in the organisation in terms of practices, behaviours, beliefs/values and strategic alignment
• The nature of various 'formal inputs' to the innovation process including top management's attitude to innovation and formal organisational arrangements
• Various factors that characterise the 'innovation context' faced by the business, for example, the extent of change in technology, market or regulation.

TPDG's innovation audit is suitable for firms at all stages of maturity, from start-up to large corporate, across all industries. By default the audit is designed to be applied at the level of a business unit, however where a business unit contains several business lines with different innovation requirements, it can be adapted to apply to each business line individually. A separate audit aimed at the Group or Corporate level is also available.