Innovation is a core business process
Most executives today would say that innovation is a core activity of their company. They speak about it in public as key to meeting their customers’ needs for new products and services and assert that innovation that keeps ideas flowing from inception to commercialization is key to building a sustainable business.
Resources are allocated, goals defined, responsibility delegated and periodical idea generation sessions organized. Big Data is high on everybody’s radar and used as input to identify opportunities. Processes to prioritize, conceptualize and commercialize ideas are implemented either within NPD or as part of a broader innovation portfolio approach.
Why is it then that so many executives still claim that results are not what they expect and after a few years of trying shut down innovation initiatives? What is different that makes innovation more difficult to embed in an organization than other core business processes? Why aren’t companies getting the results they expect? There are many innovation options to choose from but how do you make the right choices?
The innovation flavor of the month
We frequently see clients asking what to do to innovate and more specifically how to do it before addressing one other critical question: innovation to achieve what? It seems we’re most comfortable with the first two questions because they give us clear answers that we can translate into actions. As a result, many companies end up executing the hottest and latest approach in innovation they have heard of or read about.
Innovation labs, corporate incubators, startup collaboration, radical or breakthrough, open innovation, lean startup, co-creation, crowd funding etc. are all interesting innovation concepts that can potentially be used. But unless you know what you’re trying to achieve and why, it’s very unlikely that the individual innovation tactics you choose will lead to success. And, unfortunately, there is no generic innovation solution that works in every environment.
Navigating the Innovation Options
How do you navigate the increasingly complex landscape of innovation options and make choices that work for you? Here’s a very pragmatic way to get started that we apply when we work with clients on shaping their innovation agenda. It engages a group of senior executives and stakeholders and helps them to align their perspectives and ambitions for innovation, and understand choices and tradeoffs they need to make, before starting an innovation initiative.
This method addresses two overarching questions: “What is our vision of success for innovation in our business?” and “What should our innovation capability look like?”
Step 1 – Perspectives on the world around us
To start addressing this question, we first ask executives to look outside of the company and define what significant changes they see occuring around them now and in the future, what they believe the implications of such changes are for the company, and then to prioritize those that they can and should address with innovation. The outcome of this exercise provides the foundation and should be revisited periodically to assess if it is still valid. This provides a way to monitor whether what the company is doing still makes sense and deal with the inherent uncertainty associated with innovation.
Step 2 – Define the scope of your innovation effort
Next, we explore innovation scope: what types of opportunities at what stages of development will the work address, and how broad should participation be?. An innovation program designed to bring already-identified ideas to market with the most efficient use of employee time looks much different than a broad capability building effort aimed at white space. In many cases the answer lies somewhere in the middle: innovation isn’t an either or decision but a portfolio and resource balancing act. And, the conclusion shouldn’t automatically be that “everybody can and should be participating in innovation.”
Step 3 – Business outcomes
Innovation should be about delivering results and we need to be clear up front what we expect it to contribute. This shouldn’t be just about financial results but equally about other dimensions such as geographic footprint, category leadership, new ways of customer engagement, and/or establishment of new economic models. For example, when we defined the vision of success with the leadership of a Food and Beverage company, the expectation was that innovation should contribute to its market leadership in sustainability, as the senior executives saw that position as key to longer term survival.
At this point, you should give some thought to how you will measure the business outcomes you seek. Consider potential metrics for inputs (resource view), throughputs (productivity view) and outputs (results view) of the innovation system to obtain a complete picture of your innovation performance.
Step 4 – Organizational characteristics
Next, describe the organizational “future state;” what does the organization look and feel like in real terms, to deliver our chosen innovation scope? We ask clients to describe this in terms of transitions from the current state to the future state to identify gaps they must close to develop the cultural and organizational capacity to innovate.
For instance, at one recent client the innovation focus needed to be on commercialization and scaling of opportunities that were outside of their core business. This required a specific set of skills around defining business models and experimentation and less about “front end” discovery techniques.
Another client wanted to use innovation as the leverage point for cultural changes including a shift in leadership behavior from “telling” to “asking” and the establishment of much deeper empathy for customers’ challenges and desires across the employee population. These goals had direct implications for the design of the innovation program’s leadership learning agenda, skill-building activities, and metrics.
Step 5 – Barriers and Enablers
Identifying barriers and enablers for innovation is important to understand what to amplify, leverage or overcome. Often, the most critical barriers are not tangible processes or resource constraints, but embedded beliefs about how the business should operate. These beliefs in turn influence how the organization is structured, its processes, policies and behaviors and can prevent people from being effective and in the worst cases cause innovations to be stopped altogether.
One of our clients in industrial manufacturing observed that despite their ambition to innovate in areas beyond their core business, none of the ideas they had identified ever made it through to feasibility stage. A quick scan showed that resource allocation decisions were primarily being made on the basis of optimizing asset utilization and so only ideas that fit this agenda were progressed.
By identifying critical barriers and enablers, including belief-based ones, you can address them explicitly in the structure and resourcing of the innovation program.
To complete your innovation agenda, build a migration map that highlights the various activities that need to be deployed, a 30/60/90 day detailed plan and how you will monitor and manage progress.
The result of this very practical exercise is a well defined and detailed agenda for innovation that is focused on results, clear on scope, and actionable in terms of building organizational capabilities that are right for you.
Equally important is that the senior people in your organization have participated in the dialogue, have a shared vision of success for the “why” of innovation, and are far less likely simply to invest in the latest innovation “flavor of the month.”