Every organization today, desires a healthy innovation culture. Here are the vitamins to help build that strength you always wanted.
Experts have different perspectives on what innovation is and what it is not. Some of my colleagues say innovation isa process, others call it a skill or a competency, and some call it an outcome.
I think it is a mindset, that inspires you to challenge assumptions, break away from generally accepted norms, explore new options, experiment and learn from failures, eventually create a new value for someone, we call customer; be it a single user or the entire humanity. Processes, skills, or competencies are there to help you manage risk, and affordably achieve the innovative outcome.
Innovation appears to be a priority for so many companies seeking to increase their revenues, yet they struggle to innovate consistently. Some companies have added the word innovation to their mission, vision, and values; without making it clear to the organization what it means to them. Perhaps, there is a need for such a statement. There are several reasons holding executives back from taking steps to create innovation driven differentiation and change their destiny. Some common ones are
1. Management incentives promote data driven incremental improvements. Initiatives such as Six sigma and Lean, which help with production and quality, have stifled creativity for so many including 3M, Ford, … The promise of predictable near-term profit is a trap that so many managers still fall in trading off their larger intangible gains tomorrow for marginal visible gains today.
2. Management gurus, who publish best sellers based on large amount of data analytics, generally provide valuable insight into successful companies, unfortunately all in hindsight 20/20. The book “Good to Great” from Jim Collins became very popular in early 2000. Yet the success formula in 21st century for Facebook, Google, Amazon, Apple is very different, which is now captured in the book “the four” from Scott Galloway; Again, feeding leadership with a dose of so called success formula, to become better copycats of the past rather than creators of a better future. Perhaps books should carry a statutory warning label about their side effects, or past performance is no guarantee of future results.
3. Companies tend to be excessively risk averse. They focus a lot of energy on What (Metrics) and How (Process); and more recently Why (Purpose). Simon Sinek puts these in so called the Golden Circle; and has successfully inspired a lot of corporate leaders to become his followers. Innovation requires a little different twist to the golden circle. Innovators start with Why not? And then go on to How about? And What if?
Fellow readers, are these diets of management programs, a leading cause of innovation deficiency? There are probably more, but these are enough to call for a set of vitamin supplements. Let’s discuss some of these in a sequence of relevance.
Vitamin A: Alignment
Symptom: Generally, trying to catch up with the competitors!
Deficiency: The New Business Development and New Product Development teams have a different view of the future, and are dis-functionally looking at each other. Business development is waiting on product team to develop stuff and then to go market, while product developers are looking at business development folks to bring in customer demand before investing; while competitor is working feverishly to create the future for you to catchup. Classically, “when there is no customer, there is no funding, and when there is a customer, there is no time to innovate”.
Supplement: For an organization to successfully innovate, both these departments need to align themselves, looking at a single sheet of music called the “Roadmap”, an ever-current view of the future, that everyone is driving towards. At any given moment, product development should be creating “stuff” for the future, as visible on the roadmap, and business development is engaging the customer or consumer in the same future “stuff” being developed.
Ingredients: The strongest ingredient of the alignment roadmap is market or “customer insight”, and a periodic review/update to sustain consensus around the pursuit. The term customer insight, is a little broader than “Voice of the Customer” inspiring us to search for the real customer need and not just what is coming out as a voice.
Ref the LinkedIn post on VOC for Innovators.
Vitamin D: Dashboard
Symptom: Generally, a long drawn painful decision making!
Deficiency: Would you drive a car without a dashboard? Yet so many leaders drive innovation programs without a meaningful performance tracking, and then wonder what happened. Everyone in the team has an opinion and collectively, struggle to agree on how to fix it. In some instances, innovation managers have realized the importance of tracking data, but incidentally adopted operational performance metrics for tracking innovation; oops! wrong metrics driving wrong behavior, and long debates to decide everything, almost.
Supplement: In the spirit of Balanced score card, you can pick metrics around customer, innovation, innovators, and finance. Product and business development leadership needs to stay aligned on the innovation metrics and desired goals, and track them consistently, to provide course correction to the roadmap. You must ensure that the selected metrics compete with each other, essentially providing a check and balance; particularly useful when managers tend to treat metrics as objectives, rather than a measure or progress towards an objective.
Ingredients: The primary ingredient for the innovation dashboard is metrics that show both the efforts (investments) in pursuit of the roadmap, and the results (progress) along the roadmap.
Ref the LinkedIn post on Innovation Dashboard
Vitamin E: Evaluation
Symptom: Not enough new product launches in spite of the investment!
Deficiency: Investment in new product development needs a business case, no question about that. Typically, executives stack up tangible returns from various options and draw a waterline to cut off, maximizing near term benefits. This favors productivity gains over significantly innovative products requiring sustained investment for a period of time; and leaves the product development team to deal with the frustration. Few years down the lane, investment did bring in short term profits that got consumed, with no residual visibility, and no new product in the pipeline.
Supplement: Truly innovative solutions will challenge the teams with estimation of return on investment. You are better served if you view that an ROI is not a number, but a mosaic of tangibles and intangibles, near term and far term returns. The approach that has worked with me in the past had two aspects. First, the evaluation of each new concept should include both near/far-term tangibles/intangibles. Second, evaluate your options as a portfolio of new ventures rather than each idea separately. Focus on creating a mix, where the sum total of tangibles exceeds the total investment by a desirable margin, and the portfolio offers a significant growth opportunity from the some of the intangibles, not knowing a-priori, which ones will succeed.
Ingredient: The primary ingredients here are (a) Some form of a concept qualification tool, or a business canvas and (b) a portfolio management tool, just like your personal financial plan, and (c) Some form of a gated review process, so that projected ROI can be estimated and portfolio of investments on the roadmap can be adjusted, regularly.
Vitamin H: Hiring
Symptom: Product team is comfortable with status quo, prefers to comply rather than question, and is looking for standard work and protocols for design and development!
Deficiency: The hiring process is not geared to identify innovators. The recruiters and HR have devised methods to automate or speed up the screening of a large volume of applications. This screening process successfully eliminates the low performers and the mismatches on one end of the bell curve, but unfortunately also eliminates the innovators on the other end, who do not fit the generic mold designed for the majority (the middle 2/3). If an innovator made it through the screening filter, then he or she will likely face a panel and a fairly rigid process, which favors the average mindset, compliance, and group think; generally tagging the innovator as “would be a misfit”.
Supplement: The head of new product development should personally lead the hiring process, engaging his team of innovators in the interview process, bypassing the recruitment agencies completely, and limiting the role of HR to compliance assurance and logistics. Start with the resume as written by the candidate, not as modified by the recruiter. Look for keywords such as highest, largest, fastest, first-time, pioneering, never before, changed, … and not worry about quantified achievements in numbers. During the interview, throw up challenging real issues and see how the candidate starts off. If the instant reaction is like “I don’t know” or “never had a chance to do that before” the interview is pretty much over. If you are looking for an innovator, you are looking for someone who is ready to question assumptions, dig deeper, refine the problem definition, and willing to throw ideas and how to evaluate them. His is willing to start, where others say, “I don’t know”.
Ingredient: The primary ingredient here is an interview process, designed and executed by the innovators in your company, and not an HR standard work.
Ref a LinkedIn post on hiring an innovator
Vitamin B: Benchmark
Symptom: Blindsided by the emergence or growth of a competitor!
Deficiency: Being aware, analyze, and understand what is going on around you is absolutely important to compete. You do not want to be the next Blockbuster or Kodak. You want to be IBM. While, near term growth is important, a too common oversight is to ignore the rapid growth of a small opportunity within or outside, and inability to decide and disrupt your own business, before someone else does it.
Supplement: Whether you want to be an industry leader or an agile follower, you need to consistently benchmark yourself, not just within your industry, but across the domains as well. You never know, which direction, a disruption will come and change your business in plain sight. Never underestimate the startup with an innovative business model or a disruptive technology. Today, you must ask how will Artificial Intelligence, 3D printing, Robotics, bio-mimics, … change your business. Ask, if there is an opportunity for you or your direct competitor to uberize or amazonize your type of business, or even do something iconic. Find a place for small disruptive opportunity in your roadmap, fund it and groom it like an independent small business, with potential to overthrow your well-established operation, without operational type metrics, and roll it up in the portfolio evaluation as long-term intangible.
Ingredient: The primary ingredient here is a simple mechanism to consistently gather data and debate its potential impact on your business, using scenario based planning.
Vitamin F: Framework
Symptom: Can’t find the right data to create a meaningful strategy, and spending too much time reporting!
Deficiency: Managing data required to build a good strategy (alignment roadmap) and execute it well (tracking dashboard), has always been a challenge, particularly in large companies. Most companies still rely on Microsoft office products to gather and communicate. This typically results in information lost or misplaced across company drives, individual accounts and e-mails; all leading to poor decisions, followed by poor execution, and lots of time spent in making charts for reporting purpose. Most corporations correctly view strategy as an intellectual exercise, naively not demanding a framework for data management. Most software companies naturally see this as a small market and not willing to invest.
Supplement: You need an Enterprise Innovation and Strategy Framework; a tool to manage the upfront piece of the business value stream, helping rationally decide where to invest and what to develop and build. Let the PLM, ERP, and CRM platforms follow the lead for managing development, production and delivery respectively. A framework that enables Competitive benchmarking, Competitive intelligence, Customer insight, Smart forecasting, Idea management and concept qualification, Portfolio management, Talent management, Risk analysis, Stage-gate process, … A framework that performs SWOT analysis for you, provides a visual roadmap with real-time progress, and the innovation dashboard. Once you get everyone in the company on this framework, just like an ERP system, you take efficiency and effectiveness of innovation program to a whole new level.
Ingredient: “EinFrame” is one such cloud based SaaS Framework aimed at addressing this need for Enterprise Level Management of Innovation Strategy. Best practices in innovation management from decades of experience have been packaged in this application to help build a culture of innovation.
Ref LinkedIn article on Innovation Framework
Vitamin C: Chief
Symptom: The innovation activities are scattered, disjointed, occasional, and the outcome is slow to come by!
Deficiency: The C-level leaders are expected to be laser focused on their own discipline: COO on operational excellence and delivery, CFO on financial metrics, CTO on product R&D, CSO on customer engagement, with CEO keeping them all together for success today, while he also needs to prepare for tomorrow. There is an opportunity for innovation in every department, and yet no one takes the lead on behalf of the entire company, leaving it up to the CEO. So often, the CEO’s bandwidth does not allow him to focus enough on innovation.
Supplement: Although innovation is a mindset, it still needs a champion in the organization. Innovation has to be a corporate level initiative with another C-level individual at the helm, ensuring a healthy dose of all of the above vitamins. An individual who will champion the process innovation across the enterprise for a strong bottom line; product, and business model innovation for top line growth. An individual who will also coach the team and ensure learning and development necessary to innovate consistently.
Ingredient: A Chief Innovation Officer.
Ref LinkedIn post “Who needs a Chief innovation officer”
Gummy Vitamins (Gamify Innovation)
The vitamins discussed so far are not easy to swallow, particularly, when you need more than one type at a time. We need to make them gummy so we enjoy consuming, which mean we gamify the innovation activities. Think of creating an innovation club where, membership dues are paid in points, which can be earned through various activities associated with building the culture of innovation – customer insight, competitive intel, concept qualification, project to product, and even failure is rewarded. The points help gain status and can also be redeemed for personal innovation pet project or industry conference participation. All this to create a sense of competition, a psychological drive for mastery, purpose, progress, and social interaction.
R&D Leaders, …
Vitamins are supplements, which means they can be viewed as optional. True, innovation fueled growth is an option as well. If these over the counter vitamins do not help you build the strength, please call us for an extra strength, personalized drug and therapy.
Statutory Warning: These vitamins help build the innovation mindset but do not guarantee a sustained innovation culture. This article is based on personal experience and observations, over the years, followed by empirically validated hypothesis.
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