Four quotes from an innovation powerhouse reveal a lot about why so many companies find innovation difficult.
“We do pay-as-you-go innovation around here.” Not what I expected to hear from a senior executive inside one of Forbes Magazine’s most innovative organisations. “We innovate when one of two things happen: either there’s a crisis or we need to launch a product,” he added, to emphasise the point.
What he meant was that the company lacked a strategic, holistic approach to innovation. Not exactly making it up as they went along, but not far from it.
An hour later I’m with some managers in the company’s IT department. “Most of our innovation is creating workarounds to make someone else’s half-baked idea actually work,” they tell me.
The day ends with a group of sales managers and we finally get to the core issue: “Thinking about the future is a luxury here,” I’m told with a regretful tone.
Innovation Groundhog Day?
Maybe I chose a bad day to start this particular innovation assessment; but in reality, the same underlying attitudes about innovation prevail in most companies. The short-term focused “pay-as-you-go” approach creates temporary spikes in performance for some parts of the company, but they are often accompanied by costs elsewhere, notably:
- Short-lived returns – Reactive innovation tends to yield only short-term, tactical advantages that are easily copied by competitors. There’s always a place for this approach as part of a broader innovation strategy, but if all of your innovation falls into this category you risk being terminally locked into industry dogfights or eventually answering the door to the corporate grim reaper.
- Blander, slower innovation – Left to its own devices, innovation inevitably happens at the point of greatest immediate need. Usually, that means it emerges at a team or divisional level, and often without adequately including the stakeholders who will help implement and improve the idea. As the weary IT managers told me, the outcome is often a series of workarounds that ultimately slow down execution.
What’s happening is an innovation disconnect on a huge scale: innovation driven by the short-term needs of individual functions, but disconnected from the wider stakeholders and long-term strategy of the rest of the organisation.
So what’s the alternative? “Get joined up and get strategic”, is the clear message from two recent reports by Accenture and Cap Gemini. Performance sky-rockets when organisations think holistically about innovation, they conclude.
That’s all very well but where do you start? We encourage organisations to be intentional about four essential parts of an effective innovation ecosystem:
- Creating strategic focus: Great innovators make great questions the focus of their corporate innovation. The creative freedom to explore a constrained question is the nitro and glycerin of the front-end of the innovation process. In the last 12-18 months, designing what we call “brilliant questions” has become one of DPA’s most sought after services.
- Discovery-led innovation tools: 90% of product launches fail, often because they are based on faulty initial assumptions about the customer. Giving employees tools that help them discover deep customer insights, develop ideas with strong competitive advantage and then run low-cost experiments to test underlying assumptions, are essential ingredients to high-performing innovation. The tools at the heart of Lean Start Up, Blue Ocean Strategy and Business Model Generation are transforming performance inside many of the organisations that we work with.
- Culture and Climate: Peter Drucker famously said that culture eats strategy for breakfast, a perspective ultimately proven to be true by a great deal of research. A culture that supports innovation needs leaders who value things that have been gagged and bound in the basement of most companies: embracing uncertainty and ambiguity; making decisions with much less than 100% of information; encouraging risk-taking; making space for great ideas that have no natural home in the current structure; and learning from failure. Business model issues aside, leadership development programmes must start to devote more than a one-hour slot to these crucial innovation performance drivers.
- Fuel: Beyond ideas and processes, innovation needs fuel. It comes in many forms not least dedicated time, employee motivation, cross functional collaboration, engineered serendipity (80% of ideas happen outside meetings) and leadership sponsors. Oh, and budgets. They’re all essential in oiling the wheels of innovation from the initial creative spark through to pushing past the final bits of red tape that are still trying to kill the idea before it launches.
Expedient vs Heavy Innovation
Sometimes ‘fixing innovation’ can seem too complex and difficult to contemplate. The good news is that any leader or manager who chooses to become more intentional about innovation can pursue a long-term strategy of incremental improvements in these four areas that ultimately deliver compelling competitive advantage.
If that’s you, Amazon CEO Jeff Bezos has a mantra that’s worth pinning up in your office. Quoting economist Benjamin Graham in a recent interview with Harvard Business Review, Bezos said, “In the short term, the stock market is a voting machine. In the long term, it’s a weighing machine. And we try to build a company that wants to be weighed and not voted upon.”
How heavy is the innovation strategy in your organisation?
This article is also published on the DPA blog: http://bit.ly/16ZFhQP