Monday, July 16, 2012

Please, no innovation

I was thinking about innovation over the weekend when I asked myself "what's the one thing that no senior executive is likely to say about innovation?" Every executive is likely to talk about innovation, to describe what his or her firm is doing.  They are likely to talk about plans for innovation, as clients demand new products and services.  What I don't think you are likely to hear is executives telling their employees not to innovate, or executives talking to the press or shareholders about a lack of innovation.  Can you image a CEO who came out and said to his team "Please, no more innovation"?

Sometimes, to understand what's going on it takes an extreme or almost inverted perspective to shine a light into the darkness.  Certainly, few CEOs would last long if they downplayed the importance of innovation.  Innovation is seen as an important differentiator, and something every executive should support and embrace as a means to growth. Innovation is as American as apple pie and motherhood, and has become almost as overused and as saccharin.  So we aren't likely to hear denunciations of innovation, or executives verbally downplaying its importance.  Innovation, or at least the appearance of innovation, is exceptionally important.

But what we don't often hear about is the actual work of innovation, the investments made, the people trained, the mistakes made, the successes that create new segments.  Innovation, like dieting or getting into better physical shape, is something we all know we SHOULD do, but is also something that is easy to put off to another day.  If talking about physical fitness contributed to weight loss we'd all be exceptionally thin.  Unfortunately, staying in shape and physically fit requires more than talking - it requires a consistent commitment and focus on specific goals.  Likewise, innovation requires a constant commitment that is intended to deliver specific outcomes.  No one innovates for innovation's sake - they innovate to create a new product or service, to create new revenues and profits, to differentiate from another competitor, to stake out a completely different market sector.  Since we know that few if any CEOs will reject innovation, and innovation isn't widespread and fully competent in many organizations, what can we do to build and sustain innovation as a consistent competency?

Build a plan

Most innovation is undertaken as a reaction to some competitive threat or market shift.  This means most innovation is REACTIONARY rather than the result of an intentional plan. When we react we tend to invest just enough to get a product just good enough to compete in the market.  So many of our "innovations" are reactions to competitors with the goal of responding with a product that's just good enough to compete.  Rather, we should plan for innovation proactively.  This would force our internal teams to think about innovation more broadly, account for innovation in annual planning and most importantly funding exercises.  Further, a plan demonstrates vision and strategy.  One of the most common questions we hear when working with innovation teams is: how does innovation fit with our strategy?  That's not a question you should ask a consultant, but one your executives should be able to answer easily.

Establish goals
Without a goal any outcome can be declared a success.  Far too many firms are expected to innovate but without any clear goals or measurements. This is akin to a weight loss program with no clear outcomes or end state metrics. 

Many clients ask us about the "best" goals for innovation.  My response is that the 3M goal for innovation, which they define as 20% of revenues resulting from products less than 3 years old, is a good one.  Defining a revenue target for new, innovative products requires that a firm innovate and keep innovating.  In fact I'd like to see an initial target and then each year inch that target up a bit more.  Once 20% becomes a fairly "easy" target to hit, let's move it up to 25%.

Appoint a Sponsor
In many programs that help people lose weight or quit bad habits, the program insists on a "sponsor" who is an honest broker for the person trying to change habits.  The sponsor is meant to call the person to account - to ensure they are doing the things that will help them achieve their goals.  Likewise, innovation needs an honest broker or a sponsor. This could be a senior executive who constantly reviews innovation activities and compares to targets.  He or she can assess whether or not the firm is living up to its commitments, and encourage the firm to do more.  After all, we are talking about changing the habit of efficiency into the habit of innovation.

Find a coach; Get encouragement
Whether you are trying to lose weight or trying to quit a bad habit, you need resources to accomplish your mission.  Those resources may be friends and relatives who give you great advice, or a sponsor or a charitable organization to provide support or encouragement.  Changing attitudes and behaviors requires a constant reinforcement of goals and rewards for short term small successes.  Innovation needs a coach and plenty of encouragement.  If it were easy, every firm would be doing it proficiently.  Evidence suggests that few firms do innovation well, and most don't understand how to get started or how to maintain the momentum.

Stick with the program
In any change program you will encounter obstacles.  Some of these may be your own cravings.  For me, nothing beats mint chocolate chip ice cream as a dessert. But if I want to lose weight or at the least maintain the weight I have I have to stick with my exercise program and my diet.  Deviating from the program can and will have adverse affects.  Innovation faces the same dilemma.  You can't jump into and out of an innovation program.  There are simply too many factors reinforcing the status quo that will make it very difficult to swap into and out of an innovation program.  The risk factors, inertia and resistance to change will become barriers to innovation.  If you plan to become innovative, plan to stick to the program, come rain or shine.

Examine the Commitments
Few CEOs or senior executives are likely to describe innovation as unimportant or unnecessary.  But the real assessment of their focus and commitment should be an investigation into the points I've made here.  Are the commitments in line with the communication?  Does your organization understand the breadth and depth of the change necessary to incorporate innovation as a consistent discipline?

It is more dangerous to start innovation without resources and without a clear purpose than not to start at all.   Given the inertia and resistance, your team will get few chances to get innovation right before the organization becomes cynical and disillusioned about innovation.  Most corporate cultures are very good at sniffing out what initiatives will have deep executive commitment, funding and support, and which are talking points that won't be supported.  If you say you want innovation, be sure to provide the commitments necessary to sustain it.
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posted by Jeffrey Phillips at 5:33 AM


Blogger Hotelier said...

Is it time to ban the word "innovation"?
The word "innovation" is a fluffy, substance-free cliché that's abused by many companies to mask a lack of real growth, some experts say. Company securities filings mentioned "innovation" 33,528 times last year, up almost two-thirds from five years before, without evidence of a corresponding increase in creativity. "It is a chameleon-like word to hide the lack of substance.        
Innovation means inventing a product that has never existed.

7:28 AM  
Blogger Hotelier said...

Is it time to ban the word "innovation"?
The word "innovation" is a fluffy, substance-free cliché that's abused by many companies to mask a lack of real growth, some experts say. Company securities filings mentioned "innovation" 33,528 times last year, up almost two-thirds from five years before, without evidence of a corresponding increase in creativity. "It is a chameleon-like word to hide the lack of substance. Innvoation means inventing a product that has never existed.

7:30 AM  

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