Tuesday, December 04, 2012

Want more innovation? Establish investments and priorities

After a long day of innovation workshops, I ask the fateful question - does anyone have any questions about what we've done today?  Inevitably one hand goes up.  The question:  can you tell our executives that we need more time to do innovation?

The strange concept to me is that many executives want more innovation, but they don't understand the investments, or perhaps recoil from the costs.  Many mid and senior level managers want to do more innovation, for growth in their own careers, more differentiation of products and services, and simply to expand their horizons.  But they don't have any indications that if they do more innovation that the innovations will be favorably received.  So two groups, that talk frequently to each other, have deep desires for more innovation, and both are waiting for the others to make the first move.

When everyone wants something and yet no one feels free to act, it makes sense to unpack the barriers and explore them.

First Barrier - Immediate results

While executives want innovation, to help differentiate the company or grow new revenues and profits, they also don't want to risk distraction from existing revenues and quarterly promises.  Potential revenue or differentiation is just never as interesting as near term results.  To counteract this issue, we need to establish priorities and rebalance investments and commitments, or reduce the stated demand for innovation.  Innovation takes time, requires commitment from strong people and will require investments.  It may, or may not, deliver results.  If you want innovation, don't expect it for free.  Even God himself only offered manna from heaven once. 

Second Barrier - Clear goals

Yes, we know executives want more innovation, but how much?  And of what type?  In in what markets or segments?  Requests for innovation are appeals to God and motherhood, moving but often unconvincing.  What we need are clear, measurable goals with rewards attached to them.  3M's stated goal of driving 30% of revenues from products released in the last 3 years is a good example.  It's clearly stated, measurable and stakes out an important need for a continual stream of new products.  Yes, it can be jockeyed, by claiming that an existing product is a "new product" because it has new features.  But which argument would you rather have?  The debate about how "new" a substantial portion of your portfolio is, or why you are losing market share?

Third barrier - Time and Resource

After years of lean, Six Sigma, right sizing, downsizing and outsourcing, most people are working more than ever, and don't have much slack time to take on innovation projects, especially when those projects may require new tools or new ways of thinking.  If we can't turn a project quickly with minimal risk and minimal investment, we probably won't do it at all.  Yet many managers feel the need to do more innovation, and want to do innovation to extend their skill sets and their product offerings.  Perhaps no complaint is more poignant than managers and staff who want to do more innovation, but feel hemmed in by compensation programs, quarterly goals and limited resources.

Fourth barrier - internal focus

Even if all of these barriers are true, any firm that wants to innovate still has options.  While we'd argue that much innovation can and should take place with internal teams and internal capabilities, you can outsource innovation - trusting third parties to spot needs, develop ideas into products and services and even help launch new products and services.  If your firm can't afford the internal resources and people necessary to innovate and sustain quarterly results, you can find incremental services for innovation from third parties, whether this is "open" innovation or something you choose to outsource.  I'd argue that you should outsource the management and extension of existing products and services and insource innovation of new products and services, because that's where the growth lies, but that's for another discussion.

Want more innovation?  Create clear goals, refocus priorities and remove barriers.  The alternative is to create frustrated teams who want to innovate, but don't have the power, the permission, the time or the resources to innovate.  Ultimately the really motivated people in those teams will find new jobs where they can exercise more innovation, leaving behind the people who are willing to simply sustain existing products and services.  Then it will be even more difficult to innovate when your executive team finally commits.
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posted by Jeffrey Phillips at 2:26 PM


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