Tuesday, January 10, 2017

Becoming an innovative company: better late

So, after over a decade of innovation consulting, I can say without doubt that companies that are just starting to innovate have it much better than those that were attempting it years ago.  That's because as more companies try more innovation, more tools are vetted, more methods explored and exposed.  Today, there are more proven methods and more people with more innovation skill and experience, so if you are starting now you can get started on the right foot.  In this case it may be better to be late.

But if you are just starting out, here are some recommendations I'd make that may be a bit counter-intuitive based on experiences in the past.

Determine what innovation should do for you

In the past, all innovation was focused on product innovation, to create new and better products.  While product innovation is a good place to get experience, you'll want to move quickly to other forms and types of innovation, because product innovation is so well understood, and becoming very competitive.  The real impact (and real return) is in business model, experience and service innovation.  If you lack experience in innovation, then every innovation type is difficult.  Why start with product innovation when so many others are already ahead of you, and when that's where competition is the most fierce?

There's less experience and less understanding of business model, channel, customer experience and other forms of innovation, and potentially a lot more opportunity.  If you are going to innovate for the first time, go where the opportunities are more plentiful.

Determine who will do innovation for you

The old saw that everyone can innovate is true, but unless you train your teams and give them the freedom and recognition they need to take new risks, you can only really count on a small subset of your existing team to do innovation well.  That leaves you with a couple of options:
  • Outsource innovation to an experienced innovation company.  Good if you plan to innovate once
  • Hire experienced innovators.  Good if you want to build an innovation competency
  • Learn how to leverage open innovation to use the ideas of others.
These recommendations aren't mutually exclusive.  You can, for example, leverage a good external innovation company in one product group or setting, while hiring and building innovation competencies in another group.  Both can leverage open innovation.

If you are determined to build innovation competencies and capabilities from within, be sure to find the best people within your organization, give them the training they need and free them up from day to day work.  By best people I don't mean those that do the everyday stuff well - I mean the best innovators, who may be people that aren't at the top of the list when it comes to day to day production.

Determine and provide clarity about your targets

If you want incremental innovation - small changes to existing products and services - then say so.  If you want radical disruptive change, build to it, don't attempt it at the start, until your teams have some innovation experience. If you want disruptive or radical ideas and innovation, detail where they should have impact.  While you may want to disrupt the market or segment you are in, the people who rely on revenues and profits from your existing markets will resist ideas that disrupt their bread and butter.  Disrupt someone else, increment within your existing markets and segments.

But above all, provide clarity on what types of innovation you want, what problems or opportunities your innovators should address and where the innovations should have impact.

Worry less about tools and more about culture

Too many new innovators worry about finding and learning one tool or methodology that becomes their mantra.  Whether it's lean innovation or design thinking or open innovation or whatever, the tool becomes the focus, when in reality there are a range of tools for a range of outcomes, and many paths to get to your destination.  In the midst of learning methods and tools, companies forget about the most important factor or force - the organizational culture.

For 30 years we've focused on improving efficiency and effectiveness, and spent virtually no time on risk, uncertainty, variability and exploration.  So, when the new tools ask for more risk, more exploration, the natural reaction based on years of cultural training is to resist.  If you don't focus on your culture and what it values and rewards, you will become experts in innovation tools that you can only use in very limited context.


If you are late to the innovation game, in some regards you may be better off, because we know where the pitfalls and traps are, and there are more people with more experience to help you on your way.  Learn from these experiences, but especially learn that innovation and its activities are leadership and cultural challenges, not something that always translates easily into discrete tactical activities.
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posted by Jeffrey Phillips at 6:53 AM


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