Tuesday, January 19, 2021

Two documents that tell you all you need to know about innovation

 If you believe everything you hear, or read, within your corporation about innovation, you may end up a bit disappointed.  As we've seen over the last two decades, talking about innovation is easy, but implementing it and realizing the benefits are a bit more difficult.  Plus, with all the swirling definitions of innovation, what is one woman's innovation is another woman's incremental change.

To cut through the confusion about the importance of innovation and to understand how important innovation is the your company, there are two documents that you can examine that will tell you exactly how much the organization you work for values innovation and the priority it places on innovation. 

These two documents I am referring to aren't necessarily about innovation, but what they say (or don't say) about innovation will tell you all you need to know.

One important document that doesn't matter

You may think that the "strategy" document or plan is important, but it really isn't.  Today, every strategy talks about innovation - it's a requirement, like ants at a picnic.  A strategy document or plan that does not talk about innovation will be tossed back, but writing about innovation in a strategy plan does not mean that innovation will be implemented.

The two documents that do matter are easy to access and easy to read, so anyone in a company can see where the business places its emphasis.  I'll unmask the two documents below and what they tell you.


The first document is a budget.  In the political world, the saying is that the President proposes and Congress disposes.  That is, the president proposes actions and plans (similar to a strategy) and Congress decides and prioritizes and determines the funding.  

You can see how important innovation is by looking at your company's, divisions's, and team's budgets. Budgets are where company leaders decide to place important bets, and where they fund the important operations of the business.  If budgets don't all out specific funds for innovation, then it's very likely that no innovation will get done, and even if people manage to create new ideas, there won't be money to realize the idea or convert it to new products and services.

While a strategy that defines innovation is nice, a strategy is high level.  A budget defines what is going to be spent - where the company will place its resources. Budgets are much more definitive than strategy.  You can regularly hear concerns about going over or under budget, but rarely hear people get called out for going beyond strategy.

 While a strategy document is forward looking, and a budget is the realization of the forward looking plans, the second document(s) are somewhat backward looking.

Evaluations and Measurements

While these are two separate items, they are really tightly related, because both assess what happened and why it happened.  We evaluate people and processes based on earlier plans, and their accomplishment of the plans.  If your monthly, quarterly or yearly evaluation doesn't include explicit measurements and goals for innovation, then your company isn't really serious about innovation.

 Think about it - periodically you are evaluated, your team is evaluated, your division and its leadership is evaluated.  Are you evaluated on the amount, scope or nature of the innovation you do?

Here's where another old saying becomes meaningful:  what gets managed gets measured.  If you aren't measuring innovation activities and outcomes, then you aren't managing it, and it isn't important.

Not new news

This probably isn't news to most employees - they know that the budgets don't include money for innovation and further they know that working on innovation is more like sticking their neck out rather than something they'll be rewarded to do.

However, what these two documents say about executive teams and their focus speaks volumes.  If a company constantly talks to investors and outsiders about innovation, but internally does not budget for innovation and does not evaluate people or teams on innovation work, there is no longer any dissonance.  Employees recognize a cynical marketing messaging ploy, and are even less likely to try to innovate when innovation is important and necessary, and somewhat supported by executives.

If your company is serious about innovation, it will include innovation goals and outcomes in its strategies and plans, include funds for innovation in its budget cycles, and evaluate people and teams on their innovation work.  Anything else simply displays an unserious approach to innovation.

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posted by Jeffrey Phillips at 12:40 PM


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