Thursday, November 11, 2021

Building a lasting innovation capability

 I've been asked a number of times, by companies large and small, how to create an innovation capacity that lasts.  This is a really interesting and important question, with a distinction.  Note that what my clients are asking for is to create an innovation capacity that outlasts a product need, or market gap, or executive team member.  After all, most (probably 90%) of all innovation projects undertaken in large corporations are reactive projects trying to respond to a market threat or competitive move.  In these cases, innovation is a one and done activity, in order to respond to a new product or service, and aren't meant to be retained in the culture or processes or consciousness of the organization.

So, how do you build a lasting innovation competency in any business, of any size?

First, make innovation important to the CEO and the executive team.

If innovation isn't important to them, or seems like a distraction from day to day operations, then you can't do the real infrastructure development you are going to need to do.

  • How do you make innovation important to an executive team?  Most of them already say that innovation is important.  You need to demonstrate that innovation is not "a" strategy, but is a way to accomplish strategies - growth, differentiation, new line extensions and so on.  In fact, every strategy, every business and every product should have an innovation component.
  • Demonstrate that innovation can be purposeful, and managed through a process.  This reduces the risk of innovation and increases visibility
  • Introduce the idea of innovation portfolios and the need to innovate across the three horizons.  A company needs to make reasonable bets across the incremental, transformative and disruptive horizons in proportions that make sense based on competition and speed of change.
  • Demonstrate that innovation depends on finding the most innovative people, who by definition are rarely the more efficient people.  Efficient people run day to day operations really well and defend those products and practices.  Innovative people wonder why we aren't doing better or something new, or why we are sticking with these products long after they've been superseded in the marketplace.
  • Tie their compensation to innovation goals.  For example, you could tie their bonuses to the number of products less than 2 years old generating revenue.

Next, focus on the corporate culture. 

In reality, you should work on culture first, since the culture will be around long after the executives that start the innovation effort will move on or retire.  The average time an executive is in a role in a corporation is about 3-4 years, and significant cultural change will take much longer.  But no one will want to start all of this work focused on the culture without other changes in place that can move more quickly.

Culture is as powerful, and lasts longer, than any executive tenure, market depression or other factor.  If you have an innovative culture, deeply embedded, it will respond to any adversity.

  • How do you create a corporate culture that embraces innovation?  It actually isn't hard, just takes a lot of time and discipline.  Most cultures are like Newton's first law.  They are at rest and want to stay at rest.  Change is always difficult, and changing factors like informal decision making, beliefs and attitudes, risk taking and other factors is more difficult because it requires buy in at all levels and constant reinforcement.
  • Create a burning platform - let the company know that the existing culture - while it got you to where you are - isn't what will take you to the next level and opportunity.  Create a reason to change the culture and get people to buy in to the need for change.  Let them see "what's in it for me"
  • Show them a future vision of what the company and it's culture should be (these last two bullets are classic change management)
  • Change how people are compensated, measured and rewarded.  Today, very few companies measure or reward people based on innovation activities or outcomes.  If it is important, it will be expected, measured and rewarded.  This can go as far as incorporating innovation measurements in an annual review, requiring evidence of innovation work to get promoted into new roles.
  • Talk about innovation, communicate constantly at all levels, and follow up the communication and talk with action.  Too often, companies participate in what is known as innovation theater, where executives talk about innovation but little actually gets done.  Executives need to talk about innovation, but also engage in innovation, check in with direct reports, better yet, go do some innovation work.
  • Make it easier to take risks, to experiment, to test ideas and hypotheses.  Reduce barriers and encourage more risk taking, more experimenting with new ideas, more prototyping. 
  • Extend innovation work broadly throughout the organization - don't pigeonhole it in R&D.

Next, find the best people to do innovation work and give them the skills necessary to lead and conduct innovation projects.  

There are plenty of ways to find people who are really good at day to day operations, and those folks are vital.  There are also ways to find people who are good and passionate about innovation, and many times the Venn Diagram of these two segments leaves little in the middle.  Put the right people in the right jobs, and give them the training and development they need to do good innovation work.

  • How do we find people who are good at innovative work?  There are a number of assessments (FourSight, KAI, some Myers-Briggs, my own Innotraits assessment) to help discover who is more likely to be a good innovator.  Rather than choose people that are trustworthy or have delivered in the day to day model, take time to find the most passionate, most capable and most motivated people who can lead change.
  • Develop real training to build skills.  By now, everyone in your organization knows how to do lean, agile and six sigma.  They have been trained in all kinds of tools and processes, but have little to no training in creativity, trend spotting, synthesizing various data points to create a new vision of the future, understanding customer needs or the customer journey, good idea generation, prototyping and so on.  Innovation is challenging and complex, moving from a very nebulous world of trends and needs and emerging capabilities to a very definitive set of features and requirements.  This process requires skills that are not being developed in the educational system or in corporate training.  
  • Develop a process or at least define a consistent set of tools.  I am a firm believer in defining a fungible innovation process - a set of steps to help ensure that innovators complete a set of activities and learnings before they recommend an idea.  We do best what we do regularly, so innovators need consistent methods and tools just like anyone in any other business process.

 The difference between one off projects and building an innovation process

So, you'll now see that the difference between an innovation project and building a process is a difference of degrees.  You'll need to do much of what is listed above to conduct a reasonable innovation process, but if you don't plan to make it permanent much of this can be stood up and executed and then folded away in little time, with little impact to the organization.  Building an innovation competency requires more investment, more impact to the organization and something that sustains this capability, which requires more time and energy from executives, a consistent budget and incorporation into strategy.

The real challenge in what I've written is in culture.  You can find great people, have great leadership, have some interesting innovation processes or tools and do innovation occasionally if the culture will alllow it.  You can have all of those things and do little or no innovation if the culture has enough resistance.  You can fail on many of these aspects and still do innovation if the culture expects to do innovation and embraces the risk.

Why is so much innovation work so temporary?

It's difficult to build an innovation capacity that lasts, for a number of reasons.  Much of the "memory" in a company is based in its culture, and culture takes time to build, and time to retrain.  We all know this, either instinctively or because we've tried to change a culture.  If your culture is not tuned and ready to embrace innovation, you will at best succeed with a few disparate innovation projects, mostly manned by people who are comfortable overcoming the resistance.

Executives can help, but are also a bit helpless.  They know that innovation is important, and realize that innovation requires a supportive culture, but most executives are in their roles for such a short period of time that they can't create the amount of change necessary to sustain innovation.  They aren't to be faulted for focusing on shorter term innovation projects or other work.

The better answer is that building a true innovation capacity takes funding, commitment, engagement from a succession of executives, and a culture that embraces innovation. 


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posted by Jeffrey Phillips at 11:12 AM


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