Wednesday, February 23, 2022

Bringing innovation in from the cold

 I've been thinking a lot about innovation and it's "place" in a corporate structure.  Innovation is often so different, so unique and so unfamiliar that many companies aren't quite sure where to place it.  Does it belong with product teams, since some innovation is logically focused on new products?  Does it belong in a strategy organization, since innovation is often focused on growth?  Does it belong in R&D, since R&D creates a lot of new technologies?  Or does it belong in its own organization?  Where does innovation actually belong?

Innovation is like a wise but cranky old uncle that many companies keep up in the attic, out of sight, until the need is so great that they bring that uncle front and center of some of their biggest problems.  Or, innovation is a practice or capability that exists on the periphery or the edge of the business, in many groups and forms, without a coherent overall strategy or plan.  Even companies that have robust innovation capabilities or organizations are careful to keep innovation in carefully defined lanes.

It's time to bring innovation in from the cold, to the center of the organization, and embed it in the fabric, culture and practice of your business.  Honestly, most companies have some flavor or aspect of innovation floating somewhere in the electron orbit of the company, circling the nucleus, sometimes swooping closer and sometimes well out in an elliptical orbit.  What is really needed is to bring innovation into the nucleus, embedding it in the very core of the business.  What Prahalad and Hamel would have described as a "core competency", or what Drucker would have noted as one of the two functions of a business:  marketing and innovation.

Why is this so urgent now?

Why should innovation, a difficult horse to ride, become one of the most important ponies in the stable, one of the most frequently ridden?  There are more reasons than I can possibly list here, and none of them will be new.  None of them alone makes the case for moving innovation to the core, but the preponderance of all of them make the case for innovation quite compelling.  To whit:

  • The increasing speed of change in every business
  • The rapid increase in investment in science and technology and subsequent rapid adoption
  • The rise of truly global operations and competition
  • The reach of the internet
  • Customers who are constantly learning, absorbing new products and services and unsatisfied with what they have

When conditions were stable and change was slow, and barriers to entry were higher, innovation was an occasional need to solve a momentary problem.  Soon, and very soon, innovation will become a necessity, a core competency, and not just creating new products.  The real ability will be to innovate new products, and services, and business models.

What does it mean to bring innovation into the core?

A good friend - Paul Hobcraft - and I were talking about this topic recently.  He asked what I meant by saying innovation needed to be a core competency, and what that would look like.  Except I'm sure he said it more eloquently.  My answer was:  consider any executive or senior manager in a business confronted with a business challenge.  Today, they will reach for trusted methods, tools and people that are based on how the business operates, and those tools will focus on efficiency and current operations.  What's needed, and what will signal that innovation has become more important, is when any of these people, confronted by a business challenge, is comfortable considering innovation methods and activities as equally valid and potentially useful, and knows how to implement either an efficiency action or an innovation action with equal skill.

Currently, a lot of companies have a lot of programs that provide some aspect of innovation.  This could be a brainstorming group, an incubator, a market research team that conducts ethnography, an open innovation scouting team, or other innovation activities or components.  All of these companies can claim to be doing innovation, yet none of these activities is core to the business, or a core capability.  All of them are occasional activities and on the periphery of the business.  There, like the cranky uncle in the attic, if we really need them in an emergency, but not part of day to day operations.

Why is innovation on the periphery?

Innovation is out in the cold, out in the hinterlands, beyond the pale, so to speak, because most executives don't learn innovation in school, didn't require innovation to advance in their progression to the top, and view innovation as dark magic that overpromises and under-delivers.  And, since innovation is often conducted by poorly trained people who have limited time and budgets, their sense of what peripheral innovation can deliver is usually accurate.  

There's little that is more frustrating to the corporate practitioner who sees the value that innovation could bring than working against a management team, a philosophy and a culture that distrusts innovation.  In many firms, there is simply too much aggregate resistance to new ideas, divergent thinking, taking risks, experimenting and exploring.  And what so many corporations fail to understand is that these are exactly the attributes of companies that will survive in the new competitive, global, fast moving economy.

OK, so what?

Now, you could ask:  is it innovation that makes me fast, agile, adaptable and creative, or do I become more innovative if my culture and operations adjust to become more fast, agile and insightful?  This is an interesting chicken and egg question but it misses the point.  Companies now, and in the near future, must be faster, more agile, better able to use data and insight, more creative and more innovative to simply survive. These attributes aren't "nice to haves"; they are table stakes. 

The sooner you recognize that having fourteen little innovation teams on the periphery of your business doesn't mean that your company is innovative, the better off you'll be. It's more important to work to create a core capability and competency focused on innovation from the center out, if at all possible.  Few changes of this magnitude happen from the periphery in.  To do this, you need an executive team that not only acknowledges the importance of innovation, but invests in it,  You need a senior team that reinforces an innovation option at every decision point, a leadership and management team comfortable with the tools and processes of innovation.  Very few companies have the management team I just described, so getting started on changing the thinking and skills of senior leaders, and changing the culture and philosophy of your company is vital.  Do it now.  Bring innovation in from the cold.

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posted by Jeffrey Phillips at 1:48 PM


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