Innovate Your Future
Our clients' future can be changed by our imagination applied to their needs, frustrations and especially their yearnings for a better way. Often, like art, they don't know what they want until they see it. If we want to bring a better idea to our customers, we must know why we are in business - - why we have extraordinary energy that pushes us the extra mile to create breakthrough value.
The best innovation is driven by why we pursue our dreams in a spirit of curiosity and tenacity. If the why is clear, everything else follows much more naturally. Through our very own special knowledge and skills, we can enhance the human condition, and somehow add greater meaning and identity to our client’s lives, in ways that only we (and no one else) can create. If we are clear about our distinctiveness, then we understand why our customers buy from us. Continuous innovation that improves the lives of our current and future clients means not only industry domination but, more importantly, it is sustainable over the long term.
A Bain & Company study showed successful innovation delivers real business results. Companies that perform well in innovation initiatives grow significantly faster than other growth companies. The innovators have an average annual growth rate of about 13% compared to non-innovating corporations that grow at an average of 5%. What that means is that over a five-year period there is a threefold difference, a compounded growth rate of 84% compared to 28%. So just because we are growing does not mean we should sit back on our laurels - - we are leaving way too much on the table. With roughly the same effort we can do so much better.
Innovation Constraints
For one reason or another, too many of us just don’t innovate. An Accenture survey showed less than half the field, 45%, don’t effectively seek innovation opportunities. Further, of those 45%, only one in three have a well-defined innovation strategy. That’s right, only about one in seven growth companies have a systematic innovation management program. Why?
There are three key challenges that stop us from setting up an innovation system:
- time, people and resource constraints
- budget constraints, or more properly, lack of supporting conviction and attitudes by senior managers (i.e. not truly believing in innovation returns)
- a lack of structured innovation processes and procedures
Constraints are best managed by understanding the need to balance building the future while at the same time milking current profits - - it seems nothing is so critical as maintaining cash flow. Established companies strive to achieve ever higher levels of productivity and efficiency of their current “Performance Engine”; in fact they evolve to deliver such. The focus becomes serving their customers better than their rival competition. The perspective is short term and the long-term priorities of innovation are obscured by the tyranny of the urgent.
Building New Performance Engines
Harvard’s Chris Trimble says "innovation and ongoing operations are always and inevitably in conflict". Rewards are for short-term achievement, where every process and activity is driven to be as repeatable and predictable as possible. This kind of Performance Engine is very powerful in driving efficiency and effectiveness, at least as long as the marketplace stays constant.
However, the power of repeatability and predictability (the goal of management) also establishes great limitations for new organic growth (the goal of leadership). Innovation becomes the last thing a manager is trained to do. Their view of their marketplace becomes narrower, not wider. Metrics drive everything except the most important metrics for innovation; and, what innovation must truly measure is too often excluded. In fact, organizational design relentlessly keeps resources and investment trained on the current Performance Engine at the cost of any emerging S-Curve (completely new ways of making money) possibilities.
Still, staying the course must live side-by-side with reinventing at least part of the company. Front and center must be the understanding that while the current Performance Engine is the mainstay of the company, the inevitable reality is that its existence is only temporary. The company's survival and prosperity is going to depend on the development of new performance engines and new S-Curves. Within the organizational culture it is critical that a mutual respect develops between those that drive the present and those that develop the future.
So resource and budget constraints need to be dealt with by allocating a set percentage of cash flow to be invested to develop future cash flow. A reasonable analogy is that we need to set up a future pension plan. However, over-investing in innovation can be as bad as not innovating at all. Bootstrapping and cost justification are important in product and service development. Loosey-goosey innovation doesn’t make it in the real world. (Neither does having no pension plan.)
So the third challenge to innovation, a lack of structured innovation processes, is much easier to overcome than prejudices against pursuing the discipline of innovation. The problem in learning to implement innovation in our companies is that most teachers and gurus go at it in a highly specialized, ad hoc manner, rather than in a comprehensive fashion that is completely systematized. According to that Accenture study “innovation must be part of a holistic and formal system to net positive returns over time”. Put another way, companies with such a comprehensive system in place see significant results.
A Comprehensive System
Like any system, if any key component is missing, it will inevitably fail. So what we do is help our clients to develop their own innovation system from their current existing systems. It’s not boilerplate but rather customized to reflect the company’s best stuff. We deliver the necessary standards, checklists and templates to create that comprehensive piece of machinery. We can also help a client make a shift to a more collaborative, cooperative culture.
Having an innovation management system to capture customers' deepest and most pressing needs is critical to innovation. Usually, all critical needs can be identified with clarity and certainty. The needs can be prioritized for importance and opportunity. Key unmet needs in the marketplace become the focal point for aligning know-how, resources, people and strategy. The company's current performance engine (way of making money) can be invigorated; new performance engines with brand-new solutions can be built to ensure a positive future.
A PricewaterhouseCoopers study examined what fosters innovation in terms of processes and organization-wide support. There are at least five critical ingredients that go into any successful innovation recipe. They are, in order of importance:
- The right culture to foster and support innovation
- Strong visionary business leadership
- Willingness to challenge norms and take risks
- Ability to capture ideas throughout the organization
- Capacity and capability for creativity
Having a tight innovation management system in place means regularly being “first to market” with the most innovations, products and services, says Accenture. Innovation allows a company to dominate its marketplace or niche.
Balancing Constant Innovation
The PricewaterhouseCoopers report says there is a high premium placed on the ability to regularly pioneer new ideas and approaches. In the study 61% of CEOs worldwide say that innovation is a priority or a primary focus within their businesses.
We can innovate our future. The risks are manageable when a systems approach is taken. The rewards are continuously surprising. All that is required is the courage and commitment to move from management to leadership.
Building an “Innovation Zone” requires careful structuring. It must not interfere with our company's source of profits, the “Performance Engine". This engine can be thought of as the every-day means by which our business makes most of its money and fuels all of its operations and plans (including our innovation management system that will produce “Future Performance Engines”). Most of the budget goes to improving the Current Performance Engine; funds for the innovation system are relatively tiny and rightly so. However these two vehicles must be in balance, with both receiving more than sufficient time, attention and resources; our Innovation Management System is critical for survival in our fast-changing tomorrow.
The company’s strategists and innovation leaders must not fight the people driving the current performance engine; instead they must forge a partnership with their polar opposite. Respect means understanding and appreciating the endeavors of “good people doing good work". It's called honor. Some would say they want to “embed innovation into the very fabric of their company”. However the necessary activities of the builders of future engines are of a counterintuitive nature; the ingenious mindset walks and talks differently than the everyday workers who are diligently putting their heart and soul into the welfare of the current performance engine. Happy coexistence is the goal, not conformity, not uniformity.
Recruiting and Keeping New Talent
One other key thing: how are we at bringing in new and young talent to invigorate our company? Here is what Deloitte wrote following a 2014 study:
Organizations must nurture emerging leaders. Over one in four Millennials are ‘asking for a chance’ to show their leadership skills. Additionally, 75 percent believe their organizations could do more to develop future leaders.
Millennials want to work for organizations that foster innovative thinking, develop their skills as leaders and wish to see them making a positive contribution to society, but many Millennials find business lacking in these areas. If you don’t make the culture change necessary to keep Millennials engaged, they will flee to start their own ventures or join the competition.
For Millennials, fostering innovative, ‘out-of-the-box’ solutions is more a matter of business processes than individual genius. Almost 60 percent of Millennials believe organizations can become good at innovation by following established processes and that innovation can be learned and is repeatable, rather than being spontaneous and random. To encourage the innovative ideas of its professionals, whether Millennials or their older colleagues, businesses will need to examine their culture and practices.
…. Roughly two-thirds of Millennials feel the outlook and attitudes of management are serious barriers to innovation, such as a reluctance to take risks; a reliance on existing products, services, and ways of doing business; and an unwillingness to collaborate with other businesses or universities. A similar percentage cite a variety of organizational barriers that impede new thinking, including poor channels of communication across the organization, lack of a formal process to encourage innovation, and a poor organizational structure.
Building an innovative organization: Who will generate the innovative solutions needed to address the challenges confronting societies around the world?
Our Critical Choice
So what is holding us back? What is our excuse? Why do we delay bringing a formal innovation system into our company?
The pursuit of the perfect plan, analysis paralysis, self-deception about the past being more important than the future, and every other delaying “put-off” sidetracks change and innovation. But in today's fast-moving world we can't allow that anymore. What used to take 12 to 18 months now needs to be done in 90 days; 90 day business cycles are starting to reduce down to 10 days. The new normal is that moving quickly is necessary.
Committing to innovation development projects and investing in acquiring the requisite capabilities leads to results, in terms of both personal achievement and the advancement of new projects; these results make it easier to accomplish things in the future as it generates feelings of self-worth and project importance.
Innovating our future won’t be easy; but it won’t be that hard either. It can be our difference maker, if we decide.
Go to: Innovation Training and Standardization Go to: Innovation Systems