The Cultural Side Of Building An Innovation System
Too often we have all seen sound growing businesses, (at least that's how they appeared on the surface) suddenly seize up, go into crisis and die unexpectedly - - ending as a victim of some forced merger or acquisition by a national chain. Why does this happen so often?
Although we have our suspicions, none of us really know, but what we do know is that businesses that have good survival rates are ones that innovate. Today more than ever, Innovation is an imperative- - it is the key ingredient in building superior value for all stakeholders. If we are not innovating, we are more or less daring other businesses in our industry to come and take away our loyal customers.
Because the purpose of business is to create a customer, the business enterprise has two, and only two, basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.
-- Peter Drucker
Marketing and innovation, it turns out, are closely interrelated. Understanding the market means having an intimate knowledge of the people who collectively struggle to get their work (and pleasures) done in simpler and easier ways. Innovation is not as much about giving them “what they want” as it is giving them what they don’t know they want. Innovation is about finding the simple button: a way of simplifying what they are trying to “do”, a way of making the “doing” easy. Worthwhile innovation relieves frustration in very real ways.
The good news is that innovation can be learned. For innovation is nothing other than simple, commonsense processes that need to be put into place and made into a discipline. The even better news is that innovation can be systematized, made part of the core fabric of our corporate DNA. Innovation and creativity are about the mechanics of collaboration, processes that we study and improve upon continuously. So how do we systematize?
There are mechanics, which we teach, known as “Innovation Management Systems” see Innovation Training & Standardization. Then there is the people side of innovation where the soft skills required come to the forefront. In a systematic way we can go about building a culture of innovation. There are seven simple steps within arm's reach.
- Step 1: Know Our Identity
- Step 2: Build an "Innovation Zone"
- Step 3: Find Our Champion & Our Best People
- Step 4: Generate Game Changing Ideas
- Step 5: Turn Those Ideas into Extraordinary Value
- Step 6: Drive Our Dreams with Strategy
- Step 7: Mobilize Then Swarm
The first is "know our identity". That's right, we need to know who and what we are, and even more importantly “why” we do what it is we do. Distraction and the lack of focus is the most common cause of mediocrity and ultimately failure. Too often we take our identity for granted. To have any horsepower behind our purpose, it is vitally important to be crystal clear about the exact distinctiveness of our business life.
Step 1: Know or create our unique identity
Through our special knowledge and skills, we enhance the human condition, and somehow add greater meaning and individuality to our client’s lives. We do this 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. 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.
So 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. Both customers and employees feel the need to belong; they seek to "hang" with a group of people that have the same "whys" as they do - - we identify with their values in deep-seated emotional loyalty and trust. The inspiration of "why" gives people a way to tell the outside world who they are and what they believe in.
It is our attitudes that drive dreams into realities. Innovation is mobilizing collaboration and collective thinking needed to create a new tomorrow. It is this conviction, energy and focus at the top that ensures innovative effort flows throughout the organization.
Step 2: Build an "Innovation Zone"
The "Zone" is a place where people can move ideas from concept to reality. "Innovation" (and creativity) is nothing other than simple, commonsense processes that a business puts in place and makes into a continuous orderly discipline, an easily understood system. The Innovation Zone is a "reward" place. People find meaning there. They find individual and collective significance. They discover a new sense of identity. Innovation is not so much about the superhuman hero-inventor as it is about the collective wisdom and processes of free-wheeling teams. When a business culture elevates to create a greater sense of appreciation, respect and empowerment, amazing things happen.
The 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 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; the Innovation System is critical for survival in our fast-changing tomorrow.
Our Current Performance Engines, whether they sport new products or old, will have the same problem: commoditization and squeezed margins. Commoditization refers to products being sold for what they cost rather than for what their value to their end-user is. It appears new product offerings are doubling every two years! Reverse engineered and copycat products are often better than the original innovation. This means product focused companies are caught in a commodity trap. It's no longer the product but the way the consumer experiences the product that drives the market.
Deep insight to the unexpressed gut level desires of the user is where true innovation begins. We call it Innovation GoLD (G=gut, L=level, D=desires) which is about their emotions of frustration and discovery, their hopes and fears, their perceptions of simplicity and complexity, as well as their confidence or avoidance feelings about our offerings. Useful innovation is a result of developing deep insights which can be generated by ordinary and average people. Innovative companies are able to systematically gather this intelligence. To do so a firm must create a happy, fun protected space, a "zone" where ideas can bubble up, percolate around, get recorded and classified, then receive a fair and appreciative hearing. Innovation is about altering the conditions in a user's life and creating possibilities that they never dreamed of before.
Step 3: Find Champions Amidst Our Best People
Often resisters feel there is not enough time in the corporate day to commit to the development of innovation. Individual decision-makers and other senior people often find it very difficult to risk supporting an innovation project that might eventually fail. As a consequence, they lower commitment, engagement, and trust. They make it hard to get help and acquire resources; this can totally inhibit progress.
Innovation Champions are the ones with the determination to overcome the status quo and the inertia of the past. Champions who can lead and implement change, both upfront and more importantly, behind the scenes, breathe life and energy into the most tired parts of any business. The practical reality is that these champions usually are individuals who emerge informally to actively promote the deep interests of the common dream on specific innovation projects. What they do is win over “one person at a time” - - with the hope that each new supporter in turn becomes a low-key evangelist. Enthusiasm and passion will eventually overcome the gaps between the resistors and the innovators. Engaged enthusiasts have enormous force... and they have a tendency to create infectious enthusiasm for whatever they touch.
People are at the heart of any creative enterprise. If we are going to be truly innovative, we have to believe that our people at every level of the company have the ability to identify and then fix complex problems. Extraordinary things can be achieved when we harness a group of people with differing skills, disciplines, cultures and perspectives. We need to mobilize (and monetize) the imagination of our staff, customers, suppliers and business partners every day, everywhere. That takes an "innovation champion" to inspire people both outside and inside our organization. And of course, the CEO must be the greatest champion of all. Building an innovative company is not something that can be delegated.
Step 4: Generate Critical Relevant Ideas
Without a solid understanding of the true needs in the marketplace, innovation is a gamble. The scattershot approach is a hesitant one that allows no focus, no concentration of resources and people, no "damn the torpedoes, full speed ahead!" It seems to be the pursuit of serendipity. No wonder for all the techniques, skill-sets and brilliance, so many innovation projects only have only a 10-20% chance of succeeding.
We can boost our innovation success rate to four out of five, or over time even higher. The disciplines described in Market Targeting & Decision Making as well as User Analysis are the core elements to a breakthrough innovation discipline that is being applied with an above 80% innovation success rate. Success improves and the risk of failure is reduced as you become more certain about the critical unmet needs in your marketplace. The value of these disciplines is only realized as they are embedded into the day-to-day practices and mind-set of an organization. The result is an innovative capability that is hard for anyone to match.
Confidence comes from having customer-defined metrics that serve as the baseline for investigation of any marketplace; that market can be more easily understood in terms of jobs-to-be-done (people buy drills to create holes – the job to be done). The job, not the product or service solution, is the most elementary unit for analysis and the basis for further exploration. Opportunities are based on breakthrough understanding of what customers are trying to do. This means innovators can accurately identify very important customer needs that are going unmet. In other words, we go from flailing around in the dark to intimately understanding where we can help right now and possibly in a very big way. The innovative "breakthrough" comes because resources can be focused on a desperately crying need or set of needs. This way we focus on meeting a big need and avoid focusing on small needs.
The “Job Map“ breaks down complexity and cloudiness into identifiable opportunities. Those opportunities can be prioritized with hard numbers instead of wishy-washy guessing and hoping. Put another way, we deconstruct into its elements what the buyer is attempting to do; then we break down those elements into a series of very simple but precise questions; and finally, we put the responses to those questions into numbers (metrics) that will make it obvious what to prioritize as innovation projects. Establishing these well-practiced company disciplines ensures the needs of the customer becomes central to the innovator's thinking, while personal opinion, intuition and past experience becomes secondary and subservient.
Most importantly, the mystery and most of the uncertainty disappears from the innovative process. The rigorous controlled approach based on customer-defined metrics enables us to generate valid breakthrough ideas at the right time and place. Formulating growth strategy becomes simple and effective; value creation becomes straightforward.
Innovation Teams are used to generate a new class of operation. Sustainable innovation that can drive the business forward needs to be set up as a system (in which skill, expertise and knowledge are deeply embedded into the enterprise). Without such a system the output will be sporadic at best. Learning will turn out to be negligible, execution will be mediocre and results anemic. It's not so much new ideas as it is new practices and methods that will revitalize our organization. That means we harvest exciting new business models, processes, formulas, marketing approaches, and a dozen other key business components. It all starts with applying innovation to our understanding of the needs customers desperately want help with.
Innovation can be boiled down to the collective power of collaboration. Long-term, stable innovation teams must be part of any innovation system. These special innovation teams exist to understand and create new customer insights. Realizing full creative potential comes when widely diverse team members exchange perspectives in a safe, free-flowing, timeless state… as they combine and recombine what has previously worked for them in their very different worlds of the past. Simply put, innovation is all about recombination. In many cases, team collaboration results from “living together, eating together, and discussing their project constantly”, in a playful but almost obsessive way.
Good teams have the best people in them representing cross sections of the company; they are stable over time with a sense of permanent dedication, and because of it, they are not rushed for time. Their mandate and charter comes not only from “upstairs” but is also self-generated by the team. The members listen to each other on a very deep level and build on each other’s ideas. They know the power of asking good questions and they utilize good collaborative tools and techniques. Most of all they truly function as a selfless team and not as a bunch of self-seeking individuals.
Step 5: Translate Screaming Needs Into Amazing Value
The healthiest organizations run best when the CEOs romance their people. That deep caring is critical when balancing and harmonizing the many dynamics in our organization. Orchestrating that special music throughout the company is what innovation is really all about. When the corporate citizenry feel valued and important, they become more disciplined, more intense and more creative.
The CEO is the only one in a position with the power and knowledge to balance the competing demands for scarce resources (of the current performance engine) with the need to create new performance engines. It falls to the CEO to anticipate the specific organizational dynamics that will confront any real effort to innovate. Unfortunately, the moment a commitment is made to innovate the future, "ongoing operations" (the current performance engine) naturally goes into a resource competition with those responsible for developing that future. That political battle is the nature of the beast. Ironically, innovation runs into even stiffer resistance after it begins to demonstrate a show of success and promise: "innovation and ongoing operations are always and inevitably in conflict".
Keeping both ongoing operations and the creative team closely engaged in a rigorous learning process brings the potential for unprecedented growth in the company. This means assembling dedicated teams and dividing the labor force carefully and sensibly according to aptitude and predisposition - - managing the “partnership” between current and future sources of revenue. Above all it means getting everyone “seeking the truth” instead of running on emotions, attitudes, biases and predispositions. The “truth” will help establish a “collective will" to bring about the mission and vision of a “reinvented” company.
Many companies have neither the resources nor the risk tolerance to do early stage innovation. Yet they can still meet the “screaming needs” of their marketplace through imitation and copycatting. The principles of imitation are not only consistent with innovation, their practice enables even more innovation. Further, copycatting means being able to move at an even faster pace than doing pure innovation.
Copycatting can vary from simple replication and extension of existing models to the intricacies of importing ideas and recombining them. Whether working with a simple form or a whole system, the goal of imitation means achieving differentiation. That differentiation reflects what is best about our company and our ability to deliver something quite special.
The main thing to know about the art of imitation is that it must speak to the pain and deep needs of our customers and marketplace. We uncover such frustration in our jobs-to-be-done discovery analysis. Further, we must choose according to our strategic plan and vision. Reverse engineering an exact replica usually leads to failure because we are trying to duplicate another firm’s skill set and capabilities. Our imitation must be developed based on our own know-how and best practices. We need to stay within what we are very good at instead of twisting ourselves into a pretzel to be something we are not. Imitation is a complex, intelligent and creative pursuit. Copycatting gets us to markets fast and while those markets are still hot.
Step 6: Drive Our Dreams With Strategy
Strategic innovation is about us living the dream personally, identifying our common purpose, and leading everyone together into the unknown future. The future is about a better life for those we serve. That's why we innovate. The present is about delivering our best. The future is about delivering much better than that. That's why we have to build future Performance Engines while the current Performance Engine is still vibrant. That's why we have to stay the course while reinventing ourselves.
The strategist and the 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. It is not acquiescence or unanimity. It's not giving up what we believe in. It's about coming to better beliefs, about understanding the corporate purpose in deeper and more intimate ways.
The strategist leads the dream. The strategist is the peacemaker and the balancer. The strategist is the evangelist. The strategist is the one who builds hope and offers a brighter future. The strategist is the one who builds harmony and embeds respect. The strategist is the one who gives a sense of identity and purpose. The strategist is the one who makes the dream come alive for everyone.
Step 7: Mobilize Speedily & Then Swarm
The Mobilize & Swarm model is a cycling loop of
- Alignment
- Action
- Adjustment
- Anticipation
Business revolution is everywhere. Speed matters as it never has. Mobilizing and swarming is all about redeployment in a timely manner as new information is anticipated.
Anticipation has three distinct qualities:
- sensory ability to detect important trends early
- mental agility sufficient to spot opportunities and threats embedded in these emerging trends
- the mobility and resources with which to seize the opportunities and evade the threats in good time
Emerging trends can be thought of as "weak signals". Successful innovators demonstrate the mental agility to respond appropriately to these weak signals and ready their followers to be fluid enough to respond quickly to new and changing circumstances.
Decisive marketplace evidence must be acted on right away. Evidence does not have to be clear and unequivocal but it has to be credible. The evidence found in weak and ambiguous signals is important because they are signs of earliness. Evidence of impending change (which should be acted on right away by the corporate “collective”) most often comes in the form of these weak signals.
An interesting part of mobilization is how leaders can help followers attain a high degree of self-organization and adaptability, enabling pools of highly talented people "to swarm" around threats and opportunities in flexible and creative adaptation. Leaders can empower followers by setting up innovation guidelines in which simple rules or principles - - not commands - - are the modus operandi for distributed decision-making.
The whole world is shifting from traditional command-and-control mode to “knowledge worker” power, at least in companies that want to grow their market share. In other words, to innovate effectively, we need to fully utilize the skills and wisdom of our people at every level of our company. Leadership needs to be generated everywhere in the company:
The task of the leader is to get his people from where they are to where they have not been…. Leadership is it not really about individuals at all, but about the relationship between leaders and the led.... in the end, it is not what the leader does that matters, but what the led do, how quickly they do it and how easy it is for them to get hold of the resources they need to do it right.
Innovation isn’t so hard; it’s just a completely different way of cooperating - - to bring out everyone’s best stuff in a highly organized way. Command and control kills innovation; innovation is about leaders giving away power to the collective.
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