By: Gunnar Storfeldt / Orren Shalit
Most managers agree that innovation is the Nordic region’s last stronghold for competing in a global economy. Moreover, they are interested and fascinated by the thought of working systematically with innovation in order to gain a breakthrough to create growth and profitability for their organisations. But why then, is there so much talk and so little action, argue Gunnar Storfeldt (CEO) and Orren Shalit (Founder), S I T Scandinavia.
As specialists in creative processes and innovation, we have worked with many of the largest Scandinavian companies over the last ten years, giving us many years of real experience in creating innovations and actually implementing them on the market. And, after talking to thousands of managers in Nordic businesses, the situation is clear to us:
They follow the modern mantra of ‘differentiate and create value’ and to achieve this, everyone wants to be more innovative
Most everyone strongly feels a need to continuously renew their commercial offering and working methods to keep competitive in the market. They follow the modern mantra of ‘differentiate and create value’ and to achieve this, everyone wants to be more innovative.
But very few translate this talk into action
Indeed they all like to talk the creativity and innovation talk. Most managers agree that innovation is the Nordic region’s last stronghold for competing in a global economy. Moreover, they are interested and fascinated by the thought of working systematically with innovation in order to gain a breakthrough to create growth and profitability for their organisations.
We all agree about all this… intellectually. But very few translate this talk into action.
Senior business managers spend much time on creating their business visions, objectives and strategies. These strategies get implemented through a process of taking these important goals for areas like R&D, HR, IT, QA, finance, and production and breaking them down into operative objectives that are delegated, measured and tracked.
But what about innovation?
Most often innovation stays as a fuzzy formulation contained in business or strategy planning. Often these same formulations are then communicated to the market.
But the gap between cheering and actually doing is just too broad
Sure, everyone wants to be seen as innovative and pioneering! Obviously, many understand the importance of being able to adapt, innovate and renew. But the gap between cheering and actually doing is just too broad!
That’s the issue – Why so much talk and so little action?
There are exceptions. Electrolux has set up an ‘Innovation Office’ to develop the company’s innovation capability in order to create new commercial opportunities. But again, this is an exception.
If you’re interested, you can do a quick survey yourself: Pick 10 Nordic companies who advertise themselves as innovative or creative. Do this the easy way and look at their market communication and their annual reports. Call up to their headquarters’ receptionist and ask to talk to their innovation manager.
Very few have a specific person in a role that actively addresses innovation issues
You can be sure that few will be able to find someone directly responsible for innovation. They might try sending you to someone at product development, business development or marketing. Very few have a specific person in a role that actively addresses innovation issues throughout the corporation.
Why then, is there such a gap between clear intellectual acceptance of how important innovation really is and actually proactively and systematically working for innovation?
Our experience is that this comes from the basic structures and business cultures in our society.
Just look at some of the major obstacles to innovation:
- Short-sighted business objectives – Blinding focus on quarterly results makes any greater innovation effort too risky. By definition, innovation is uncertain and anyone working on innovation risks missing their quarterly financial objectives – and being disqualified as a leader.
- Standard budgeting procedures – Setting annual budgets prevents companies from taking advantage of new ideas that come up during the fiscal year. Standard budgeting models restrain applying resources and financing for any opportunities that are not planned long in advance.
- Innovation is too vague – People still think of innovation and creativity as something almost mystical, where ‘lightning strikes’ or you have to ‘think outside the box’. Do you say ‘Getting an idea’ or ‘Creating an idea’? In the worst case, you’ve been part of a woolly, embarrassing creative exercise that didn’t lead to anything concrete. As long as you think about innovation and creativity as something fuzzy and uncontrollable, that you can’t direct or do systematically, then you will find it difficult to ‘do’ innovation.
- Lack of knowledge – People don’t know how to run innovation and leaders are educated to be ‘Masters of Business Administration (MBA)’ as opposed to ‘Masters of Business Innovation’. Regardless of how much they talk or write about it, most organisations lack a basic understanding of what innovation really means. This lack of knowledge makes misunderstanding more common. As in ‘Innovation can’t be measured or controlled’; ‘Great innovations can’t result from goal-oriented processes, since they are unpredictable events’; ‘Innovation depends on the right kind of culture instead of the right kind of processes, methods and tools’.
- Consensus – Managers in the Nordic countries are not allowed to make individual decisions about new investments or high-risk projects. Rather, they have to seek consensus and support among many others. This slows innovative efforts and creates resistance. For example, there is a significant difference between Germany and Sweden about the kind of decision a manager can take in relation to ideas that are not fully spread and supported.
If you are the proactive, hard worker who wants to create innovation, what can you do?
However, if you are the kind of leader with the insight that innovation is important and you also do not accept that relying on chance or unpredictable events are valid leadership qualities; if you are the proactive, hard worker who wants to create innovation, what can you do?
Here’s a suggestion for a good start:
- Acquire knowledge – Learn about how you can implement effective innovation through systematic and focused efforts. There are many good training programs and tons of literature for this. Start with a simple test, by asking your associates how they define innovation. If you can agree on this, you have a base to build on. Then move on to gaining more knowledge about principles and models for systematic innovation.
- Create a strategic plan for innovation – Integrate a long-term plan for innovation into your overall business strategy. The plan should answer five basic questions:
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- First, what are your goals for innovation and how do these help you fulfil your overall strategic business objectives?
- Where do you see opportunities for innovation? By revamping your products, services, processes, your business model, marketing message or maybe even your overall business strategy. What segment of your business needs renewing?
- How radical do you need to be with innovation, and what risks can you take? Is it enough to take small incremental steps forward or do you need to do something more radical to differentiate, add value, and gain the competitive edge?
- How can innovation be organised and managed? That is, what processes do you need to implement and what tools, competencies, skills and resources—human and financial—are necessary to effectively run these processes?
- How is innovation measured and controlled? Which metrics do you need to obtain information for good decision-making about innovation? How are these metrics integrated into your overall business scorecard and how are they linked to your management processes and incentive system?
- Put innovation on the agenda – Innovation should be a regular item on the agenda for your senior management meetings. It should be given the same status and time for discussion and decision-making as with any other business-critical activity.
These points are just the beginning, but beginnings are important. Make sure your senior management leads these activities.
Managers who want to invest in innovation … also need support
Managers who want to invest in innovation and work to overcome structural and cultural obstacles in the organisation also need support. That’s why it’s important that initiatives like the ‘Nordic Innovation Leaders’ and ‘Innovation for Growth’ get encouraged to grow and strengthen.
For example, the industry-wide Nordic Innovation Leaders(N I L) was initiated two years ago, and is already the largest Nordic network of managers who lead innovation. Its vision is for Scandinavia to become a global leader in innovation. It is an action-oriented forum for sharing and developing practical knowledge and experiences.
The Innovation for Growth program was just announced in the Dagens Industri, the Swedish daily business newspaper, on September 10. This program brings together industry, academics and other institutions such as IVA.
The most important result these initiatives can bring is immediately providing concrete support to managers who want to work with innovation. And they should be prevented from becoming simply another institutional talking forum that leads nowhere.
Do you walk the talk?
Consider carefully, is renewal and innovation important for your organisation? Do you regularly discuss the importance of innovation, and is it integrated in your business strategy? Does your organisation just hope for innovation to happen, or do you work proactively and systematically to bring innovation about, as you do with other mission-critical activities in your business? Do you walk the talk?