CEOs like to win. Today, innovation is the playground where many CEOs are seeking to demonstrate their winning prowess. However, it just so happens that large organizations are having a very difficult time putting points on the scoreboard when it comes to innovation. One recent survey suggests a mere 10-25% innovation success rate on corporate projects (McFarland 2014, p.1). Strategyn’s 2010 data generates an estimate of 17% on innovation product or service launch success.
By their very nature large corporations are complex, distributed, sometimes challenging to shift and change when it comes to innovation.
What’s a CEO to do? As with many matters, sometimes the answer lies within. By their very nature large corporations are complex, distributed, sometimes challenging to shift and change when it comes to innovation. Although innovative ideas may be prevalent, large organizations are rarely structured to allocate the time, attention, and thought required to generate innovation success. Thus the CEO must properly organize and develop the human organization systematically in seven specific ways. When all seven sources of human potential and leadership are cultivated, corporate innovation does indeed flourish.
#1 A well-conceived Chief Innovation Officer role stewards innovation success.
In many North American organizations, the success of corporate innovation is being supported by the presence of a well-conceived, carefully selected Chief Innovation Officer (CINO). A CINO brings daily focus to the development of a comprehensive innovation portfolio, learning and capability development, implementation of processes and tools for enterprise innovation, and the introduction of capabilities such as Design Thinking or Lean Start-Up that likely will assist business units to attain stretch growth goals. Without a CINO, most organizations experience inconsistent, sometimes incompatible pockets of innovation effort. A CINO can contribute to consistent innovation at scale, with proper speed and cadence.
#2 The Innovation Steering Committee protects horizons, emboldens the CINO and maintains pace. As a process, innovation is cross-functional, cross-business-unit, and cross-geography, with clear benefits to open and external relationships. Usually requested by the CEO (or at minimum supported by the CEO), the innovation steering committee exists in perpetuity to stimulate executive discussion about innovation priorities and resource allocation across investment horizons. It provides the Chief Innovation Officer with a predictable, receptive forum for innovation topics that otherwise may be overlooked in the daily course of operations. A great deal of learning occurs in these forums when data and analytics are required, in addition to anecdotal results.
It’s essential for each key business unit to carry a top-line commitment or goal aimed at “beyond the core” innovation activities.
#3 Key Business Unit Leaders with explicit Innovation targets contribute to the overall innovation agenda. The horizon tension is well known and understood: how does one balance the need for immediate results against the need to invest in long-term, more unproven opportunities? Business unit leaders are valued for their ability to meet or exceed expected operating results. However, without a business leader’s commitment to new ventures, product or service innovations, innovation success is all but doomed. It leads to the dreaded “hand-off” crisis between innovator teams and the operating units, where commercialization most typically must occur. It’s essential for each key business unit to carry a top-line commitment or goal aimed at “beyond the core” innovation activities. Depending on industry, sector maturity, growth rates, and other circumstances, the goal percentage may vary from 5% to 20%. When a business unit leader is held accountable for growth from “the new,” it happens. When near-term corporate targets are the only focus of the business units and innovation is secondary or an afterthought, it becomes optional.
#4 Democratize and turbo-charge innovation by inviting employees to participate. The days of R&D owning 100% of innovation are long over, at least in most markets and industries. Democratization of innovation is less a matter of information or innovation systems (although they do facilitate reach and ease of use) and more about an inclusion mindset, an inherent belief that front-line employees can contribute to opportunity development and problem solving. Large corporations with stable, strong-functioning employee innovation programs seem to achieve measurable success irrespective of industry or market. In most cases, an innovation management system plays a key role in corporate-wide engagement of this nature.
#5 Innovation Champions add a viral dimension to corporate change. Innovation initiatives are resource intensive. Talent, more so than capital, can be hard to secure. Champion communities at large corporations play a multi-faceted role: as communications bullhorns, resource pools for projects, and even potential recruits for new internal ventures or business units. In short, an internal talent marketplace for innovation can be a pivotal success factor. Because champion networks defy the traditional corporate hierarchy, they often compliment the purpose and mission of the Innovation Steering Committee, namely to diffuse the innovation strategy across the enterprise.
#6 Open the enterprise to external experts, voices, and innovators to enhance serendipity. Notwithstanding IP and legal concerns, open innovation is here to stay. In its initial incarnation, Open Innovation looked like idea sourcing from outside the enterprise. Today, the possibilities are vast: academic consortia, solver networks, liaisons with accelerators and even grand challenges asking the public to help develop opportunities. All Open Innovation strategies have one thing in common: curiosity about the possibilities for innovation from sources outside of the enterprise. As the saying goes, it’s impossible that all the world’s smartest people work at your organization.
It’s well known that the CEO and associated staff have a profound impact on the innovation climate at large corporations.
#7 The office of the CEO must set the cultural standard for curiosity, horizon thinking, prudent risk-taking, and talent development. It’s well known that the CEO and associated staff have a profound impact on the innovation climate at large corporations. But how can she or he evolve a stronger view of what must happen for innovation to become successful? One way is to view the world from outside-in, versus inside-out. Taking annual field trips to diverse organizations with an innovation edge is one exceptional way to do this. Field trips provide an immersive experience that few conferences or peer gatherings can match. Another approach is to relocate part of the corporate CEO staff to a Silicon Valley outpost or another innovation hotbed relevant to the business. The outside-in perspective is likely to fuel a stepped-up passion for innovation. It’s less a matter of imitating others in distinct industries, as it is an opportunity to collect valuable nuggets for implementation back home. In some instances, the CEO may discover ways to reframe entire business offerings with new models.
Enterprise innovation has never been easy at large corporations. Silos, change antibodies, performance pressure, and the inherent risk of innovation are formidable barriers. Yet the growing list of uncommon success points to an underlying formula: focus on the proper development of these seven facets of human effort at large enterprises, and innovation success becomes significantly more attainable.
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By Luis F Solis
President, North America, Luis F. Solis is a pioneer in the diffusion of innovation strategy and enterprise software in global organizations. As entrepreneur and business builder, he has taken companies public, guided global roll-ups, started ventures and turned-around software companies. A graduate of Stanford University’s Business and Law Schools, Luis recently authored “Innovation Alchemists: What every CEO needs to know to hire the right Chief Innovation Officer.”