Looking at the “system problem” of corporate innovation, we think that there are six levers for improvement. These are outlined below.
We think that all of these levers need to be pushed since there are interdependencies between the components of the “innovation system” that these levers are addressing. So, for instance, just aligning the management system – in particular KPIs – without empowering the culture and strengthening the innovation skill set will only have limited impact. The same is also true in the opposite direction.
Actually, although this is not the focus of this article, one will find that some of these levers also help solve the “complexity problem” that we identified to be the second root cause of the corporate innovation problem.
So for instance, modern enterprise-grade systems supporting innovation work are able to connect real-time the “innovation footprints” of ideas and experts. Once these systems are combined with electronic lab journals (recording innovation footprints of ideas and experts), chances are high that the number of re-invented wheels goes down because people in the global organization know about innovation topics, the outcomes from tests done – and most of all, who else is working on these things.
At the end of the day, innovation is a people business. It is people who discover insights, generate ideas, prototype potential solutions, validate technical feasibility / commercial viability / customer desirability, implement the concepts and bring them to market.
Innovation culture is what makes the people tick. Practitioners define innovation culture by “the way we innovate around here” or by “what happens when the boss is not around.” It manifests among others in styles of thinking, deciding and co-operation, in underlying values and beliefs and in artefacts, e.g. how offices and spaces for co-operation are designed. Innovation culture does not exist in an empty space: it is shaped by factors like leadership style, governance structures, KPIs etc. Actually, as we find often, “wrong” KPIs are a massive driver for “wrong” innovation behaviors.
Innovation by itself is not a linear, waterfall-type of process. It has by its very nature diverging and converging process steps and iterative loops that come into play when things do not work as planned or when new insights come on the table. Consequently, a lot has been written about needing an open atmosphere that allows for trial and error (after proper thinking) and learning from “mistakes”. It has been argued that companies deemed to be innovation leaders have a “fail fast, fail forward” innovation culture. We do not need to elaborate on that.
What should Executives focus on in culture change?
The point that we would like to bring into the spotlight is what Executives need to do in order to change an existing, sub-optimal innovation culture into a more innovative one. From our experience, we recommend to think along these lines:
It is quite surprising how few people that in some degree work on innovations have direct customer contact. In many companies, you find people working in innovation-relevant activities who never had a single customer contact in their whole career.
Getting people out in the field provides a basis for “walking in the customer’s shoes” and to connect the internal operations with the ultimate aim of innovation: Providing a solution for unmet customer needs that the customer is willing to pay for.
The results one gets when people are sent out into the field are quite astonishing. One observes not only an energized atmosphere but also tangible results.
So for instance, an engineer from a chemical company was surprised to find that the customer’s production yield changed by more than 10 percentage points even though the company’s product was well within the specified quality parameters. This made him think about how an improved, cross-value chain QM could be established using cloud-based IT solutions.
In another case, the production manager of a metals company was surprised to see that the customers developed their own fixings because their “job to be done” was not being fully satisfied. She spotted the business opportunity and suggested doing this in-house which created a new source of revenue.
As illustrated in the first part of this article series, nearly all of the large companies have IT systems in place that allow for sharing of ideas. The problem with many of these systems is that they were developed in the mid-2000s, which in IT terms is ancient history. From a technical point, these systems build on a structured database model and staff has to “feed the system” in order to get some meaningful things out. Unfortunately, today people are so busy that they hardly find the time to do so.
Modern IT systems: The innovator’s best friend.
Innovation is often linked to the development of a new technical solution, the deployment of a new business model or to new service offerings. The corresponding cross-company processes need to run smoothly in order to create a superior technical solution and/or a convincing user experience. This position cannot be reached without addressing and challenging the processes and policies in the domains of Human Resources, Finance, Procurement, Production, Information Systems, etc. – and this cannot be achieved without involving people.
Think about them as the local “agents of innovation change”.
For this reason, innovation catalysts (some companies call them “coaches”) need to be appointed and empowered in all functions with a strong link to the corporate innovation team. Think about them as the local “agents of innovation change”. Typically, their responsibilities comprise:
Innovation catalysts play a key role. Corporate Innovation and the catalysts should meet regularly for meetings and workshops. These events should be used to train the catalysts in new methods, to pass the messages on the priorities for the company and to exchange best practices. But also to work collaboratively on new innovation frontiers such as e.g. how digital technologies (Big Data analytics, Cloud, Internet of Things, etc.) may be used for innovations.
It seems so puzzling: If innovation has a top spot on the Management Agenda, then why are so few companies putting the development of innovation skillsets and mindsets into a similarly important spot on the competency agenda?
Taking innovation skillset and mindset development seriously would mean to come up with a list of soft and hard skills that the will be included in the different human resources development programs such as leadership programs, e-learning courses or in-depth, specific training and development planning for the corporate innovation team and the innovation catalysts.
Four elements make up the innovation skill set.
We have found that innovation skillset and mindset base needs to have at least four components:
We hesitate to state that solving the corporate innovation problem requires Top Management attention. It is almost a no-brainer – but the reality looks different.
To be a little provocative, Top Managers use the I-word often in their presentations. In many cases, the term “innovation” may even be overused. So for example, upon learning that “Peanut Butter Pop Tart” was one of the most important innovations of a USD 15B food company, the Wall Street Journal remarked: “Some CEOs spray the word ‘innovation’ as if it were an air freshener“.
But we are not talking about paying lip service. We are talking about Top Management …
Aligning the management system is key.
Maybe the most important point where sustained Top Management support is needed is to align the management system behind innovation, in particular KPIs and resources with respect to time and budgets. This is because disappointing innovation often comes from an internal business environment that produces thinking, deciding and acting patterns that do not support innovation.
Despite all of their efforts, many companies are not satisfied with the returns they get on their innovation investments. In this article series, we have stated that this “corporate innovation problem” has two root causes: A “complexity problem” and a “systems” problem.
We have zeroed in on the second one and have laid out that there six main levers for solving the “system problem” and hence contribute to solving the corporate innovation problem.
As a result, any company that moves these six levers can expect:
Part one: the Fuzzy Front-End
Part Three: six levers to change the “system problem”
Rob Munro runs innovation.support’s business in UK and Ireland. Before consulting with leading companies on innovation management, he spent over twenty years within multinational chemical and material companies creating new technologies, building new businesses and developing capability. He has held senior management positions from manufacturing to commercial and R&D with a track record in developing business and innovation strategies, improving business work processes and delivering complex high-value projects. Rob also founded The Growth Engine specializing in developing innovation strategy for clients and guiding them to build more robust, effective innovation systems.
Frank Mattes founded innovation.support and runs its business in the German-speaking countries. Frank Mattes has more than 15 years of experience in managing innovation, change management and projects. He has worked for several specialized medium-sized consulting companies and for The Boston Consulting Group. He also worked at C-level for an IT and a professional services firm. Frank also founded and runs innovation-3 which focuses on integrating cutting-edge innovation approaches into existing innovation management systems. Frank is the author of several books and a contributing editor to InnovationManagement.se, the number one platform for innovation management practitioners.
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