How is innovation driven in your organization?
What is the role
of your CEO?
How do we push this into the DNA of the enterprises?
Well, here are
some thoughts:
Today, every enterprise is subjected to more triggers and disruptions than ever
before. To me, the critical ones are:
- Impact of digital / new technologies in business (diminishing margins, eroding of competitive advantage etc.) as well as in employee workforce (changing skills, automation, type of jobs that are going to be generated etc.)
- Learning space has undergone a rapid change. Take MOOCs. Today, the very concept of going to university to acquire skills is being keenly debated. Give a laptop with an internet connection. People can start business or provide value. The barriers to traditional thinking and the required infrastructure have gone out of vogue rapidly.
Before answering the innovation related question, we need to understand how
to interpret “INNOVATION”. First and most important point is to differentiate
this from INVENTION. Innovation implies an invention that is commercialized.
ISO defines this terms as “Ideas that are implemented and deliver value to
customers and enterprises.”
Innovative companies are always, a few steps, higher than
the rest. This manifests in two forms mainly – higher profits and/or higher
growth. Innovation triggers could be many – New technology, New business model,
Gen Y skills and Digital disruption, Market opportunities etc.
- Innovation can never be serendipitous or accidental. Every enterprise must understand the factors responsible for an innovative organization and try to set up and sustain.
- Two key factors are important for nurturing this – CULTURE and STRUCTURE. If the underlying cultural issues are not addressed, no amount of fancy INNOVATION OFFICERS can bring any tangible benefit. The structure is a powerful enabler of innovation.
- Innovation can happen incrementally or radically across multiple dimensions. Here is a quick table to visualize this.
|
Innovation Dimension
|
Level (Incremental)
|
Level (Radical)
|
|
Business Model
|
|
|
|
Process
|
|
|
|
Product or Service
|
|
|
|
Management System
|
|
|
|
Production
|
|
|
- Another way to look at the innovation is to understand the type of changes and the market.
|
New Concept / Process / Technology
|
Disruptive
Technology
|
Breakthrough
Innovation
|
|
Existing Concept / Process /
Technology
|
Incremental
Innovation
|
Disruptive
business concepts
|
|
|
Existing
Market
|
New
Market
|
- We can also look at strategic innovation, open innovation, value innovation etc. In the best seller Blue Ocean Strategy, we hear “Value innovation” that aims to make the competition irrelevant as compared to the traditional red ocean strategy that aims to be one-up.
- Open innovation brings the organizations and external parties together with tremendous improvements in business model or new services or license fees. This can be outside-in.
- Another way to see this is a PUSH or PULL type. PUSH type means the organization has uncovered a new technology / product or service and it tries to find how to successfully use that to differentiate. PULL starts with customer need.
- Innovation cannot be assigned to one pocket of the organization and hope pinned on it. IT has to permeate the entire organization. Yes, a specific office / roles / KPIs are a must to kick-start the process.
- In order to assess the current innovation footprint of the organization, look at the following aspects:
o
Products & Services
o
Customer Insights used / experience given /
engagement
o
Learning capabilities
o
Process
o
Value propositions / platform / capture
- Look at the capabilities across the innovation management:
o
Ideation
o
Selection
o
Development
o
Commercialization
- After the assessment, suitable action plan for creating or strengthening the innovation management system, across the enterprise, is to be formulated with specific KPIs to understand their progress and impact. The aspirations should be matched with capabilities.
Implementation
It is this area the most enterprises struggle. Focus on the
following:
- Leadership style of the CEO (doesn’t have to be fixed. Should be adaptable). You have to be an explorer at some point in time or a climber. Explorer doesn’t demand short term profit or growth. Climber builds on strengths never losing sight of the overall goal. There are various other styles.
- Who is responsible for innovation? Never assign this to a few people and close your eyes. Your eventual goal, as CEO, is to embed this as part of DNA. You may still need to identify few people as the shakers or movers to give the required fillip.
- Be clear on the KPIs – short / medium and long term. Different types of innovation with different time horizons call for suitable understanding. Let’s say, a CEO wants to open a new office in Antarctica. What should the centre be known for? Is it just another location diversification with no meaning? Are you prepared to give some time once you commit the resources? RoI / Profit can help in reinforcing and expanding the current business. But new business / innovation opportunities call for new metrics such as NPV based on prototyping, Strategic option value etc.
- To get some incremental innovation, a major change to the structure and culture may not be essential. But, they are the very mechanisms that can teleport a company into the field of radical innovation.
- The workforce learning culture needs to reflect the hunger for innovation. There are organizations that allow their employees to work on BAU as well as strategic initiatives. The latter would call for new skills to be provided for through training and prototyping.
- If we take a look at the standard business maturity S curve (Emerge, Grow and Mature), it comes as a S curve. We start with a competitive advantage, utilize it to the full before it loses lustre and the margins start to diminish. The innovative organizations must start inventing a new S curve whilst riding high on the current one.
 |
| Business Growth & Innovation Curve |
If your CEO is too busy and lives from one quarter to
another but dishes out all the right terms, the market wants to hear,
frequently with no genuine on-the-ground-movement, it is a sure sign of “Decline”
setting in.
References:
https://innovationmanagement.se/2016/04/01/13-practices-of-the-worlds-most-innovative-organizations/
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