Innovation is a key organic growth competency. It’s also something we’re passionate about at thinkGROWTH. So it’s no surprise that it’s a subject we like to frequently explore.
However, our recent Growth Insights 09/10 research also suggests that innovation is an area that many companies really struggle with.
Growth Insights 09/10 reveals good news – in that companies are aware of the need for, and aspiring towards, greater innovation. It also makes clear that innovation will be an essential growth capability in the times ahead:
- Innovation trailed only cost reduction and overarching organic revenue growth as an increasingly relevant issue over the coming 12 months;
- Innovation frequently placed as a ‘top 5′ priority issue, albeit to a lesser extent than costs, growth and demand;
- Over 70% of respondents stated an intention to increase the revenue contribution made by new products and services.
However Growth Insights 09/10 also reveals some troubling disconnect with existing organisational performance.
In particular, companies scored themselves poorly against some vital innovation ingredients. For example, risk taking, processes, idea generation and incubation all scored low as areas of current performance – yet all have a key role to play in supporting a robust innovation capability.
This highlights the distinction between positive recognition of the need for innovation, and the actual positioning needed to succeed.
It also highlights that for many organisations, innovation remains an enigma. They agree that it is important, but also don’t tend to understand it. And while in concept innovation is fairly straightforward, its execution can be considerably more challenging.
It is with this in mind that we thought we’d spend some time exploring 5 practical tips on what companies can do to unleash their innovation potential…
1. Know what you’re trying to achieve
Understanding that innovation comes in different shapes and sizes is essential, because innovation efforts are not ‘one size fits all’ and must be customised to specific needs.
For example, a manufacturing organisation looking to improve operating efficiencies might be well served by a ‘bottom-up’ approach using employee participation and idea suggestion to deliver localised process improvement. This might also deliver on employee engagement objectives and even extend to participation from business partners and customers.
On the other hand, an organisation looking to generate a radical and major new growth platform might instead need to focus on ‘top-down’ strategic innovation, leveraging a strong understanding of the market, existing capabilities, and long-term strategic points of difference.
Organisations need to know what they are trying to achieve through innovation if they are to invest in the right blend of these activities. In practice, this might require a portfolio approach to address a mix of innovation needs – but if companies don’t understand what they are looking for, then chances are they might not find it.
2. Align your innovation efforts with key areas of business value
Successful innovation efforts require a sound understanding of current and future drivers of business value. In other words, strategy is a key innovation ingredient. It’s often no surprise to walk the floors of large companies and ask employees – “what is this company looking to do?” only to find there’s not a clear understanding of the strategy at the employee level.
In the simplest sense, clear business strategy is important because, without it, it can be hard to answer the obvious question “is this idea taking us in the right direction?” (Specifically because people don’t understand what that direction is). Clear strategy also helps identify priorities and challenges for more focussed innovation attention. In other words, it gets everyone in the game.
A good example of this is the different approaches to ideas competitions – a really tangible and tactical component of innovation.
Asking employees to “send us your good ideas” often results in hundreds, if not thousands, of ideas of all shapes and sizes, many of which do not align to the strategy. On the other hand, a fast food retailer looking to compete on the basis of “food in a hurry” might ask “how might we speed up customer service at out tills” – a question more likely to yield meaningful ideas.
I won’t be the first one to say it, but often, it’s the question that you ask which is the real key.
3. Build a supportive organisational culture
Creating an ‘innovation culture’ is one of the trickier challenges of making innovation happen. Staff must be empowered to conceive, develop and collaborate on ideas.
Some required attributes include:
- Trust
- Risk taking and courage
- Constructive debate
- Time and support for ideas
- An element of playfulness
Building such a culture is not easy, and the starting point will differ for all organisations. However, two common elements include:
Leadership behaviour: where senior executives are credible and committed, and managers at all levels are providing staff with incentives and license to innovate. Innovation is often “delegated” down to employees with management “challenging” staff to come up with good ideas. Leaders need to be participative – leading by demonstrating their ideas and the support for the ideas of others;
Incentives and recognition: used to encourage ideas while engaging and empowering staff. Such incentives must focus on recognition rather than rewards or risk being seen as prize driven where there are winners and losers.
4. Establish a backbone of tools, systems & processes
Innovation is about more than just motherhood statements. Behind the soft exterior of employee engagement and culture building must sit a robust backbone of tools, systems and processes.
This backbone includes:
- Tools to support the generation of ideas (e.g. staff training, physical spaces and internal innovation challenges)
- Systems to capture ideas (e.g. from low-tech suggestion boxes to high-tech innovation portals)
- Criteria and processes to screen ideas (e.g. standardised methods and approvals)
- Structures, resources and capabilities to take ideas to market (e.g. appropriate teams, talent, funds and mandates)
The difficulty is to design an infrastructure that is supportive yet not too clinical, as anything too rigid may limit, rather than enable innovation.
5. Focus on tangible opportunities to keep things real
Nothing builds organisational confidence like real-time results.
Building innovation capability requires the right blend of program building, processes and culture change, but when these are supported by real innovation wins, results are accelerated.
Most companies don’t have to look far – day to day there are usually great examples of innovation at all levels of the organisation that are often not recognised. Take time to celeberate simple wins that demonstrate innovation is already happening and support the risk-takers that are delivering better ways of doing things.
In parallel, ensure the focus on innovation is supported tactically and strategically with a series of identified, high-value projects to work on. This may be by the same or a separate incubation team. Such an approach provides visible demonstrations of success as well as a perfect testing ground for newly defined tools and processes to support innovation.
For example, rather than working on processes in isolation, select a real opportunity and use this to build and test your workflows. People are far more likely to discuss funding levers if they can see a new idea that needs immediate testing, than if they’re asked to do so in abstraction.
There’s no better way to measure return on innovation investment than through banked returns from a fast tracked idea.
