Creating a Sustainable Innovation Program
By Armin Roeseler, CIO, DirectBuy
What is Innovation?
Innovations create value propositions that people are willing to pay for. They inspire game changing outcomes for a business by meeting new consumer requirements, or satisfying previously unarticulated—but existing— market needs in new, imaginative ways. Furthermore, impactful innovations create discontinuities in existing business models and elevate the business plateau to new levels. As such, innovations do much more than just incrementally improve sales or other desired business outcomes (e.g., market share), but they “move the needle” appreciably and, in addition, create new and unpredictable circumstances that can disrupt entire industries. This business transformative effect is often accomplished by leveraging new technologies (e.g., Internet; mobile technology) to either create new products and services, or by instantiating entirely new business models. For example, to satisfy existing needs for home entertainment via on-demand rental movies, Netflix upstaged an entire industry by promoting a completely new movie delivery method (postal mail; Internet) compared to existing brickand-mortar rental locations (e.g., Blockbuster).
Historically, businesses largely relied on strategic planning and execution of the business strategy to be successful. Due to globalization and ever more rapid technology obsolescence and turnover, however, even planning for the next quarter is a challenge today; committing to decisions that will play out in a few years is extremely difficult. On the other hand, to keep doing the same thing repeatedly is no longer a recipe for success for many companies, as it can drive a business toward obsolescence in fast changing industries. Many companies are looking for innovation as one of the top drivers of growth in the near future to counter this development.
Why is Innovation Thinking Hard?
Innovation thinking is different than traditional business thinking. It represents a crucial addition to traditional business thinking for organization that wish to establish an innovation process, and to create a climate for innovation within organizations to ensure continued health and future viability of the business. In business thinking, when faced with a problem, our immediate instinct is to address it with order; to examine and analyze the situation; to look for logic until we understand the problem and know what to do based on past experience. This approach, however, fails when complex problems and circumstances do not fit previous patters, and a paradigm shift has occurred that presents an entirely new business situation and context. In those situations, solutions are not immediately obvious—thus requiring innovation thinking.
What are the Elements of Innovative Thinking?
Rather than relying on traditional market research, formulas and logical facts that attempt to remove ambiguities to drive results,
and trying to find the “right answer” by looking for precedent to inform decisions, innovative thinking does not rely on past experience or known facts. Instead, it imagines a desired future state that is unconstrained by past experience, and determines ways to get there: the goal is to find a better way and to explore multiple possibilities to arrive at the desired state. In this context, ambiguity is considered an advantage as it provides multiple options on how to proceed; it is not a “problem” per se that needs to be overcome.
Innovation thinking involves a cultural shift from the logical to the intuitive, and the desire to “want results” is replaced by the desire to “achieve meaning.” Rather than using deductive and inductive reasoning to deconstruct a problem into its parts, then trying to understand the components in isolation and requiring proof of assumptions about them to proceed, abductive reasoning is applied that holds multiple possibilities in an effort to achieve and improve on an end state view. Synthesizing components into a larger whole is the first step to arriving at a solution. The Apple iTunes ecosystem, consisting of independent devices and associated services and applications, is an example of aggregating independent components into a larger whole to deliver a unique listening experience.
Required Organizational and Leadership Characteristics
To create a culture of innovation, it involves more than just hiring a few creative individuals and relying on their competencies and unique skills. Leaders must learn to create an organizational climate where others are empowered to apply innovative thinking as a matter of course to solve problems: innovation is everybody’s job in the organization.
At the Corporate Level, management needs to define the kind of innovation that drives growth and helps meet strategic objectives, e.g., delivery of services; creating a unique customer experience; creating new products—or any combination thereof. In addition, innovation needs to be added to the formal agenda at regular leadership meetings. Performance metrics and targets for innovation need to be set and results need to be broadly communicated. Targets can be financial (e.g., percentage of total future revenue derived from new products or services), or can include behavioral metrics that specify how people work and interact (e.g., percentage of office cubicles vs. open collaboration workspaces; number of interdepartmental interactions orcross functional teams created).
To encourage innovation at the Organizational Level, a shared vision for innovation needs to be developed and communicated—which includes a rewards and recognition component for innovative work. Organization impediments and barriers to innovation (e.g., overly rigorous ROI analyses at the conception phase; harsh criticism of new ideas or destructive internal competition) need to be removed, and negative individuals need to be “neutralized.” The workplace should be rearranged to encourage interactions and easy exchange of ideas. Leadership encouragement is required that shows support and confidence in the work. Within the broad scope of the defined corporate strategic objectives, people need to be empowered to decide what to work on and how to do it.
Finally, the Innovation Leader, who is the ultimate champion of the innovation process, needs to possess excellent strategic vision and be able to paint a clear picture of the destination, while the team figures out how to get there. Strong customer focus, an uncanny ability to get into the customer’s mind, and the abilityto ask incessant questions about their needs and wants are key to success. The innovation leader must create a climate of reciprocal trust, where warm, collaborative relationships can flourish, where risk-taking is encouraged and people never get punished for honest mistakes. S/he must project optimism and energy, and be able to replace grimness with lightheartedness. S/he excels at setting and achieving stretch goals not by just “working harder,” but by finding new ways to achieve a high goal. Innovation leaders are candid in their communication and provide honest and, at times, even blunt feedback that always focusses on objective issues and never on personalities. Most important of all, innovation leaders inspire and motivate through action: they walk-the-walk and provide a clear sense of purpose and meaning in the activitiesof the team. Creating an innovation culture is a process that involves all levels of a business; it is not a short-term process, but can take years before it permeates all corners of the enterprise. It is still worth the effort, for when the innovation capabilities of an organization align with the business strategies of the corporation, stellar performance of the enterprise at all levels is the likely result.