In homage to my Alma Mater, Forrester Research, here we go: “Memo to the Swiss: 10 Steps to Build an Innovation Culture.” Forrester titles were always (uncomfortably) audacious for a good European like me (I will never forget: Memo to Oracle; Memo to France) but they did the job i.e. they caught attention.
Following on from my blog last week (Innovation in Switzerland), a good colleague of mine Bhaskar Venkatasubramanian and I put together the following summary and sent it through to the attendees. It’s rather long and bearing in mind I am going to a tree-house for my holidays this August I am going to split it into 2 to 3 posts. So here goes.
Let’s be clear. The life blood of any company is its ability to improve its product portfolio or develop new ideas, Leaders who champion innovation understand context, mechanics, goal-setting and measurement beyond bottom-line results. They also approach innovation as a journey, with learning and incremental improvements and apply them along the way. The emphasis is on instilling the habit of generating more ideas and managing good ones through the business rather than worrying exclusively about the ROI generated at the end of every quarter. Surprisingly, this softer approach results in much more business impact, and faster than you’d expect. This is because when the business seeks ideas with the intent of earnestly considering all propositions, it encourages individuals within the organization to reciprocate with a spirit of, “ideas need to pay back the business.” The decision of not setting parameters for what defines an acceptable idea makes it possible for more ideas to be heard from a wider perspective than organizations normally see in traditional project review meetings.
1. Start with context; not “Blue Sky” notions
Popular myth says we should welcome all ideas, without any restriction, and then evaluate all of them on their individual merits. Fortunately, there are far more efficient ways of generating valuable ideas while retaining a democratic spirit, by using a few simple execution changes. For instance, you can encourage teams to generate ideas by doing the following:
- Identify specific challenges for which they are keen to find solutions. Some may arise from daily frustrations (i.e., why do I need to repeat the same task every day?).
- Be on the lookout for events triggered by the external (i.e., how might we speed up our mortgage application processing in view of newly revised regulation standards).
- Ask questions that spur new insights (i.e., why do many potential online sales drop off prior to check-out? What is wrong with our customer’s experience?)
Specific prioritized challenges identified as innovation contexts are helpful directional pointers; they make it possible for innovation efforts to be channelled in the required direction. Here are a few real-world examples from our experience:
- Context A: For a retail business account team, the challenge was not merely a cosmic question of “how to increase sales and decrease IT costs;” instead, the innovation context became “how to make IT support elastic for the retailer business, expanding during the peak season and contracting during off-season.”
- Context B: Faster-to-market is an oft-sought innovation outcome; one of our insurance accounts teams rephrased the context as, “how might we shorten the time taken in the policy risk profiling process between the (larger) broker communities and (fewer and highly specialized) underwriters?”
These aforementioned innovation contexts have given our teams a clear direction of why their ideas were required and toward what use their ideas would be put. In both cases, a wide variety of ideas were offered, and the ideas were scored and ranked based on which met the objective with the best ROI. At the end, everybody on the team had the conviction that the idea selected for implementation was the best for the given challenge.
Imagine the consequences of simply asking for ideas. With no direction, ideas would have been all over the map, and leaders would have been saddled with the unpleasant task of not knowing how to compare apples and oranges. In both of the above cases, team members generated a large number of valuable ideas. The idea implemented in Context A predicted peak IT infrastructure needs ahead of the holiday season (a time when revenues typically rise by up to 30%), enabling the business to focus on strategy. With Context B, the top idea was a smartphone calendar that was shared between brokers and underwriters, which shortened process time by 20%. Clearly, starting the innovation initiative with a carefully identified question makes the process more efficient and puts the odds of success in the organization’s favour.
2. Take a balanced approach; not a dartboard
Innovation is a very broad term. Defined as a novel idea that will produce value when implemented, the extent of innovation can vary from small and continuous core business improvements (contributing to process or operational excellence), to a major breakthrough in the development of new market opportunities (blockbuster products or services). Also, in some cases, it may be an enhancing impact in an adjacent segment, giving an edge to the company in terms of improved margins for a differentiated product or service.
What’s important is that companies strike a balance in allocating resources for the pursuit of their innovation agendas. While it may vary from company to company, this balance will be dependent on many factors, such as industry maturity, the company’s own stage of development, its state of competition, the composition of its customer base, its market and its appetite for risk.
Research indicates that performance-leading companies typically allocate about 70% of their innovation activities toward sustaining the core, 20% toward enhancing adjacencies and about 10% toward the pursuit of breakthrough opportunities. This approach provides a balanced approach between short-term and long-term goals and supports more predictable growth. It takes various skill levels, a wide range of motivational levels and organizational support systems to pursue all three. Directionless and uncontrolled spread of innovation initiatives, through sporadic energy displays, may quickly dissipate into frustration. By having a thoughtful plan of objectives, with a measured approach toward allocating resources, organizations can sustain the energy and become the driver for reliable growth.
3. Involve everyone; not just the privileged few
Innovation today belongs to everyone. Companies should think in terms of leveraging the wisdom of a chosen crowd by identifying specific contexts and inviting a large number of team members to offer their ideas. Invitations should be extended to more people than just those who normally deal with this challenge in their day jobs. For example, a software design-related challenge will traditionally be confined to architects and may include a few lead developers; we recommend opening this challenge to a wider community of developers, testers and business analysts, with representatives from the user teams, as well. In some cases – if the challenge is appropriately abstracted – it may be opened to people outside the regular team. For instance, a challenge involving invoice processing could find an enthusiastic response from unexpected quarters outside of finance and accounting; perhaps the point-of-sale data warehousing team may have an interesting point of view to offer.
Next week, steps 4 through 7.