Back to basics: Define appropriate goals

Photo: by earl53

In previous posts, we’ve made the case for purpose-led innovation. However, it’s also true that, in some cases, the ‘job to be done’ can entail ‘softer’ ambitions, namely, creating an innovation culture and embedding an innovation capability.

These are ambitious goals and definitely deliver high returns to organisations when implemented successfully. The trick, in our experience, is to tie these objectives with more tangible, shorter-term business challenges. Call it an ‘insurance’ – it prevents your initiative from being shut down by results-starved executives looking for short-term, return-on-investment measures.

The opposite approach is also surprisingly common. When launching an innovation initiative with specific business aims, make sure you track some of the side benefits of your efforts. Many of them are difficult to measure but have to be accounted for, especially increased collaboration and organisational learning levels and a stronger two-way communication channel between top management and the rest of the organisation.

When kicking off any effort, at Exago, we advise our clients to track very simple metrics:

– Number of individuals that participated in the effort
– Number of individuals prepared by any sort of training event
– Number of ideas and insights generated
– Innovation and challenge perception (through a company questionnaire/survey)

As your initiatives move forward, track your progress: Communicate and claim the appetisers, while the main courses are still being prepared.

In the end, it’s about results
Today, innovation is under fire as a ‘fad’ to be replaced by pragmatism. Budgets are shrinking and ‘soft’ outcomes no longer claim the attention of the boardroom. In other words, innovation without results is useless.

This being said, always remember to align your innovation efforts with your company’s specific business functional or operational challenges, engaging your people in the process. Addressing leadership’s agenda through innovation – while reaping some side benefits – is more and more often the recipe for successul and sustained innovation initiatives.

FROM THE START:
1. Back to basics: Why are we doing this, really?

Pedro do Carmo Costa, Exago’s director and co-founder
pcc@exago.com

Going on an innovation journey? Pack your bags with the 7 must-haves

Every day, Earth´s rotation speed only changes slightly, by up to milliseconds. Yet the business world just keeps spinning faster and faster.

In this interconnected age, organisations have long realized that innovation is the way, the only way, to stay ahead in the race. It’s the ongoing attitude that makes it possible. A source of opportunities, to create differentiated business models, products and cost structure that can ensure resilience and growth, at a global scale.

But where to start? And how can I make sure my innovation management initiatives do thrive?

In our “Short Guide for a Successful Take-off”, we go straight to the point, to share with you the seven must-haves you’ll need to guarantee your innovation management quest succeeds.

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The inevitability of incremental innovation

In the last post we focused on the difficulties of investing in innovation during crisis times and outlined why it is important to think about the long run.

Typically transformative results come from radical innovation which tends to take time to bring benefits due to its inherit complexity. Nevertheless there are many small innovations that can, when summed up, bring effective results for an organization.

According to Innovation Zen, “There are two dimensions we can use to separate an incremental from a radical innovation:

  • The first is an internal dimension, based on the knowledge and resources involved. An incremental innovation will build upon existing knowledge and resources within a certain company, meaning it will be competence-enhancing. A radical innovation, on the other hand, will require completely new knowledge and/or resources and will be, therefore, competence-destroying.
  • The second dimension, the external one, differentiates the innovation based on the technological changes and on the impact upon the market competitiveness. An incremental innovation will involve modest technological changes and the existing products on the market will remain competitive. A radical innovation will instead involve large technological advancements, rendering the existing products non-competitive and obsolete.”

Therefore, internal and external dimensions allow companies to quickly start cashing in on incremental innovation. Simple efficiency improvement ideas or slight product/service face-lifts or upgrades can help increase revenues and/or reduce costs.

By engaging a large community of people and harnessing the wisdom of the crowd incremental innovation results come quickly and people feel listened to. With a transparent, efficient and interactive process, leadership gets a bidirectional communication tool to improve management-employee relationships and bolster participation.

Our clients experience the approval and implementation of many ideas for a constant flow of improvements with results that make an impact on the bottom-line.

Innovation in times of crisis

Government and enterprise leadership tend to act the same way when facing a crisis: they cut what is seen as non-essential to the execution of their primary objectives. Basically, everything that seems not necessary for survival (in the short term) is cut. Items like culture (with some exceptions like Churchill in the UK during WWII), fixed capital investments or innovation tend to be abandoned or to put in hibernation.

Even though cutting such items helps balance short term P&L, it will certainly compromise future growth potential or, in some cases, long term survival. Many times that is not taken into account by leaders for several reasons:

    • It is difficult and unpopular to explain to people why there is a need to keep (or even reinforce) investment in something that only brings benefits in the long term, and, as Keynes once said, “in the long run we are all dead.”
    • Government and enterprise leaders know they will not be there in the long run, making it difficult to compromise their present position and popularity for some sacrifices that will only benefit their successors.
    • People tend to prefer a smaller benefit now over a much bigger one in the future (time value of money and/or other benefits).
    • We all know that innovation and R&D are essential for differentiating, improving efficiency, increasing growth, and thriving in the market. All reports point out that countries and enterprises that invest in innovation and R&D get better performance and higher growth potential in the long run.

We at Exago, as well as many other innovation management providers, faced in the last few years many prospects hesitating to dive into an innovation program. The reasons for this were mainly the following:

        • “There is a huge economic crisis and we can’t invest in non-core activities.”
        • “We only invest in projects that bring measurable ROI in the short term.”
        • “It is not the right timing because we already have too many corporative programs going on and can’t start another one.”
        • “It is not the time because the company is facing structural changes and we can’t distract people from their objectives.”

These real examples show how companies still look at innovation. They’re really saying, “Innovation is nice to have but now is not the time for it because we have “serious” things to take care of now.”

Our point of view is the following: As long as innovation is seen as a non-core activity it will never be the right time regardless of the economic situation.

Curiously, the most successful clients working with Exago did it during crisis times. They did not concern themselves with short term ROI (even though it came at a very high rate as a consequence of the process used) but with creating, nurturing and implementing an innovation and participation culture.

Innovation by itself does not ensure an organization will thrive but lack of innovation will certainly condemn an organization to a slow demise. Furthermore, it is in times of economic difficulty that more value can be extracted from innovation due to diminished investment and the commoditization of products and services when demand falls and margins are lower.

What you need to be successful in your new innovation role

Stefan Lindegaard, an innovation guru, recently did a survey entitled “The people side of innovation” (58 respondents, mostly from large companies). Among other things he focused on three aspects:

  • What are the most important personal qualifications for people working with innovation?
  • What should leaders do to motivate their employees to become more innovative and help create a better culture for innovation?
  • Are intrapreneurship programs relevant for upgrading corporate innovation capabilities?

These questions are so interesting and insightful we could spend years discussing them but let’s just focus on the first one.

According to Stefan’s survey results, you should be happy if you were or will be appointed to an innovation role if you are passionate for work, persistent, have the ability to deal with uncertainty, and have resistance within an organization.

Why these results and why are they not a surprise? Innovation is usually a support area, being a second, third or even a forth or fifth priority for many enterprises. Considering it is already difficult to make the “monster” (the enterprise) move when talking about core competencies, imagine how much more difficult it is when the subject is innovation.

Resistance to change, lack of inertia, and/or frontal opposition from others is the day-to-day reality when dealing with corporate innovation. Therefore, just like a salesperson, people in innovation must be persistent to deal with the barriers that will pop-up at every corner. The person should be passionate on the subject (and for work in general) to self-motivate themselves after each “no” they get.

Uncertainty is intrinsic to innovation, not only in the innovation process itself but also because it creates uncertainty with things related to it. If the innovation program does not bring results as expected in the short-run there is a tendency to start questioning it and those in charge of the program. Only someone who can deal with this uncertainty internally will be able to convince “detractors” in the long-run.

Summarizing, if you were or will be appointed to an innovation role you should definitely work on the above characteristics if you want to improve your chances of long-term success.