To mark Exago’s 11th anniversary, we have put together our clients’ pieces of wisdom to truly bring innovation together. This is lesson 5.
From the start:
EXAGO has come a long way since we embarked on our innovation adventure 11 years ago. In that time, we have seen thousands of brilliant ideas come to life, and we couldn’t have done that without our greatest inspiration: our clients.
Eleven years on, more than 1 million people actively use the Exago innovation management software, in nine different languages, bringing companies millions in ROI and establishing a culture of innovation within organisations across five continents.
We’re also grateful for our clients’ valuable insights. To mark this special date, we have put together their pieces of wisdom to truly bring innovation together. We’ll be sharing our 11 Lessons Learnt over the coming weeks, so stay tuned!
In times of uncertainty, when business models are challenged, managers and financial directors are bound to cut costs to make organisations more agile, robust and adaptable to change. Leaders with a clear vision then tend to use cost-cutting and improvement to align costs with business strategy, to lower costs, focus on the aspects of the business that are controllable and free up resources to fund transformation and future growth.
However, aggressive cost-cutting tactics will not salvage companies under pressure. The change must go deeper, reaching a strategic and cultural level. This means that a company’s most valuable assets – people and their talents – must be mobilised to innovate and to find new ways of working that do not require high investments in new product research and development. Together you can save substantial amounts of time and money.
We show you how to add strategic cost-cutting and improvement to your innovation agenda, and how the development of an innovation culture is a powerful tool to align people’s focus, change behaviours, save costs and deliver continuous and effective results. To make it work, we guide you through the following five steps:
You need to have a clear view of your company’s strategy and map out good and bad costs for programme intervention, at macro and micro levels. On the one hand, bad costs should be seen as those that do not align with the growth strategy. On the other hand, good costs are those that support business capabilities to achieve growth and may be worthy of more investment.
You should deliver cost optimisation with the support of the CEO and top managers, defining areas of improvement from the beginning, as well as how to address each of these areas.
Simply externalising tasks and reducing headcount are often ways to overshadow a complex problem. You need to call on people’s knowledge and experience to help you separate the wheat from the chaff and find concrete and innovative solutions.
Over time, as you seek new ways to rationalise and optimise costs, a new culture of strategic cost-cutting will be embedded.
ensuring that both needs and strategy are consistently understood across the organisation. Your employees must feel they have a role to play and can have an active voice in the decision-making process, being welcomed into the discussion about the best ways to reach the proposed goals.
A well-structured innovation management programme for strategic cost-cutting and improvement can be particularly useful to get employees identifying ground-level enhancements, with several additional advantages:
- allowing you to develop a cost-conscious culture
- easily uncover bad costs and inefficiencies
- assure more dialogue and engagement
- build up an ongoing, resilient process
Strategic cost-cutting is never blind cutting. It is, in fact, a method to accelerate the discovery of new and more effective ways of doing business, at a lower cost, challenging you to look at the larger picture, to seek the root cause of the problem. It should be seen as a way of questioning how we do things, even why we do them, exploring new innovative routes and building the foundations of tomorrow’s growth.
Exago is once again one of the TOP 15 companies of the Happiness Works initiative, after first being recognised in 2016. The ranking Exame – Happiness Works 2018 assesses the overall well-being and happiness levels of workers in firms operating in Portugal.
The Exago innovation software house ranks 11th in this year’s edition, with over 4000 respondents. Key study indicators include a positive work environment, personal life/work balance, trust and collaboration, stability and safety, individual contributions to the company’s path, leadership and management support and autonomy, proactivity and entrepreneurship.
With the expansion of the Fourth Industrial Revolution, and academic and organisational interest in the subject booming in recent years, “it’s more important than ever to find and retain talent, and that means keeping employees happy”, says Georg Dutschke, the professor who leads the research. As he explains, Happiness Works is not just a ranking, “it’s about creating a culture of happiness”.
According to the survey, the internal environment, recognition, and personal confidence and development represent more than 50% of happiness in organisations, with salary representing just 10% of the overall results.
A commitment to happiness seems to pay off, as organisations that invest in employee experience multiply their revenue fourfold. High employee engagement can also result in a 19.2% increase in revenue in just one year, the study concluded.
Launched in 2012, the Happiness Works survey is promoted by Lukkap Portugal, Atlântica University and the leading business magazine Exame. The 2019 rankings will take into account additional stress and burnout factors.
If you are introducing cost-cutting in your innovation agenda, your ultimate drive is to create a cost culture that sustains itself over time and is not forgotten three months after being announced by the leadership.
Your final goal is that your workforce feels that the organisation’s investments are personal investments, which can benefit all.
Still, organisations are living creatures in changing contexts. So, strategic cost-reduction priorities should be regularly reviewed and updated in the same way as business opportunities are.
And so we find ourselves where we started: needing to map out intervention areas at micro and macro level, both good and bad costs, and clearly define and (re)align everyone with your cost strategy over time. Ensure that you have the best methods in place to address each area in an efficient way, using top-down yet privileging bottom-up approaches in your innovation agenda.
For bottom-up approaches, also review the communication plan at hand to help your employees understand the tweaks and turns. Let them have an active role in the process of building the company’s future together.
It will take time and some effort, since resistance is normal under less favourable circumstances. It will take people’s commitment.
Yet, with strong leadership, a clear and well-defined strategic cost-cutting programme and the awareness of shared responsibilities, an organisation can reinvent itself and learn how to do so continuously, as models are challenged and new opportunities arise.