Embedding Innovation in your Organisation’s DNA

EFQM
28 February 2014
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Large or small, public or private, you need to have an ‘Innovation Compass’

It is sadly the case that whilst Innovation*1 is often recognised as important in the ‘C-Suite’ or Boardroom, there is typically a massive gap between Innovation rhetoric and action. Most senior managers recognise the role that Innovation can play in developing their organisations; they know that Innovation is often essential to creating or maintaining future revenues and value, but they can become paralysed by past failures or an over focus on process efficiency and/or just a lack of leadership consensus on how best to manage it.

*1 EFQM Definition of Innovation: ‘The practical translation of new ideas into products, services, processes, systems or social interactions’.

You need to have an Innovation Compass?

Successful innovators find ways to manage the delicate balance of investing in the future, whilst sustaining the benefits being obtained from their current core offerings. -They forecast how much Innovation they need and what specifically it should achieve for them, but the big question is how best to do this? Regrettably, most academic work on Innovation does little to help with such aims; valid research is fragmented and where systemic views exist they are rooted in the micro-perspective of a specific discipline, and little cross-faculty, cross-discipline work is done to consider the broader subject from the perspective of the holistic organisation-wide management systems, within which most business managers have to operate.

The Innovation Reboot Project™

The Innovation Reboot Project™ is a collaborative learning experiment, aimed at both academia and organisational managers, with the objective of promoting Innovation Capability Assessment Frameworks that may help to encourage the open, sharing of knowledge on what best enables Innovation Capability building in organisations.

The logic of the current Innovation Capability Assessment Framework, shown on the left is that at the highest level, a wise Innovator will ensure that a focussed ‘Innovation Strategy’ (Element 1) will be informed by sound ‘Data and Analytics’ (Element 2), which will lead to a portfolio of projects in an ideas launch platform going from ‘Ideation’ (Element 3) to ‘Validation’ (Element 4) and ‘Scaling’ (Element 5), all of which is underpinned by ‘Future Focussed Leadership’ behaviours (Element 7), which act to maintain an appropriate, supportive, ‘Innovation Ready Culture’ (Element 6).

Clarity on an Innovation Strategy

Clarity on an Innovation Strategy is a key feature of those who successfully embed Innovation in their organisational DNA. This is why Innovation Strategy features prominently in the framework above. You could ask yourself the following questions to reflect on the degree of clarity with Innovation that is in your strategies and plans:

  • Are we are clear on what we expect ‘Innovation’ to deliver?
  • Are our Innovation projects appropriately resourced and planned?
  • Are our Innovation plans are translated in goals and communications that having meaning for all involved?
  • Do we have a balanced portfolio of activities, creating an Innovation pipeline that has a sound mix of projects, spread across a range of Innovation risk aspiration levels and timescales?
  • Do our Innovation plans balance the tensions between short-term operational necessities and our Innovation aspirations?
  • Do we list strategic assumptions and test our hypotheses that are within the plans?
  • Are we effective at managing Innovation investments and setting related funding trigger and review points?
  • Have we maintained our Innovation efforts even when times are tough and short-term profits/savings are needed?
  • Do key stakeholders understand and have confidence in our Innovation plans, our project ‘pipeline’, and are they satisfied with the historic Innovation outcomes we have achieved?
  • Have we been able to ensure that we do not experience disruptive or competitive Innovations in our core markets?

Wise innovators

Wise innovators define opportunity and initiate ‘projects’ in a range of strategic innovation categories, for example:

  • Value Sustaining Innovation Opportunities: -These are their ‘play not to loose’ tactics. Activities at this level are typically directed towards reducing the risk of commoditisation of existing successful products/services, by activities such as creating variants to existing products and/or cost reductions.
  • Adjacencies for Market or Product Extensions: -Investments here are about achieving growth by either ‘Next Generation Products’ obtained by product/technology extensions, or ‘Market Extensions’ for migrating existing products or processes into new or adjacent markets.
  • Transformational Growth: Investment at this level is about ‘playing to win big’. This is often about both new markets and new technologies (new-new). Most organisations dream of creating the often called ‘Blue Ocean’ for transformational growth – uncontested market spaces about which much is written, but these are typically high risk ‘bets’ and wise innovators do not pursue projects at this level in isolation of other strategies.

An often quoted example of successful growth

An often quoted example of successful growth is Nike, who has transformed with a range of both adjacent and transformational Innovations, from its origin as a shoe company, into one where its future growth is now from digital technology (with phone apps, wearable devices, data and web services now a major part of its turnover). However not every one can replicate such success and there is an old saying that ‘whilst an early bird may get the worm, it’s the second mouse that gets the cheese’ and this applies to many Innovation successes. Apple was not the first to sell mp3 players, when they first launched the iPod; it was to them, at that time, an adjacent market. They had the capabilities to respond quickly, they built a clever new ecosystem around their new product (iTunes), and they laid the foundations for what many respect as some of the most impressive growth attained in the last two decades, through a mixture of exploiting adjacencies for their technologies and simultaneously creating a transformational growth ecosystem in iTunes.

The amount of investment

The amount of investment (*2) typically made in a specific category will vary dramatically, according to an organisations strategic need, but it is not uncommon for a mature high-performing company to use the often called “golden ratio” of innovation investments, in which 70% of available resources are allocated to Value Sustaining investments, 20% to Adjacencies and 10% to Transformational Growth, but such figures will vary significantly if rapid growth is being sought, catch-up is needed, or technologies are changing at speed.

*2 Nagji, B. and Tuff,G., May 2012, ‘Managing Your Innovation Portfolio’, Boston, Harvard Business Review. Reprint R1205C.

What next?

Maybe this brief article has helped you reflect on how well you are embedding Innovation into your organisations DNA. If you’d like to contribute to an ongoing debate and help us build a growing body of knowledge, to assist with Innovation Capability Building, please engage with our project via http://www.innovationreboot.org and/or our ‘Innovation Reboot’ Group on LinkedIn.

About the Author

Chris Hakes, Editor, The Innovation Reboot™ Project, Cambridge, UK, February 2014

Chris Hakes, maybe known to some of you through his work in the EFQM Training Faculty and supporting the Awards process over many years. He has recently gone back to his entrepreneurial and research, career roots and taken on a new job as Editor in a collaborative venture called 'The Innovation Reboot™ Project'. In the article above he shares some thoughts on the need for, and benefits of, this collaborative project, which is aimed at sharing good practices that may help organisations build innovation capability.