I nnovation may feel like a trend or industry buzzword, but at companies like Apple, Aglient, 3M and Infosys, it is a core competency. Executives at these companies have chosen not to fall prey to their own past successes but instead they have chosen to make innovation a methodology for how they do business.
A study published by Claudio Loderer, Klaus Neusser, and Urs Waelchli (2009, University of Berne) reveals that less than 50 percent of companies survive longer than a decade, only 15 percent survive longer than 30 years, and a mere five percent make it to celebrate their 50-year mark.
For a company to be a market leader, or shift from a defensive to an offensive position, innovation must play a key role. But rarely is the road to innovation a straight line.
Five years ago, Booz & Company identified three categories of innovative companies: Need Seekers, Market Readers and Technology Drivers. Each offers its own distinct way of managing the innovation process and engaging with customers and markets.
Need Seekers include companies like Apple and Procter & Gamble that go directly to the customer for new ideas. They proactively gather expressed and unexpressed customer needs, and vigilantly work to be the first to get to market.
Market Readers such as Hyundai, Caterpillar, and Samsung use a variety of means to generate ideas by closely monitoring their markets, customers and competitors. They focus largely on creating value through incremental innovations to existing products and services. These companies are also referred to as fast followers.
Technology Drivers like Google and Bosch, depend heavily on their internal technological capabilities for the development of new products and services. Time-to-market is less of a concern than the technology behind the initiative.
Regardless of the strategy, innovation is just a fad and not a strategic discipline unless corporate executives:
- Create a customer centric culture.
- Institute processes for capturing creativity and ideation.
- Develop outcome-based implementation plans.
- Make accountability a corporate strength.
- Embrace change and support others through the process.
Let’s examine each aspect:
Create a customer centric culture
For all innovative companies, understanding their customers better than their customers understand themselves is an area of expertise especially for Need Seeker companies. Strategy, decision-making and implementation plans center around the goal of delighting, or “wowing,” the customer. Before strategic decisions are made, the question is asked: “How will this result in delighting our customers?” If the answer is not compelling enough, alternate options are explored.
At these companies, every employee understands and can articulate how the work that they produce contributes to delighting the customer. Individual performance goals align with corporate strategic goals and performance is measured. When I worked at Procter & Gamble, our mantra was “performance excellence” – it was a cultural norm.
Institute a process for capturing ideas
Innovation can only flourish in a fear-free zone – where everyone at every level has permission to contribute. Innovative companies often flex between different styles of ideation, creating a new spin to diversity initiatives: collaboration between those with highly technical expertise mesh with those who possess customer expertise; those with historical company knowledge engage with market or industry visionaries; analytical thinkers partner with those who think imaginatively. Consider adding customers, suppliers and outside experts to the conversation as their perspective can enrich the discussion and spark new ways of thinking.
The fundamental competency shared by innovative companies is that they all have a formal process for capturing and processing ideas. They recognize that many of the best ideas occur as a by-product of everyday work life and want this information captured in rea time.
Develop outcome-based implementation plans
Not all ideas are created equal.
There is an inherent risk of falling in love with ideas that have great curb appeal, but aren’t likely to generate significant revenues. Outcome-driven executives require a business case to justify customer value before the investment to allocate financial or manpower resources is allocated.
In the Booz & Company’s “Making Ideas Work” article, Matthew Ganz, vice president and general manager of research and technology at the Boeing Company says, “If you have a creative idea and it doesn’t create value, it’s not technology. It’s art. You need to prime the pump with creative ideas, and then you need to have rigorous processes in place to turn those ideas into dollars.”
Ideas must be vetted and the financial investment justified. Once that happens, a detailed working plan is developed so everyone knows who owns what responsibility.
Make accountability a corporate strength
Accountability is what turns innovation from being a fad, to becoming an institutionalized corporate value. Idea generation transforms into idea conversion and the roadmap for implementation is then defined. Action steps are assigned, and team members become accountable to one another creating a closed-looped process.
Embrace change and support others through the process
New product or service offerings can demand new ways of doing business, and in some cases even require a new business model.
The resistance people feel about change is often not so much about the change itself, but what the change represents: a loss of status, the uncertainty of unknown (a loss of control), or a threat to existing relationships.
Leaders can help employees improve how they embrace change by preparing them for it. Explaining why the change is necessary and the inevitable consequence(s) of maintaining the status quo provides employees with a context for understanding the rationale. Too often, this information is discussed at the executive level, but by the time it is shared with employees it has become so intuitive that it is often overlooked.
Whenever possible, it’s best to present information in smaller chunks (versus disclosing the whole plan at a single meeting) so employees have adequate time to internalize the meaning of the message and its respective impact. Seek employee input so key opportunities, and likewise barriers to success, are identified and discussed. This cultivates an environment of trust and encourages a higher level of employee engagement.
For innovation to become a cultural competency, leaders must pay equal attention to two elements: fostering an environment that nurtures innovation, and establishing the infrastructure and processes to generate the right results. Innovation is both systematic and opportunistic and inspiring engagement is a top-down responsibility. n
Christine McMahon is a business strategist. She can be reached at (414) 290-3344 or by email at: ccm@christinemcmahon.com.
