Innovation is discussed now like never before. Worldwide, companies appoint someone – even a whole team – to manage innovation. The question is: what are the true effects? In a global survey led by McKinsey, 94% of managers interviewed were dissatisfied with the capacity to innovate of their companies. Indeed, it’s not easy at all to develop a strategic management that both inspire in the team the instinct to innovate and test the best ideas. However, if your company has thought about making an innovation plan or has struggled to carry it out, note the five steps, which, according to innovation experts Gary Hamel and Nancy Tennant, build an innovative company:
1. Employees taught to think like innovators
Many managers still believe in spirits genetically blessed with the gift of creativity, while the rest can’t come up with anything more exciting than “We should change the color of the walls because I’m tired of this one.” However, the fact is that most professionals don’t have a chance to exercise their creative thinking, to present their ideas, either to test them. So, these are the first lessons you should teach your team:
a) Challenge common sense. When there is no social, cultural and gender diversity in a team, professionals tend to read the same things, go to the same places and talk about the same subjects. After a while, all they have the same ideas. Innovators, instead, question what they see and learn that laws and obvious notions were ingrained beliefs, traditions and manipulation.
b) Don’t underestimate trends. Innovators don’t spend much time speculating about what might influence people’s behavior. Instead, they pay attention to small and quick changes that are happening. Keep an eye on trends that your competitors didn’t have noticed yet and that your company can use.
c) Focus on the company skills. The capacity for innovation is thwarted when the company is defined by what it does, its products and services, not by its skills, methodologies and its intellectual capital. Innovators see their company and the world around it as a set of skills that can be endlessly recombined to create new products and services.
d) Investigate implied needs. Asking your customers what they want rarely produces a great insight. Therefore, investigate: Where are we wasting our customers’ time? Where are we making things overly complex? Where are we treating customers like numbers instead of people?
2. A shared definition of innovation
Having a practical, agreed-upon definition of innovation makes it easier to set goals for innovation, to allocate resources to innovative projects, to plan a cadence of innovative product launches, to target advertising on high-value breakthroughs, and to measure innovation performance. By the way, here are some examples of successful innovative companies to inspire your team.
As a starting point, it’s important to look back over a decade or two and identify the sorts of ideas that have produced noticeable margin and revenue gains. For a product or service to be counted as innovative, your company may define that it must be unique and compelling to the consumer, create a competitive advantage, sit on a migration path that can yield further innovations, and provide consumers with more value than anything else in the market. It’s also important to periodically review the definition: did the products/services that got rated as highly “innovative” actually yield above-average returns?
3. Clear ways to measure innovation
There are several ways to measure the performance of an innovation. To be the more comprehensive possible, remember to measure:
3.1 Inputs: the investment dollars and employee time devoted to innovation, along with the number of ideas that are generated internally each month or sourced from customers, suppliers, and other outsiders.
3.2 Throughputs: the number and quality of ideas that enter the pipeline after initial screening and the time it takes for those ideas to move from concept to prototype to reality.
3.3 Outputs: the number of innovations that reach the market in a given period, the percentage of revenue derived from new products and services, and the margin gains that are attributable to innovation.
3.4 Leadership: the percentage of executive time that gets devoted to mentoring innovation projects.
3.5 Competence: the percentage of employees who have been trained as business innovators, the percentage of employees who have qualified as innovation “black belts,” and changes in the quality of ideas that are being generated across the firm.
3.6 Climate: internal surveys may reveal whether the company’s leaders have encouraged or frustrated innovation.
3.7 Efficiency: changes over time in the ratio of innovation outputs to inputs.
3.8 Balance: the mix of different types of innovation, like product, service, pricing, distribution, operations, etc.
4. Accountable and capable innovation leaders
How many leaders in your business, from project managers to vice presidents, are responsible for innovation? And how many of them were trained to master and encourage innovation in their teams? In short, to be an innovation leader means:
4.1 Being adept at using innovation tools.
4.2 Creating frequent opportunities for blue-sky thinking.
4.3 Avoiding premature judgments when evaluating new options.
4.4 Demonstrating an appetite for unconventional ideas.
4.5 Recognizing innovators and celebrating “smart failures.”
4.6 Personally mentoring innovation teams.
4.7 Freeing up time and money for innovation.
4.8 Hiring and promoting for creativity.
4.9 Working to eliminate bureaucratic impediments to innovation.
4.10 Understanding and applying the principles of rapid prototyping and low-cost experimentation.
5. Innovation-friendly management processes
When Whirlpool’s then-chairman, Dave Whitwam, committed himself to build a culture of innovation in 1999, he told his colleagues that the journey would take at least five years and that, during that time, innovation would remain his top priority. He made it clear that this wasn’t going to be another program du jour. Moreover, he clearly understood the scope of the challenge. “Ultimately,” Whitwam warned, “every job and every process will change.” Think of how many leaders you know are willing to do so. Are you?
No matter how much the company’s practices are innovative, if your entire business model isn’t dedicated to innovate. If the company’s budgeting process is conservative and makes it difficult for employees to get funding for small-scale experiments, any investment in innovation skills will be wasted. If its product development process places too much emphasis on removing risk from new launches, few new-to-the-world products will make it to market. If its assessment and compensation system doesn’t reward innovation performance, it will end up with managers who are more bean counters than trailblazers.
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