Many books and articles have been published that deal with how to make innovation more effective. Yet very often I have seen companies struggle with the basics of running a successful innovation program. For example, new product ideas may be mainly generated by R&D, based on a technical understanding of customers’ challenges, and not marketing and sales, although those functions communicate with customers on a daily basis. In other cases, companies may talk a lot about innovation, but may not understand how to measure it and how to implement productive innovation processes.
I believe that companies generally know what makes innovation successful, but that it is very hard to make lasting changes to the organizational culture that promote innovation. Many new innovation initiatives hit a wall of organizational risk avoidance and resistance to change. Why would a successful executive change the way he or she has always done things? It is particularly hard to implement a new innovation process when a company has had frequent management and strategy changes. The new process will be seen by the organization as a temporary adjustment and lasting change will be very difficult.
In this article I would like to discuss 6 ways to be more innovative that require only minimal changes to corporate structures and processes. The small steps I will discuss can be put into place immediately without any investment and low risk of failure. When these small changes produce measurable outcomes, they can yield innovation success stories that build support for larger process changes.
Visible C-suite support for innovation
No one outside R&D will pay much attention to innovation programs if they are not seen as core to the company’s strategy. Corporate leadership can’t be seen as delegating innovation to a subsidiary function. If this happens, innovation activities become prime targets for corporate cost reduction, especially because the business impact of innovation is hard to measure.
However, of all company activities, long term survival of the firm is determined to a large extent by its success in innovation. Clayton Christensen’s famous text The Innovator’s Dilemma clearly demonstrates that stagnant firms tend to wither.
For a company to be innovative, the CEO needs to be talking about innovation at every opportunity. Too often, corporate communications center on financial results and not on products and customers. If a firm is seen as innovative, top innovators will want to work there, external partners will be motivated to collaborate on new ideas, and the firm will be more attractive to investors. Companies with higher growth prospects have higher valuations.
Better ideation to fill up the early innovation pipeline
Brainstorming is an excellent way to generate ideas for innovations, but very often it is not done effectively. For example, the business problem that the brainstorming team is asked to address may not be addressing the real customer pain points: it may be too technical, or too generic so that the ideas are scattered and not actionable. Very often the participants in ideation sessions are mostly R&D personnel and participation from other business functions is lacking. But R&D is not the business function that is closest to customers, leading to a disconnect between the innovation pipeline and customer challenges. On the other hand, if the customer problem is very technical, brainstorming may not deliver a solution where in depth technical analysis is needed.
How can ideation be improved so that projects in the innovation funnel correspond to immediate customer needs? Where possible, customers should be included in ideation sessions, at least in the early, non-confidential stages. Before the session, the team benefits from spending time analyzing the customer problems and refining the challenge questions used in the ideation. If the challenge questions are directly relevant to customer challenges, the ideas generated will be more specific and actionable.
An experienced facilitator can make ideation much more productive by engaging all participants and steering the discussion away from dead ends. The facilitator should allow participants to build on each other’s ideas, because the best ideas are often composites. Good ideas that aren’t relevant to the challenge at hand can be parked for later consideration. After the session, the project team needs to follow up on every idea to keep the idea submitters engaged and motivated.
More robust decision processes at gate meetings
Innovation projects at large corporations are generally governed by a stage-gate mechanism. Projects proceed through a series of gates that release additional investment funding if the project is approved for passage to the next phase in a gate meeting. The goal is to fund only the projects that have the highest chance of giving a positive return by launching successfully and meeting their sales targets.
In my experience, it is very hard to run such gate meetings effectively. If gate decisions are not well grounded, innovation projects are funded that may not be the best investment opportunities.
Ideally, in a gate meeting innovation projects are brought to the table that compete for available resources, which are both financial and human capital resources. The projects that score highest on a predefined list of clear, transparent and objective gate criteria should be funded. The gatekeepers/decision makers then need only consider the risks of the projects presented and their potential future payouts in the form of the net present value of future cash flows.
In practice, this idealist situation never materializes. Often, there is significant uncertainty in the NPV and project teams have an incentive to present their financial models in the best possible way, with little pushback if they are too optimistic. Risk analysis and mitigation is cursory at best, if done at all. Finally, not enough projects compete, so that it is unusual that a project is killed or sent back. Also, a project may have strong senior executive backing, which makes it politically difficult to vote against.
In some cases, gate criteria become long checklists of business and technical criteria. The risk is that project teams spend more time preparing to defend their project against checklist criteria than developing products. The data requirements can be excessive for smaller projects. It is hard to get this balance right.
Such issues are rarely effectively addressed. With an inefficient decision-making process, gate meetings become project status updates. This wastes everyone’s time. Implementing improved decision-making is a first step to a robust innovation pipeline.
Making innovation tools available but not mandatory
Innovation initiatives often come with an assortment of new tools available to practitioners. Some examples are new checklists to complete and present at gate meetings, or new ways to calculate a project’s value. The firm may have developed new ways to plan and manage projects using project management software. New risk management and mitigation processes may have been set up.
These tools are meant to improve project launch efficiency. They can improve the quality of project business cases that are presented for funding at gate meetings. They may also allow better resource management and resource tracking by offering project management techniques. And they improve the chances of project success by estimating risks and providing guidance for risk management strategies.
But there is often a learning curve for project team members to use new tools effectively. Project leaders and others who will use the new processes and tools must be trained. Above all, decision makers need to know how to evaluate projects and how to ask for the output of the new tools. If managers don’t ask for thorough business cases, including project plans and risk mitigation plans, project leaders will not see the value in spending the time to learn and use new tools. This can cause rapid failure of innovation initiatives.
The solution is not to stay away from new tools, but to introduce them with detailed and frequent training. Using the tools and attending training should not be mandatory but need-based. If team members and managers are not using the new tools, they are not adding value.
Everyone ideates and innovates
Too often innovation is seen within firms as the job of R&D. Innovation goals are R&D goals and new products launched and patents filed are the R&D metrics. Other corporate functions, such as manufacturing, sales, and administration, rarely contribute new product or process ideas. However, this thinking leads to functional silos that don’t communicate outside their area of responsibility. It leads to slow innovation and growth.
In reality, innovation and new ideas can come from anywhere. New manufacturing processes can enable new products and lower costs. Better customer relationship management allows the firm to better understand customer needs and wants. Improved sales methods let a company understand and target hidden customer needs that customers may not be able to articulate themselves. Every function has opportunities to improve its work methods and innovate. There is also a lot of value in including different functions in ideation sessions to obtain a greater diversity of ideas.
Functional participation in innovation initiatives can be encouraged by aligning functional priorities and objectives around growth and innovation. Frequent communication between functions at all levels is crucial so that the challenges faced by one function become a challenge for all.
Measure and reward innovation impact
An innovative organization enables and rewards its innovators. How can it best do that? According to Griffin, Price and Vojak in their book Serial Innovators, managers should reward innovators with freedom to pursue their interests, time to define the most important customer problems to study and solve, and the resources they need to do that. Freedom means that innovation is not tied up in bureaucratic processes and that innovators can set their own goals.
As mentioned, there is a risk that innovation management processes become bureaucratic by requiring excessive documentation, especially for small and exploratory projects. This situation hinders and frustrates innovators. Companies need to find a balance between careful innovation management and demands on innovators’ time.
A firm can create opportunities for workers to innovate by bringing them together to work on common challenges. Many companies host idea competitions for employees, which provide out of the box ideas for the innovation funnel. An internal conference or poster exhibition is also an excellent way for innovators to share ideas and find like-minded coworkers. Such events can improve communication through the whole company and build a strong innovation culture.
Communicating and sharing innovation success stories in the whole organization will inspire and motivate other innovators. The value created by innovation can be demonstrated with several metrics that I reviewed in an earlier article. Some examples of metrics are the number of new products launched, the number of ideas generated by the organization, and the number of patents and trademarks filed. Measuring quantitative innovation outcomes makes it easier for managers to support the effort required to build and maintain an innovation culture.
Send us a note if we can help you implement one or more of these ideas!