Despite the explosive rate of innovation transforming our world, how established organisations innovate themselves is another matter altogether.
The string of defunct or struggling organisations such as Kodak, Nokia, Blockbuster, Blackberry or Borders Books attests to the fact that incumbent, established and erstwhile successful organisations either resisted, or were unsuccessful at attempting intrinsic innovation. At the same time, industry research indicates that there is no statistical relationship between R&D spend and business, revenue and net margin growth.
Given that the real economy comprises mostly of established enterprises, be they government agencies, public or private firms, how can we realise the real potential of enterprise-wide innovation? The benefits are there for the taking, and include substantially improved enterprise agility, resilience, productivity and enhanced wealth creation.
While product based R&D spending and innovation may deliver hero products or service offerings, investing in an enterprise wide innovation capability is evergreen, as the organisation itself becomes a sustainable innovation incubator. Product and service based innovation is then a consequence - woven into the DNA of the entire organisation.
The key is to get it right.
Innovation or improvement?
Innovation means different things to different people, and is often context specific.
For example, an innovation in the air traffic control industry will differ from an innovation that relates to the use of smartphone technology. In the former, people may die if the innovation’s downstream impacts are poorly understood, while in the latter, failure may be an inconvenience, or even encouraged as a way of helping in the rapid evolution of the product.
Additionally, the fact that a new product or service offering may be marketed as “innovative” further blurs the distinction between an incremental improvement and a transformational or even disruptive innovation.
For any established organisation to really make sense of innovation, its C-suite executives must see past the innovation headlines to identify its potential value and risk to their own organisation.
So, in the new innovation economy, how does the C-suite of established organisations transition their enterprise to becoming “innovative” without either compromising effective governance, or diverting valuable resources from keeping the business running?
The key to building a sustainable enterprise wide innovation capability is to consider innovation through the three lenses of your (1) business strategies, (2) intrapreneurship and (3) organisational culture.
1. Rethink your high level business strategy
Conventional approaches to developing enterprise-level business strategies are being tested in the new world of technology-led change, marketplace disruption, globalisation and rapidly shifting customer needs. Ensuring that your high level business strategies remain relevant when confronted with innovation and change is key. This is not the world of fixed strategic plans.
Long term business strategies, while useful as a guide, have the potential to rapidly become irrelevant when organisations have to either respond to, or initiate rapid transformational change.
The important skill then becomes being able to rapidly review and alter key elements of the business strategy, while retaining its overall integrity.
2. Recognise and protect INtrapreneurs
An intrapreneur is an entrepreneur who operates within a large firm to drive value through internal innovation. Problems is, in the absence of an appropriate process, explicit executive support and protection, their life expectancy in established organisations is limited.
In their recent paper on realising the value of intrapreneurs UTS’s Prof. Ken Dovey and entrepreneur Dr Bruce McCabe offers valuable insights of three real world cases from very different industries. In each case, organisations failed to realise the value of the talent that was recruited at significant cost to lead an attempt at innovation.
Innovation should not rely on a job role or title, but should be an intrinsic organisational capability.
3. Build an innovation culture: incubate, don’t mandate
Top-down initiatives calling for “innovation” or one-off ideas are unlikely to result in an a sustainable innovation capability.
Within your organisation, in what way are the insights of your junior staff valued and assessed? Those involved in the development of innovative ideas soon become disheartened when their ideas are dismissed by senior executives who do not understand their origins or context. This has a corrosive influence on any executive level attempts at fostering innovation.
Remember when it comes to innovation in established, hierarchical organisations - insights trump seniority and ego.
The critical success factors that result in a sustainable, enterprise-wide innovation culture lies in the C-suite:
1. Architecting and implementing a holistic enterprise strategy which embodies agility. Innovation will not thrive if the organisation is change resistant.
2. Developing innovation processes that are transparent, inclusive and secure. Individual innovation can be unpredictable, however collective innovation requires a process. Understand that enterprise-wide innovation is not an ideas-fest, ideology, marketing strategy or competition where “winner takes all”.
3. Reviewing staffing strategies, incentive schemes and structures to maximise executive and employee (or contractor) engagement. Innovation will most likely fail if the staffing strategy is based on a revolving door of casual, contract and interim staff.
4. Defining and measuring strategic leadership competencies for innovation throughout the organisation.
When the organisation is already being adversely impacted by change, the proof that existing business strategies and innovation capabilities have fallen short of the mark should be plain to see.
But before you call in the consultants, stress test your business strategies, intrapreneurship and culture.