Have you recently come across expressions like, “Been there, done that,” or “I told you already” when you talk about the challenge of running a successful and sustainable innovation initiative within your organization? Well, you are not alone. Welcome to the land of innovation, where you know that your organization won’t survive without it, but you haven’t yet figured out the magic formula for its success.
This challenge is much more severe for large corporations where the so-called “psychological inertia” is high and there are many people who are happy to maintain the status quo. While the start-ups and smaller organizations look at innovation as a 100m race, for larger organizations it is more like a marathon. You should have a continual source of ideas and the funding to keep the innovation initiative running for a long period of time. Most importantly, you should have patience.
Organizations have now mastered some key ingredients of an innovation initiative. These include stage-gated process, ideas qualification methodology, regular governance, and exploring the extended ecosystem of suppliers and partners. Also, there are a few important areas that are often missed, and can contribute to the failure of the innovation initiatives:
1. Connect to the business—The innovation initiatives are usually housed under CTO or CIO organizations. These are driven by external technology trends rather than pressing business needs. It is similar to a man with a hammer whose every challenge looks like a nail. The people who are passionate about the latest technology find a reason to use it within the business. This approach risks of little sustained support from the business, eventually drying up the funding source. The successful innovation teams, on the other hand, are as fascinated by the business problems as by the technology trends. They talk to the business stakeholders on a regular basis to understand their current and future challenges. The composition of the innovation team is an important factor in solving this problem, but I think the root of the issue lies in a process that doesn’t facilitate regular discussions between the innovation team and the business stakeholders.
2. Spread your bets—Innovation activities can be presented as a spectrum. The left side of the spectrum is about incremental or Kaizen innovation, while the right side of the spectrum represents transformational or radical innovations which “Uberize” your industry. The worldview of innovation is skewed towards the right. The startup community and the innovation forums talk more about the transformational innovation ideas. For larger organizations, based on the type of industry and the inherent culture, it is important to have the initiative extend across this spectrum. While the transformational innovations give groundbreaking revenue opportunities, the continuous improvement through Kaizen innovation can generate a consistent revenue stream (through cost savings and efficiency gains) to fund some of the transformational ideas of the future. The time horizon to witness the impact of Kaizen innovations is relatively short, which helps to keep the interest of business stakeholders.
3. Scale-up the pilots—Most innovation initiatives follow a stage-gated process that moves the ideas from a fuzzy state to full-scale projects. While the journey from crazy ideas to pilot execution can often progress at a good pace, there is a sudden choking effect as the pilots are completed. Even with a well-calculated ROI and a feasibility study, the organizations find it difficult to scale a pilot into an industrialized solution—whether it is a product or a process. The ideas get parked at this stage for reasons such as lack of funding, immature markets, or not-scalable technology. While these pilots serve as strong sample cases to explore the art of what’s possible, they delay the revenue steam on which the business case was initially built.
As organizations continue to run this innovation marathon, a quick self-examination on the above points followed by taking the necessary corrective actions will help them to finish on the podium!