INNOVATION CAN BE GAME CHANGING and disruptive, but it can also be a small, incremental improvement to something that already exists. The key to innovation is progress. Generally, the progress that organizations make is forward, although sometimes organizations can progress by taking a couple of steps back, and there is nothing wrong with that.
Innovation keeps organizations alive and competitive. If an organization relies too heavily on what it already provides, eventually competitors will pass it by or customers will change what they are looking for.
The telephone is one of the most innovative inventions ever produced, and just look how it has evolved. Can you even fathom picking up an earpiece and speaking into a separate mouthpiece to an operator who then puts you through to another person? Contemplate that notion while you talk and text on your mobile phone. Customer needs have changed, and the product we call the “telephone” has changed with them. (In the case of the telephone, the evolution of the product has made customers realize they have needs they never knew about before.)
Innovation is the improvement of an existing product or service to achieve a better outcome or the development of a new product or service that achieves a positive outcome. It can be a small improvement to something that exists, or it can disrupt an entire industry. That’s what makes innovation so challenging and so fascinating. It is dynamic, constantly changing and moving. Organizations and individuals are constantly making improvements and conceiving new ideas.
There is no such thing as a status quo for an organization. You might think an organization can stagnate, but it can’t. Even if an organization isn’t making changes on its own, the external factors around it are changing. New competitors are entering and leaving the marketplace. Customer habits are changing. New legislation is being implemented. The economy is on an upswing or downswing. Organizations need to constantly adjust to those external factors by innovating. The best organizations anticipate changes and make adjustments quickly.
Innovation can be a small change to a process, or the development of a new tool, or the creation of a brand-new product. Innovation is not just about being stagnant or being satisfied with the status quo. Innovation is the difference between organizations that survive and those that thrive. And innovation, if it is to be effective in moving an organization toward operational excellence, must involve collaboration.
Fostering innovation requires a certain mind-set to prevail, both within industries and within individual organizations. Figure 4-1 shows six attitudes and actions that are essential if an organization is to foster innovation.
To foster innovation, we need to understand what it is. Innovation can be an incremental improvement or an enhancement to something that already exists; it can be a new, ground-breaking idea; or it can be anything in between. Innovation can take different forms even within an organization. Apple developed game-changing products with the iPod, the iPhone, and the iPad, but it has also made enhancements to existing products like the personal computer.
Organizations need to build systems that encourage and incent innovation. Incentives for innovation come not only from within individual organizations but also from governments, associations, and industry stakeholders. Organizations that successfully innovate provide incentives for new ideas and improvements, keep barriers to innovation low, and provide funding for new and innovative ideas. Equally important is removing elements of the organization’s culture that hinder or criticize those who are trying to innovate.
Figure 4-1. Attitudes and Actions That Foster Innovation
Innovation is a risky business; not all innovations are successful. For every successful product enhancement or new product that comes to market, hundreds have failed. However, with risk comes reward, so organizations that want to foster innovation also need to be driven by the prospect that great potential benefits can accrue from the innovations they are developing. Organizations need to encourage trial and error and positively acknowledge people, teams, and departments that are trying to fulfill a customer need or create one. Collaboration is key to encouraging this appetite for risk.
As with any journey, the path to innovation needs a roadmap. When you plan a trip, a map shows you how to get from where you are to where you want to be. Innovation is no different. Once you have an idea of the direction you want to go, you need to develop a map that identifies the steps you need to take, the processes you need to follow, the stakeholders you need to engage, and the metrics you need to use to ensure you are successful in your journey.
Collaboration is an important component of innovation because innovation is not just about ideas; it is also about the implementation of those ideas. You can’t expect to adopt new ideas without input and support from others. Those others might consist of fellow employees, customers, suppliers, investors, or other business partners. For innovation to be successful, some of the people most impacted by the innovation should be involved.
Once you know the destination you want to reach and have created the roadmap to get there, you need to take the first step. The first step can be a difficult one, but without this fifth action, the first four are useless. You need to know where you are going, you need to have the appetite for risk, you need to have incentives to innovate, and you need to know what innovation means for you and your organization. Then you take the first step, and Newton’s first law of motion takes over: “Something in motion tends to stay in motion.”
Taking any step is often better than being stagnant. Remember that innovation can’t happen in a vacuum, so it needs to be supported by many areas within an organization in order to be successful.
The Canadian bookstore chain, Indigo Books and Music, has had to rethink its business model; it needed either to innovate or to be left behind with the growth of digital publishing. Indigo Books and Music has transitioned from a bookstore to become more of a general store. It stills sells thousands and thousands of books and magazines, but its product mix now includes a children’s toy section, a section for music and DVDs, a section for household accessories (candles, vases, picture frames), and an in-store coffee shop. It also offers home delivery for most of its products.
Indigo Books and Music recognized that change was required. They defined what that change would look like for them and learned to understand innovation. They took a risk in trying to create a new model for bookstores and created a roadmap to get there. Every strategy they implemented moved them toward becoming a place for people to buy more of their household needs and spend more time in the store. They collaborated with customers and suppliers to find the right mix of products, constantly trying new product lines and removing others.
Indigo Books and Music has now turned its stores into meeting places where people come to browse, have coffee on their own or with friends, treat their children to a story hour, or sit quietly and read. They offer thousands of gift and household items that encourage customers to spend more time in the store. In a very challenging marketplace, Indigo Books and Music has evolved into not just a place to buy but a place to read, congregate, and socialize.
Innovations are commonly thought of as something new and game changing. However, many innovations are improvements on something that already exists. For every invention like the iPod or the television, a faster car or a stronger material is being produced. All of these are innovations.
In his book The Innovator’s Dilemma, Clayton Christensen classifies innovations into three types: evolutionary innovations, which improve a product in an existing market in ways that customers are expecting; revolutionary innovations, unexpected innovations that do not affect existing markets; and disruptive innovations, which create a new market by applying a different set of values that ultimately (and perhaps unexpectedly) overtakes an existing market.
Although this might help us to segment different types of innovation, what’s more important is creating a culture of innovation within your organization. Christensen gives us some guidance on the different types of innovation, but we need to have the culture and the mind-set to make any type of innovation work.
I believe there are only two types of innovations: those that work and those that don’t. And there are only two types of organizations: those that succeed and those that fail. Innovation and success are closely linked. The ones that innovate are often the ones that succeed.
Why are some organizations more successful than others at innovation? Is it because they have smarter people who have better ideas? No. Is it because they are blessed with a better set of circumstances? No. Some organizations are better than others because they implement a culture of innovation and manage the innovation process. And they recognize the importance of collaboration within that culture.
A successful organization is one that grows constantly by balancing innovation with operational excellence. It is one that integrates innovative thinking into its daily operations. It encourages risk and rewards good ideas, even when they don’t work. It encourages employees to show up at work every morning and question how the organization operates. A successful organization is one that excels at turning new ideas into usable products and services for its customers.
At companies like Google and Apple, employees are encouraged to spend up to 20 percent of their work hours investigating new ideas and improvements, even if they have nothing to do with the employees’ actual job responsibilities. Many great innovations have come from employees working on challenges during their free time. But this kind of formal initiative is not required in order to encourage and foster an innovative culture.
What separates truly innovative companies from those that just say they are innovating? There are two key factors.
The first is the size of the organization. Smaller organizations tend to innovate more, though some large organizations are exceptional innovators. Companies like 3M, Apple, and General Electric are leaders in innovation. But for every one of those companies, a plethora of other large organizations are not innovating at all. Smaller companies often compete against larger companies, and sometimes their only competitive advantage is the speed and delivery of new innovations, large and small.
The second key factor is a culture of innovation. This means an organization encourages new ideas, challenges the status quo, and is comfortable with failure. Groundbreaking drug treatments go through years of trials before they work successfully on humans. The Wright brothers failed hundreds of times before finally achieving flight. A culture of innovation is a mind-set, not a process or a methodology, and that mind-set starts at the top. How do you treat employees who make mistakes when they try to develop a new solution or solve a customer problem in a different way? The answer to this question alone will tell you whether you are fostering a culture of innovation.
Within that culture of innovation is a collaborative subculture. Successful organizations realize that innovation won’t be successful if it happens in a vacuum, that it needs input from many different stakeholders. Although one person may come up with an original idea, that idea will never become a success without the work of others to test the idea, enhance it, and make it successful.
Figure 4-2 depicts the cycle of innovation and its six stages. Paying attention to these stages will help your organization become successful not only in identifying new ideas, but also in prioritizing them, implementing them, and integrating them into your company’s operations. You must ingrain this cycle into the DNA of your organization.
Figure 4-2. The Cycle of Innovation
The different stages of the innovation cycle revolve around the empowerment of your employees.
Organizations must encourage a culture in which new ideas are generated and employees are encouraged to think of creative solutions and improvements in the way the company operates. The key at this stage is not to focus on details but to foster ideas. Encourage a company-wide brainstorm in which no idea is too far-fetched.
Hubspot develops inbound marketing software that helps companies attract new leads and turn those leads into new customers. Hubspot holds monthly “sprints,” in which teams are organized around developers and product managers. These teams avoid detailed specifications and plans and instead focus on generating new ideas.
One of the keys to success in the gather stage is that these new ideas may come from employees, customers, suppliers, or other business partners. Collaborative discussions with your business partners can yield productive ideas, and you may get unexpected perspectives from people outside your organization.
Ideas that are identified in the gather stage need to be reviewed for impact and usefulness. What this really means is that the risk of each idea needs to be assessed; you need to get at least a cursory understanding of the potential rewards. What will be the impact of the idea? What risks are associated with it? What is the level of effort required to implement the idea? All these questions need to be answered.
You can establish a review team, or the review can be done by one person. Each organization is different, but as a general rule, collaboration is a key factor in making innovation work: The more of the right people you can involve, the more ownership each idea will have.
Develop some parameters around how ideas are chosen for development. Then create a short list of those ideas that have the best potential for success, the highest potential impact, and a tolerable level of risk. Having guidelines for the selection process makes reviewing the ideas easier and more transparent and gives the review team the ability to focus on certain decision-making criteria.
Try to make the review a rich collaboration. It’s important to involve representatives from different departments within the organization to ensure a broad consideration of each idea. You may even bring in representatives from outside the organization who can offer a different perspective on the discussion. This collaboration will help look at the idea from different angles and even enhance its viability.
Once all the ideas have been reviewed and a short list has been made, you need to examine the remaining ideas to identify those for which at least some progress is possible.
It’s important to recognize from the outset that not all ideas are going to be addressed, so you need to establish how they will be prioritized and how that prioritization will be communicated to the organization as a whole. Will it be based on senior leaders making intuitive decisions, or will they use objective, transparent decision-making criteria? Do you move forward only if there is dramatic financial impact or, say, because it is the right thing to do for your customers?
The objective of prioritizing is to select one or two ideas that can have the greatest impact or that can provide the best results and then to move forward with only those.
Apple had the idea for the iPhone and the iPad at the same time, but Steve Jobs decided to pursue the iPhone first because he wanted to change the way people interacted with their cell phones. Apple built the iPad only when they saw how poorly other tablets were being made.
It’s important to prioritize, or nothing will get accomplished. When you have too many priorities, you end up with none.
Now that you have one or two ideas to move forward with, develop an execution plan for getting those ideas to market. Identify who will work on the idea, the timelines for completion, what success will look like, and who will be accountable for that success. This plan can then be tracked and measured to ensure that progress is being made.
Don’t just track activities and tasks; focus on results and outcomes. Look at your plan and identify areas where things could get held up or sidetracked, then take measures to make sure that doesn’t happen. Look at what has worked for your organization in the past, and replicate it. Look at other successful product launches, determine why they were successful, and repeat the process.
Organizations like Google plan their product releases very carefully in order to gain an advantage over the competition. They assign project managers to each release to ensure that accountability is sustained and activities are completed on time and successfully.
Begin executing the plan. This means assigning resources to the idea, along with clear roles and responsibilities; most important, things need to actually get done. Someone, whether a project sponsor or senior executive, must have overall accountability for the success of the initiative, and this should be clear to everyone involved.
The execute stage separates market leaders from the rest of the field. Those that can execute most effectively will dominate by combining speed and quality. For years, IBM dominated the personal computer industry. Due to a lack of execution of new ideas and a change in strategic direction, IBM no longer even makes personal computers. Toyota cars used to be synonymous with quality, but after the company grew too quickly and executed poorly, the brand’s reputation and sales suffered.
It’s also important to note that the better the collaboration you have had up to this point in the process, the easier execution will be. If the right people have been involved in the reviewing, prioritizing, and planning stages, then they will know what is expected of them and their criteria for success. That serves as a much better foundation for success than if you were just bringing them into the fold at this point.
Ongoing execution and support for innovation needs to be integrated into the company’s daily operations. This integration includes transitioning relevant knowledge and maintaining focus on which parts of the organization are accountable for the success of the innovation. After this step has been completed, the new idea should be fully integrated into your operations and your support functions.
At this point, do one final piece of integration: Review the success of the initiative, and integrate any lessons you’ve learned into your organization’s way of operating. Identify what went well and should be repeated and what needs to be improved on in your company’s innovation cycle so that it works more smoothly the next time you undertake something new.
The empowerment that’s at the heart of this cycle gives your employees the ability to make decisions, try new ideas, and collaborate with others. After the integration is complete, you can begin the cycle again, generating new ideas and innovations. If you have previously generated ideas you now want to act on, you may want to fast-track them to the prioritize stage.
Make sure that your company is constantly moving forward one step at a time. Too many organizations breathe in their own exhaust and become complacent after one or two successful initiatives. Focus on establishing a culture of innovation that will ensure your company’s success for years to come, and focus on managing the cycle of innovation with each new idea. Even if a given idea is not a commercial success, your process of bringing that innovation to market will remain solid.
Innovation needs to be like a flowing river, constantly changing and moving and going in different directions. When the water stops flowing, a river becomes stagnant and dries up. The same stagnation can occur with your ideas and eventually your results if you don’t figure out how to harness the power of your people and encourage them to take risks as you manage the innovation cycle.
Think of how the planets in our solar system revolve around the sun. Without the sun, none of the planets would survive. Similarly, without empowerment, innovation will not be sustainable. The successful completion of the innovation cycle depends on permitting your employees to fail productively.
Productive failure is a concept that many organizations have trouble embracing. It’s hard to accept the fact that sometimes, in order to improve, you need to fail. Not every organization makes that connection, but it is evident throughout successful companies. The most successful companies recognize the value of a failure. They also recognize that there can be a problem not just with the failure in and of itself but with how people react to the failure. Do they hang their heads and sulk, or do they get energized because they are one step closer to making an idea viable? Successful companies foster the latter response. Also, failure can help an organization improve on and enhance the original design of the product or service. If it didn’t work, why didn’t it work? What enhancements can be made not only to fix it but to make it better? Failure provides organizations with the opportunity to develop better solutions.
Here’s a quick summary of four actions you can take to effectively manage the innovation cycle:
Be collaborative in the broadest sense. Encourage new ideas from all sources—customers, employees, suppliers, and other business partners. You never know where your next great idea will come from.
Put a lot of attention and energy into assessing the risks and rewards of those ideas. If you decide to move forward with a new idea, then you should know why; you should be able to clearly identify any risks or issues associated with pursuing the idea.
Prioritize based on key factors. Look for ideas that will have the largest impact on your business and a high potential for commercial success.
Focus on effective planning and execution. Without execution, there is no strategy. Planning is useless if the plans are not executed. It’s important to plan, but it’s even more important to implement and execute effectively.
Imagine an organization in which all of the employees come to work every day wanting to improve how the organization operates. The hallways buzz with collaborative discussions and new ideas. People are energized about the prospect of creating new solutions to problems. Every office and meeting room is a laboratory where employees try out ideas and solutions.
These organizations exist; they are all around us. They have created a culture that encourages, fosters, rewards, and even incents innovation.
The leadership of a company can’t just state publicly that the company has an innovative culture. Every organization says that. What differentiates those that have an innovative culture and the ones that just say they do? Two things: empowerment and skill level.
Empowerment means that employees can make decisions they feel are in the best interest of the organization and its customers. Many decisions don’t require executive approval, and employees are not reprimanded for making a “wrong” decision, as long as they learn from it. Great organizations understand that having a culture of innovation means that everything they do is a learning process. Every failure is the next step on the way to the next great product or service.
If you walk around the hallways of an organization with an innovative culture, the feeling is palpable. Employees are energized about new ideas and are constantly huddling to bounce ideas off each other. There are very few formal meetings. These formal meetings are replaced by informal collaborations in which employees from different departments are collaborating on an idea or a solution to a problem. If a new or different perspective is needed, the employees find the right person to provide that perspective.
The best companies recognize that without failure, there will be no successful innovation. The massive Tata Group gives an award each year for the best idea that failed. This actually encourages people to try out new ideas and supports employees even if they fail. According to Ratan Tata, chairman emeritus of the Tata Group, “Failure is a gold mine for a company.” Do you embrace failure in your organization, or are you afraid of it?
Employees must have the ability and competence to do their jobs properly. Having the proper skill level means that people are capable or that they can learn how to be capable of meeting or exceeding the organization’s standards and expectations. It also means that employees are in the right positions—ones that are a good fit and in which they are set up for success.
Figure 4-3 provides a diagnostic for empowerment and skill level and how they affect the innovation an organization is capable of. Where does your organization fit based on this conceptualization?
Figure 4-3. Diagnostic: Do You Have a Culture of Innovation?
If your organization is in the bottom-left quadrant—your employee skill level and employee empowerment are both low—your organization lacks direction. (To put it more positively, your organization has a great deal of opportunity for improvement.) Here are some of the characteristics of organizations in this quadrant:
Employees don’t have the power to make decisions; senior management must approve everything.
Employees are not encouraged to bring new ideas forward; if they do, no one takes ownership or can act on those ideas.
The organization is not very good at commercializing new ideas.
It is ineffective in measuring success; in extreme cases, it has no metrics to show success in driving innovation.
Employees don’t collaborate with each other to develop their ideas.
Employees do a lot of duplicated and failed work that adds no value to the organization.
If your organization is in the top-left quadrant—it has a high skill level but low empowerment—you are an autocratic organization. There is also a great deal of opportunity for improvement here, but senior management must loosen the reins on the organization. Organizations in this quadrant tend to have these characteristics:
Senior management doesn’t trust the employees to make the right decisions.
The organization measures activities and tasks, not outcomes and results.
Employees are frustrated because they are not included in key decisions.
Communication is ineffective, and change is forced from the top down.
Innovation is viewed as the responsibility of the senior management team and no one else.
There is a lack of collaboration. Silos have been created across the organization.
If your organization has high empowerment but a low skill level, it falls in the bottom-right quadrant of the figure; it is underperforming. Again, there is opportunity here, but the organization needs to go out and hire the right people. Organizations that are underperforming have these characteristics:
Employees make many wrong decisions and don’t integrate what they’ve learned from failed innovations.
Senior management is too far removed from daily tactics, and those tactics don’t often align with the organizational strategy.
The organization has tried many innovations that have failed; it is poor at commercializing innovation.
If your organization is in the top-right quadrant—high empowerment and a high skill level—you are an innovation master. This is where all organizations should want to be. This is an innovative culture that provides the right level of empowerment for its employees. They take on the accountability for success and failure of their ideas, and they have the ability and skills to be successful. Here are some characteristics of organizations that are innovation masters:
Employees can make decisions and try new solutions that they feel are in the best interest of the organization and its customers.
Innovation is removed from the standard metrics of success that are used for the rest of the organization, which removes the focus on short-term results.
The process of innovation is formally managed and measured.
Employees are responsible and accountable for the success and failure of their ideas. They are given a challenge and told to go figure it out.
Employees are given the ability to bring in whoever is necessary from within the organization to make the innovation more successful.
Employees take on ownership for the solution and are self-motivated to make it the best solution possible.
Innovation is funded separately from other initiatives in the organization.
We all want to become innovation masters. We all want our organizations to continuously grow and improve. We also need to remember that innovations can be small, incremental improvements. They don’t all have to be game changers. What’s important is that employees come to work every morning looking for ways to improve the performance of the company and that those employees are in roles in which they can be successful.
One of the strategies you can implement to help your employees become more empowered and accountable in innovating is to provide them with the critical thinking skills required to identify new opportunities. For example, you might develop two or three criteria that employees can use for assessing new opportunities or showcase some of the more successful innovations and highlight the process those innovations went through. Giving employees this sort of support will encourage them to take ownership of new ideas and show them what is possible.
As part of this process, senior management needs to let go of some control and give it to the employees. You will find that if, say, you develop innovation criteria and effectively communicate them across the organization, you will see more effective presentation of ideas. Employees now know what senior management considers a good idea.
One of my clients was having a real challenge getting new innovations implemented. The process of identifying the benefits and details of innovative ideas was taking several months. By the time the idea was fully developed, it would no longer be innovative, and they would abandon it. This is the process they would follow:
1. A division manager would take a new, innovative idea to the senior management team.
2. The senior management team would review the idea and provide comments to the division manager. Almost always included in those comments was that the division manager needed to work with the other division managers to identify any impact on their divisions as well as additional benefits.
3. The division manager would work with some of the other division managers to identify the impact and benefits and better develop the idea.
4. The idea would then come back to the senior management team for review.
What we realized in assessing this process was that not only was the organization wasting time and energy presenting underdeveloped ideas to senior management but that accountability and empowerment was lost when division managers were asked to collaborate with their peers. Meanwhile, division managers were measured, in general, on their own success, so they were incented to try to retain the benefits from any new ideas they developed. Therefore their ideas tended to focus on maximizing results for their division and ignoring the impact on others. As soon as the perceived benefits were reduced as a result of the impact on another division, the division managers would lose interest in moving the idea forward.
To eliminate these issues, we implemented an innovation process that encouraged collaboration and set reasonable expectations for the development of new ideas. Because the senior management team would review only ideas that had been reviewed by all the division managers, what was presented to them was a comprehensive view of the risks and rewards of the new innovation. We developed a framework so that all new ideas had to meet certain criteria; thus the presentation of the ideas was consistent.
Once these changes were made, the senior management team reviewed fewer ideas, but the ones they did see were likely to have a bigger impact on the organization. Division managers collaborated more because the measures for success were changed to encourage that collaboration; these new innovations were funded separately to remove the individual agendas and instead focus on what was best for the entire organization.
It’s important to understand that effective collaboration is not about bringing in the maximum number of people possible; it’s about bringing in the right people. Consider who could look at the innovation from a different perspective, and bring in those people, the ones who will add value to the process. Collaboration is about a commitment to work toward a common outcome. By encouraging this behavior, my client was able to focus on better ideas and, more importantly, implement them successfully because the key stakeholders were involved from the outset.
Creating a process to manage innovation is not that difficult. Frankly, most organizations are probably already doing it in an informal way, but they are most likely missing some important components. Earlier in the chapter, we discussed the cycle of innovation (Figure 4-2) and how it can help organizations manage the innovative process more formally. To maximize the effectiveness of this cycle of innovation, organizations should be asking themselves:
Where are the innovative ideas coming from? Where should they come from? How many ideas should we be identifying every month?
How do we evaluate the ideas to ensure that we move forward with the right ones? Who should be involved in the development of the idea and testing its viability?
How do we know whether an idea was successful? How do we measure progress and success?
What kind of a plan do we need to execute in order to turn good ideas into something commercially viable?
How do we compare against our best competitors?
In a complex and interconnected world, organizations can’t afford to miss any opportunity for an advantage. Managing innovation according to this process and asking the right questions may give you that advantage you need.
In a 2013 survey of 450 companies, the Conference Board of Canada found that more than half had no formal innovation process. How is that possible? In an age where innovation and growth are paramount to success, a significant number of organizations were not formally managing the innovation process.
Companies may wonder, “How do we know if our innovation process is successful?” The simple answer is that an organization needs to put metrics in place that show success. One way to know that your innovation process is successful is if customers are buying the products and services that result from that process. Instead of focusing on the number of new products and services you bring to market, measure the percentage of revenue those new products and services represent. An innovation can be successful only if it has commercial viability; otherwise, why innovate?
An organization can say that it has a culture of innovation only if a large percentage of its revenues come from products and services that didn’t exist, say, five years ago. If you want to know whether your organization is successful at creating innovation, look at the breakdown of your revenue. How much of that revenue is represented by products and services that did not exist five years ago? If the answer is less than 30 percent, then you are not an innovative company.
How many new ideas have you brought to market successfully? How many improvements have you made internally that have had an external impact? You may be a successful company, but if you haven’t made a significant financial contribution through new ideas and innovations, then you’re not an innovative company.
When you have a new idea or enhancement, what can you do to accelerate the adoption of that innovation? Here are a few strategies.
You can accelerate the adoption of innovation by collaborating on ideas with your suppliers, customers, and other business partners. Your suppliers have a unique perspective into your organization and may surprise you with their suggestions for how your organization can improve performance. There are many successful examples of organizations that have worked with their suppliers to tackle specific issues and opportunities and, as a result, developed new products and services.
Auto companies like Toyota and Honda work very closely with their suppliers to ensure that the parts the suppliers make are of the right quality and the right fit. Key suppliers are brought in early as a part of the design process, not only to ensure that they can support what is being designed but also to bring different perspectives to the discussion that can enhance the innovation.
Your customers also have a unique, yet different perspective on your organization; they are intimately acquainted with your products and services—they use them. Make sure you understand the customer viewpoint and integrate that into your innovation process. Collaboration with customers or clients is an untapped resource that organizations often ignore.
Many technology companies, like Apple and Dell, involve their customers in the development of new products. Involving the customer in the design process is a strategy that more and more organizations are employing. Not only does it help to create brand ambassadors (more on this in Chapter 6), but it also helps to ensure that the innovation will be commercially viable.
Removing the constraints that hinder innovation will go a long way in accelerating your organization’s adoption rate of new products and processes.
Such constraints might be cultural, such as creating an environment in which failure is not tolerated. They might be based on poor measurements, such as evaluating new innovations in the same way that existing products and services are evaluated. They might be politically based; one individual or department may exert too much control over the direction of the company. They could be based on fear; some companies have had great success over the years and are afraid to change.
Whatever the constraints are, find them and remove them so your innovative culture can flourish.
The development of tools can be an effective strategy in fostering innovation. We have discussed the cycle of innovation as a strategy for managing the innovation process. You can also develop criteria and guidelines to help make the assessment and prioritization of new ideas more consistent across the organization. You may even decide to develop an innovation template for the organization to follow as it identifies the potential costs and benefits of a new idea, as well as its risks and rewards.
It’s important to ensure that your organization is measuring the right success indicators. Cost savings may not be the most appropriate way to measure a new innovation. Measuring the number of ideas doesn’t tell you whether you have any quality ideas, only that you may have a lot of ideas to review.
Look at measuring the percentage of company profits that came from products and services launched in the past three years. Look at the time it takes for customers to adopt your new innovations. Measure the impact that process improvements have on your bottom line. Those types of metrics will give you a better sense of how successful (or unsuccessful) your innovation process is.
Figure 4-4 identifies some of the key components in accelerating the adoption of innovation. As the figure illustrates, all the elements of the innovation process need to be aligned with a common goal. This doesn’t mean that all the elements need to be aligned with each other in the solution, but they all need to align in their own way with the goal or outcome to be achieved. That common goal is what makes collaboration possible, and collaboration is what, in turn, allows an innovation to succeed.
Let’s look at some specific examples of innovative ideas that companies are implementing. Remember: Innovation can take many forms, from a simple enhancement to an existing process to a game-changing invention.
Procter & Gamble Canada. This organization is constantly innovating. It removes innovation from the constraint of its daily metrics and thus unleashes its people to be creative. The organization encourages failure and funds innovation separately to foster its innovative culture. This is one of the key reasons P&G Canada has been an industry leader for so many years.
Revolution Foods. A food-service company that provides meals and nutrition education to schools across the United States, Revolution Foods uses locally produced food to support the communities it serves. The company employs some unique ways of innovating. It does a great deal of testing of new foods with the children who will be eating the meals each day (its customers); it sends nutritionists into each school to help with the adoption of new meal programs; and it provides nutrition education to the students.
Figure 4-4. Accelerating the Adoption of Innovation
India’s World Health Partners. In delivering health and reproductive health services to rural and marginalized communities in the developing world, this organization uses innovative technology to link the informal health workers in remote villages with physicians in telemedicine networks that provide people in remote villages with the same level of care as someone in a larger community.
IDEO. Led by founder David Kelly, this well-known design firm innovates using a concept they call design thinking. According to IDEO’s Web site, design thinking “brings together what is desirable from a human point of view with what is technologically feasible and economically viable.” This might mean assembling a diverse group of people and watching them use products in order to figure out what people really want. This approach to innovation has led to some amazing new product designs, including the first Apple mouse and the Palm V PDA.
HMV Canada. This company operates more than 100 retail stores in Canada, selling CDs, DVDs, and other audio and video recordings. It recently launched a digital music service called The Vault; users can sign up for a subscription-based service to stream music (and possibly eventually movies) or download them to a phone or mp3 player. At first glance, it might seem that this move would hurt their physical sales. But as HMV Canada president Nick Williams has said, “We absolutely believe we should provide people with music in any way they choose to experience it, whether that’s [to] download, stream it . . . or come into stores and buy it physically.” This is a great example of innovating to meet new customer demands.
The Cable Telecommunications Industry. For years, this industry has been innovating to include an increasing number of services—cable TV, Internet services, telephone services—and build a large subscriber base. The approach was to sign up as many subscribers as possible and only then to worry about how to profit from those subscribers. Something very similar is taking place with social media companies like LinkedIn, Facebook, and Twitter. They are constantly providing new services and building a huge base of users. Once they have that massive user base, they will figure out how to make money from their users.
Think about some of these examples and where you found yourself on the culture of innovation diagnostic earlier in the chapter (Figure 4-3). Recognize that none of these innovations would be possible without collaboration, both internal and external. Bringing the right people together toward a common goal is the right formula for successfully managing and implementing innovation. Now come up with two or three things you are going to do to improve innovation within your organization.