Innovation is about transforming ideas into offerings, which solve problems, satisfy needs, alleviate pains, or generate gains, and for which customers are willing to pay. It requires a strategy to start with. Innovation is a professional function, a real job, rather than a sideline occupation everybody should embrace. Fostering the innovation profession within a firm requires building an environment around seven key traits, starting with leadership embracing innovation and supporting change.
Innovation has become an overhyped trend in the business management literature in recent years. Do not get me wrong, innovation is important, sometimes even vital, but it is only one aspect of successfully doing business. Giving it the buzzword status is overdoing it. This may come from the tendency that innovation should be on everyone’s agenda. Or, even more, from the fallacy that being innovative is identical to having great ideas. In addition, a lot has been written about innovation being a purely cultural thing. Giving employees time and an adequate environment will make innovation happen. Yes, sometimes this works – those are the success stories one can so often read about – but more often than not, this approach fails. You may ask yourself why? The answer is simple: Because innovation is a job, like finance, or human resources. It needs specific skills to make success non-random.
Before digging a little bit deeper into how to make your company more innovation friendly, let me characterize what innovation is all about. An innovation is a new method, technology, product, or service which solves a problem, satisfies an existing or future need, alleviates a pain, or generates a gain for which the recipient is willing to pay. Helps a given job to be done. It is much more than just an idea. Innovation includes:
- Relating an idea to current or future needs.
- Transforming the idea into a solution.
- Showing value in the derived solution.
- Selling the idea as being the basis of a valuable solution.
To arrive at your destination, you need to know where you want to go. Similarly with innovation. First and foremost, you need an innovation strategy! But what does that mean? It means that you need to answer the following four key questions:
- Where do you want to focus your innovation resources (time and money)? Limited resources require focus. Possible focus areas are customers, offerings, technology, or business processes.
- What kind of change associated with innovation do you want in your company? Do you look for continuous improvements or search for disruptive innovations? In technical terms, how do you want to structure your innovation portfolio and allocate resources?
- Who should be responsible for driving innovation in your company? How do you want to address the change ownership challenge?
- What culture should support your innovation capabilities? Who should be involved in innovating? How do you want to ensure diversity and creativity? What approaches to knowledge fostering do you aim at implementing?
Every company that wants to be strategically innovative needs a dedicated innovation function, the same way as it needs a finance function, or a human resources department. Being an innovator requires specific skills that not every employee has, but which can be learned.
- Innovation requires specific knowledge not directly related to a company’s industry or target market. This innovation knowledge can be classified into three categories, that is,
- innovation process knowledge, e.g., design thinking, learn start-up, or agile project management,
- framework knowledge, e.g., business model canvas, value chain, or customer journey, and
- facilitation knowledge, e.g. brainstorming, focus groups, root cause analysis, or five why’s.
- Innovation requires capabilities to design and implement change, both at a rational as well as emotional level.
- Innovation requires communication skills, to sell ideas and associated solutions at all levels of the company and beyond.
In addition to having these specific skills, innovators need to exhibit a specific mentality. They need to be curious people by nature. They need to be team players and always open for change, for novelty. And, they need to be good at coping with setbacks.
The innovator role – I call it the innovation manager – can be compared to that of a product manager. He/she does not need to be a subject matter expert, but must have the capabilities to focus on the big picture and connect the dots. He/she should be the owner of, and with that, responsible for the innovation portfolio and its performance over time.
In addition to having a well formulated innovation strategy as foundation and a dedicated innovation function reporting to senior management, innovative companies exhibit maturity along six key capabilities, as shown in Exhibit 1.
Culture. Innovative companies need a culture that is open to change, supports diversity, and allows for failure. It needs to address the “not invented here” and “not my problem” syndromes.
People. To support innovation, employees must show strong domain knowledge related to their core role. They need to be team players and have a diverse experience.
Recognition. What gets measured, gets done, also applies to innovation, especially with respect to incentivizing individuals and teams. Rewards need to be role based ensuring the unique contribution of everyone is appropriately valued.
Process. The innovation process defines how ideas are analyzed, processed, and transformed into innovative solutions. It addresses how and when different stakeholders are involved during the innovation process. Key phases of an innovation process are:
- Idea generation and collection.
- Idea evaluation and prioritization.
- Transformation of ideas into innovations.
- Implementation of innovations in the company through proper change management.
Frameworks. Frameworks help structure ideas and associated insights. They provide a common language and support communication.
Communication. Selling ideas and spreading the message associated with innovation activities is key. Communication must be applied during the whole innovation process. It also needs to be two-way, allowing for feedback from recipients.
Making your company more innovation friends requires lifting the bar along three dimensions:
- Ensure that a sound innovation strategy is in place and that it is understood throughout the company.
- Implement the innovation manager role at the most senior level, owning the innovation process and portfolio.
- Ensure readiness in the six innovation capabilities, that is, culture, people, recognition, process, framework, and communication.