Thinking

How to make real innovation happen

By Rob Anderson

If you were to ask ten consultants what makes a successful innovation programme, nine would describe a creative ‘ideation’ and a funnel process to filter and prioritise the best innovation, assess it and push it out to market. However, if this is what is widely acknowledged as the necessary process for success, why don’t all innovation programmes deliver the results they are supposed to?

The answer is that whilst the above are necessary ingredients, they aren’t sufficient to offer a guarantee of success, but are only part of the process of getting returns from what can be a significant investment. Too many programmes start with great prospects but don’t actually deliver on the underlying aims: satisfied customers and more profit.

There are few racing certainties in the world of innovation, however, it is possible to take some steps to stack the odds in your favour. Set out below is a framework for innovation in which the various elements work together to locate and deliver new customer-centric propositions to market and fuel profit growth. 

Throughout the future issues of Innovation Quarterly the various elements of the framework will be explained and discussed in detail. But for now we shall start with a broad overview to help you make sense of the framework. 

The big picture

An effective innovation infrastructure comprises the following key components:

 

 

  • The Platform – This is the foundation of a successful programme, without which we effectively build on sand. Essentially, the platform needs to create the conditions in which an innovation programme can be mobilised, established and, in due course, deliver superior results. 
  • The Process – Most likely a Stage-Gate™ process alongside creative innovation tools. However, we mustn’t lose sight of the ‘big picture’ that the process is actually about converting insight into customer value and business profits
  • The People – It might seem obvious, but a programme is only as good as the people who operate it. Innovation is no less a specialism than finance or IT; it needs particpants with skills and experience. The type of person involved – ideally, someone curious, resilient, flexible and determined – is often as important as the capability set.

Needless to say, the three components are not exhaustive, yet they are the most essential for an effective innovation infrastructure. 

Platform

“Do not worry if you have built your castles in the air. They are where they should be. Now put the foundations under them.”  Henry David Thoreau

A strong mandate empowers the team and focuses minds on clear business goals. It is surprising how often innovation programmes kick off without a clear definition of their objectives and remit. Perhaps it is because the initiating sponsors don’t want to limit the potential of the programme, but unless the innovation mandate is clearly defined, the programme can be unfocussed. Moreover, unless the mandate is positioned as integral to delivering the overall business strategy, it may be regarded as ‘nice to have’ rather than essential, with obvious consequences for levels of commitment across the business.

Of course, the mandate needs to be translated into a practical plan. This doesn’t have to be 100 pages long but it does need to cover the business rationale (mission, vision, objectives, targets/KPIs) the programme architecture (process, evaluation criteria, governance, team & structure) and management and control (activity planning, management & reporting, change control, RAID, communications). It is not a trivial task, but like most planning tasks if it is done well it will save a lot of pain and cost later on. Creativity and chaos may sometimes be linked, but not always in a positive way!

A detailed plan can have a significant collateral benefit for the innovation team. Engaging senior stakeholders in the process creates realistic expectations around what constitutes success and how to achieve it. The best innovation leaders are masters  of expectations management and communications with all levels, from executives to the shop floor. Innovation teams rely on widespread co-operation, collaboration and assistance, so it is best to keep everyone onside.

The last major ‘platform’ area is the ‘soft infrastructure’ of rules and policies that exist to safeguard the profitability of the business, but which can inhibit success in the field of innovation. For example, some companies mandate 12 or 18-month cash payback on all new proposition launches – hardly suitable if the innovation mandate is to create a new business unit, rather than an adjacent product line. Key support functions, such as HR policies and procedures aren’t always built for speed, and IT teams frequently have existing workloads stretching out for years. These kinds of checks and balances are necessary for an orderly and profitable business on a day-to-day basis; however, adapted governance is required for an innovation programme.

Process

“If you can’t describe what you are doing as a process, you don’t know what you’re doing.” 

W Edwards Deming

The backbone of an innovation programme is its methodology. Structured stage-gate methodologies that filter and prioritise ideas through a funnel are now well established. There are many variations but all operate on similar principles – to pull out the best ideas and opportunities and accelerate their successful development.

A differentiator at the front end of the innovation process is the quality and depth of the insight base. Innovators need a strong understanding of target customers, their needs (and projected needs), key trends in their markets, competitor strategies, relevant technology developments, regulatory and legislative changes - in other words, a strong insight base to work from. Without this, idea generation is speculative rather than grounded, and the likelihood of systematically identifying attractive new opportunities is greatly reduced.

Turning to the ideas themselves, the view that idea generation is all about workshops is something of a cliché. Yes there is a place for them, but they should be used in combination with more analytical processes, such as competitor studies, learning from other industries and geographies, trend analysis and scenario development. Increasingly, ideas are being sourced from outside the company, crowd-sourced or co-created with partners and/ or customers.

Customer participation in innovation has become a significant trend in recent years. Rather than hothousing ideas and then launching them upon an unsuspecting market, companies are increasingly involving customers in all phases, from idea generation through to piloting, allowing customers to shape propositions to their own satisfaction.

Probably the hardest part of all for those propositions that aren’t in themselves new businesses is the transition from successful pilot to embedding within the core business. This is the point at which all the carefully-nurtured relationships between the innovation leaders and their counterparts in the core business come into play - the co-operation of the core marketing, operations, customer service, IT and other teams is critical to a successful transplant. And in most cases the return on investment depends on it.

People

“Some people want it to happen, some wish it would happen, others make it happen.” 

Michael Jordan

It doesn’t matter how good the platform and process are if the people are not up to the job. Conversely, great innovators can prosper in the most inauspicious circumstances. Life is full of trade-offs, but whatever you may have to compromise on, don’t compromise on the team.

In planning a team, the mandate and objectives of the team will inform the skills, knowledge and expertise required, and HR colleagues will usually be able to help structure this and manage a recruitment process. Most important of all, however, is attitude. However much we systematise it, innovation is rarely an entirely smooth and predictable process and it requires good team players who are positive, resilient and results-focussed. Most will be natural problem-solvers, who navigate around obstacles (rather than being halted by them) and can think on their feet.

The pivotal role in any innovation programme is the team leader. As well as good generic leadership capabilities, the leader needs both a high level of innovation-specific knowledge and skills, and strong influencing and interpersonal skills to engage successfully with the core business and retain its support. Team leaders need good reputations and relationships across a business to broker appropriate ‘deals’, overcome natural barriers, and periodically ride out the incidents and crises that will inevitably arise from time to time.

Should external support be engaged? Almost certainly, given that most organisations don’t already have depth expertise available for deployment, at least initially. Most programmes have foundational advisers and engage a mix of external parties - experts, advisers, interims and / or partners - to supplement the core team and create access to a diversity of perspective and experience that can materially strengthen the end product.

The innovation leader will also rely on sustained and informed sponsorship at Board level, capable of creating and maintaining support - financial and other - for the programme over the period it needs to deliver returns. Unfortunately, there are plenty of sceptics out there, with good reason in many cases, and in tough economic conditions investing in innovation is frequently questioned. The sponsor’s key task is to resist a gravitational pull to reduce commitment and investment in innovation, until the programme can generate the sorts of returns that state its case beyond question. 

Conclusions

The innovator needs to resolve an apparent fundamental paradox – to systematise creativity. (S)he also needs to be able to hold out the promise of probable, rather than possible, financial returns - despite a high degree of uncertainty and the requirement to invest before opportunities are even visible. 

It is foolish to pretend there isn’t a degree of risk in innovation programmes. But equally there is an underlying risk in allowing competitors to innovate while you do nothing. 

Innovation should be approached logically and systematically, and with a profit motive. It should be organised, planned and executed with discipline. It should be led and staffed with qualified people with proven credentials. 

In short, it is just like any other business discipline, and done well it can generate outstanding returns.

Rob Anderson

Rob was a founding director of Edengene in 2000, having previously been head of the business growth practice at PA Consulting Group. A chartered accountant with strong finance skills, he has 20+ years’ consulting experience working with blue chip companies, designing and directing multi-year growth and innovation programmes. Rob is the author of Edengene's customer-led innovation methodology, which provides a structured approach to innovation to deliver revenue growth.

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