How to Successfully Drive Innovation in Organisations.
A checklist for CEOs and Managers.
Innovation has become a core driver of growth and long-term sustainability. An organisation’s ability to innovate, to develop the fresh value-creating ideas of its employees and to translate them into the organisation is becoming a fundamental organisation capability.
Our 2018 Innovation Study found that high-Innovation organisations have on average realised 65% more benefits from their innovation initiatives in comparison to their low-Innovation peers in terms of customer, revenue, scaling up the organisation, productivity and operating costs, profitability and sustainability benefits.
In a survey, we recently conducted we identified that 8 out of 10 highly-innovative organisations had innovation as a strategy compared to only 4 out of 10 mainstream organisations. Innovation is one of the top drivers of growth for their organisations in the next three to five years.
Why are some organisations able to continually innovate while other organisations often struggle to achieve their innovation outcomes?? We have developed a checklist for CEOs and Managers to help drive innovation as a strategy for their organisation.
We have identified four key capabilities that truly innovative organisations do well.
Strategy – a clearly defined innovation strategy which guides decisions, and an explicit innovation ambition from the Board and Top Management.
People – people are innovative, have a strong capability to innovate, and have innovation tools and innovation metrics.
Process – deep market and customer insights, constantly uncovering and understanding today's and tomorrow's customer needs, collaborate well with partners and leading-edge customers.
Culture – encouraged to think big, dream big and take calculated strategic risks. Great at making innovation investments, funding is easily available for new innovative projects, and have the time and freedom to innovate.
A large body of innovation research points to the importance of these four capabilities. They might sound straightforward and relatively simple, but careful consideration of what each of them actually involves helps in building innovation capability.
Figure 1: Four Innovation Capabilities
Innovation as a Strategy
Innovation means different things to different people and is industry and sector context specific. For example, an innovation in the health sector will differ from an innovation that relates to the use of solar technology. In the former, people’s health is at risk if the innovation’s downstream impacts are poorly understood, while in the latter, failure would be an inconvenience, or even seen as a major political issue in the rapidly evolving industry.
With each industry or sector’s landscape changing more rapidly than it has ever been, there is not only an opportunity but also a need, to be involved and ahead of the disruption curve and the new industry operating norms.
Our 2018 innovation research identified the major innovation strategies organisations are employing to address future threats to their organisation or industry/sector. Two of the top three innovation strategies are responding to customers changing demands; improving the customer experience and developing new products and services.
Figure 2: Major Objectives driving Innovation Strategies
While CEOs and Managers cite innovation as an important driver of growth, how do you explicitly lead and manage innovation? We have observed that organisations typically adopt one of three approaches:
Innovation is managed on an ad hoc basis.
Innovation is managed as part of the leadership team's agenda.
Innovation is managed as part of the leadership team's agenda. It is resourced and is integrated as a core business process.
Does our organisation have an innovation strategy that clearly defines what the organisation wants to achieve?
Does our innovation strategy include priorities based on strategic objectives responding to the major industry and sector shifts and the changing needs and requirements?
Does our organisation allocate a budget and resources for innovation in its strategic plan?
Does our organisation have a balanced portfolio of short-term and longer-term innovation initiatives?
It is clear that there will be an enormous period of disruption and opportunity ahead, where innovators are combining technologies and new business models in different ways to drive innovation and opportunities.
The impacts of disruption have a significant way to play out over the next 5 to 10 years. Organisations will not be able to stand still. Organisations doing what they do now will not sustain them in the future. Innovation is not an option; the question is how do organisations respond, develop their innovation capability and move forward.
Innovation requires individuals who have a mindset which is comfortable dealing with uncertainty and ambiguity. These individuals love to explore, learn, create and test opportunities. They view roadblocks as learning opportunities to reshape or pivot their innovation.
Highly-innovative organisations are encouraging their people to innovation, without implementing disruptive change programs. The practical starting point to improve an organisation's chances of stimulating and sustaining innovation is amongst the organisation's people.
The leadership team is ultimately responsible for driving innovation and manage it formally as part of the organisation’s strategy. Holding the leadership team accountable for encouraging innovation makes a big difference through formal innovation targets or metrics. In this way, innovation can be not only be encouraged but can also be managed, tracked and measured as a core element in an organisation’s strategic initiatives.
Are our people equipped with a strong capability to innovate?
Do our people have the innovation tools and innovation metrics?
Are our people innovative?
Does our organisation have specific innovation targets, outcomes, and metrics?
Are our people are given a voice/forum to express their innovative ideas and have input into opportunities?
The Innovation Process
Innovation entails using the right processes and the most appropriate toolkit that promotes exploration, discovery and fast experimentation. However, the innovation process also involves scaling up and embedding the innovation into the organisation to achieve growth and long-term sustainability
The Innovation process journey can be described in phases; Opportunity Identification > Opportunity Evaluation > Scaling Up > Growth.
Figure 3: Innovation Process Journey
The four Innovation Phases are:
Opportunity Identification – Ideation, finding great ideas, concept development;
Opportunity Development – Market research, strategy development, developing, testing and piloting those ideas into the new product, service, program or business;
Scaling Up – Launching the innovation, testing and validating that systems and processes are ready to scale;
Growth – Delivering the innovation at scale, driving growth so that the innovation is sustainable and merges successfully into the organisation.
Do we have a defined process for managing our innovations?
Are we discovering deep market and customer insights?
Are we constantly uncovering and understanding today’s and tomorrow’s customer needs?
Are we collaborating well with our partners and leading-edge customer?
The cultural part of innovation is key. Innovation results from iterative experimental learning. Innovation requires an empowering work environment. To facilitate increased innovation, one needs to enable and drive innovative behaviours by aligning culture, structure, leadership behaviours, measurements and rewards.
Highly-innovative organisations are fostering an innovation culture based on trust among its people. In such a culture, people understand that their ideas are embraced, resources are committed, and they are equipped with the innovation tools and techniques to work collaboratively as a team. Promoting and encouraging innovation behaviours such as ideation, developing, testing, and validating are key motivators to facilitate innovation.
Are we encouraged to think big, dream big and take calculated strategic risk?
Are we great at making innovation investments?
Does our organisation provide funding which is easily available for new innovative projects?
Do we have the time and freedom to innovate?
Our 2018 Innovation Study found that high-Innovation organisations have on average 49% greater innovation capability compared to their low-Innovation peers. High-Innovation organisations have a significant advantage when it comes to their people, innovation tools and innovation metrics.
Our 2018 innovation research identified significant capability differences between highly innovative organisations and their peers.
Using this research, Chase developed an Innovation Diagnostic for organisations to measure their strongest and weakest innovation areas, benchmark their innovation score against leading innovators and offer suggestions to help organisations develop their innovation capability and progress towards innovation leadership.
Figure 4: Innovation Capability Benchmarks
The Chase Innovation Diagnostic provides deep insights into capability gaps of organisations compared to leading innovators.Take this short diagnostic to gauge your organisation's progress towards innovation leadership.
How Chase Can Help
Chase helps clients build their innovation capabilities and maximise the impacts from their innovation investments. We help our clients look at the future differently from various perspectives, helping them to innovate and transform themselves.
2018 Innovation Study - find our what enables highly innovative organisations to grab the opportunities for innovation.
Innovation Diagnostic - Learn about your strongest and weakest areas, and what you can do to develop your innovation capability that delivers results.
Ready to accelerate your innovation? Chase offers a complimentary 30-minute discussion to help organisations accelerate.