Innovation is one of those business buzzwords that many people use, but don’t understand how to put into action. Innovation isn’t simply about creating ideas, it’s about creating real value from them.
Successful start-ups are good at it, in part because they have to be if they want to compete with the companies around them, both big and small. Creativity is welcomed, collaboration is crucial and the team can focus on that big idea at speed.
It’s different if you are part of a big enterprise.
Yes, there are more people and potential for ideas, but often large businesses can’t respond quickly. The decision making might need the input and sign off of various stakeholders, for example, potentially making it harder to innovate. It’s easy for enterprises to start playing safe and become risk-averse.
Professional services network PwC believes innovation is often the most direct path to keeping an organization’s offering fresh, as well as the best way to disrupt an industry’s status quo. According to its 2017 CEO Survey, nearly a quarter of CEOs singled out innovation as their top priority for 2018 – this outstripped concerns such as human capital, competitiveness, customer experience and technology capabilities.
Mark Fields, president and CEO of the Ford Motor Company, was quoted as saying: “Without innovation, I strongly believe that companies die over time.”
“If only Blockbuster had bought Netflix”
On innovation, Jacob Dutton, managing partner at digital studio 383 Project, says: “Three big things are changing: customer expectations are higher than they’ve ever been, competitors are more disruptive and technology is moving at a faster rate than ever.
“We’ve seen the case studies again and again – if only Blockbuster had bought Netflix, if only transport authorities had invented Uber, if only Borders had have imagined the Kindle.
“The reality is that if established organizations fail to transform and innovate they will either shrink and fall away or become another one of those case studies.”
To keep the fire of innovation bright, Jacob advises enterprises to adopt the mindset, capabilities, and methodologies of a start-up.
He says: “A common misconception among established organizations we work with is that the start-up way means no process – that couldn’t be further from the truth.
“Methodologies such as human-centered design and agile software development will help them to discover new innovations, make the right things and continuously improve them. But this doesn’t mean there’s no rigor. This is what the companies we see failing at innovation are lacking – a persistent approach that is scrutinized and assessed regularly.”
To innovate, change your way of thinking
Want to innovate? Your boardroom needs to lead the way.
At CFO or CIO level, you might be a person who needs to drive a courageous way of thinking driven by a strong vision, considering marketplace disruption, globalization, and the changing needs of increasingly demanding customers. Importantly, any high-level business strategies you put in place must be fluid and reviewed constantly.You must be willing to accepting failure – when you think that many start-ups fail, why would this be different for innovative initiatives that your enterprise might be involved with?
Your teams need to be given license to fail fast, learn and start again.
Empower your employees – create entrepreneurs who take risks and look at new opportunities. They won’t do this in isolation – the senior team will know what is going on – but they’re given the trust to operate in an effective, agile and creative way.
This might mean putting in place changes when it comes to performance management – dropping annual reviews and forced rankings in favor of faster and flexible performance management strategies, for example.
Hire the right people and encourage collaboration
It’s easy to focus on bringing in candidates who will be a safe pair of hands and guaranteed to stick to the status quo.
However, if you want to innovate, take a risk and hire people who will have an outside point of view and willing to question things. And it’s not just recruitment – make sure you take a close look at your current workforce and unearth those employees with a high-performing, innovative drive.
A collaborative approach can increase the levels of motivation and participation of team members, which in turn provides an atmosphere which can breed experimentation and innovation. This can lead to significant business benefits – PwC’s 2017 Innovation Benchmark Report showed that companies embracing collaborative approaches to innovation were twice as likely to expect growth rates of 15% or more.Companies embracing collaborative approaches to innovation were twice as likely to expect growth rates of 15% or more. – PwC’s Innovation Benchmark Report
Collaboration is crucial in allowing a global workforce to work together. Have the right technology available, which will allow your employees to work productively with clients while still always being available to their teams. Enterprise management solutions will help, as they will allow your staff to access the same connected real-time information – whatever they need that meets their needs.
Use innovation metrics
Jacob points out it may also help to reward employees for innovation with the use of metrics. He says: “Innovation metrics should be reported on at the highest levels of an organization in that same way that other key KPI’s are. They should also look to hire entrepreneurs to report into that function and give them skin in the game.
“I’ve lost count of the number of companies we’ve worked with who demand entrepreneurialism from their people but give them none of the rewards. If corporations aren’t careful, real entrepreneurs will move to companies who will reward them as such leaving a huge void.”
Using people management technology will provide you with analytical data about your current workforce, and help you making sure that they are in the right role and achieving appropriate rewards. Neglect this information and you could easily lose your innovators to a competitor.
Change your processes
PwC’s annual Global Innovation 1000 Study says there is no statistical link between the money spent on research and development and financial performance, which suggests the way enterprises spend money on innovation is more important than how much they invest.
For your business, consider thinking about moving away from traditional research and development models, and opting for inclusive operating models such as open innovation, design thinking, and co-creation with partners.
Stop your departments from being siloed and break down walls and barriers – bring together people across the company.
Use the cloud to become a digital enterprise
It’s easy to associate innovation with companies in hi-tech industries, but it’s important to remember that forward-thinking organizations are digitizing essential functions and introducing innovative services to compete. Because of the possibilities of the cloud, they are moving towards becoming digital enterprises with physical products at the core.
According to PwC’s Global Industry 4.0 survey, businesses globally will be spending billions on digital technologies such as sensors or connectivity devices, as well as software and manufacturing execution systems.
Industrial innovation is accelerating at a serious pace, with management consultancy McKinsey stating that manufacturing, in particular, was a vital source of innovation and competitiveness, making outsized contributions to research and development, exports and productivity growth.
Technology firm IBM provides tips for enterprise innovators to make use of the cloud, by creating new products and services or incorporating new channels and payment models. These include the following:
1. Use the cloud to expand your product and service feature set, while improving ease-of-use
For example, technology and solutions firm Aberdeen states that leading manufacturers are more than three times as likely to have deployed their ERP solutions in the cloud – they can be used from anywhere with accessible internet, providing a central source of real-time data across countries.
2. Capitalize on the cloud’s capability to support sophisticated customer journeys to design customer interactions, individually tailored to user preferences and situational context.
Management consultancy Accenture says every firm is becoming a digital business and we should reimagine the supply chain as a digital supply network that unites the physical flow of product and services with talent, information, and finance.
3. Make the use of the cloud’s agility to anticipate customer needs through rapid prototyping, development, and deployment of new products and services.
As part of an Internet of Things strategy, made possible by the cloud, manufacturers could, for example, enable alerts that trigger changes in production or maintenance schedules.
4. Adopt a cloud that supports your entry into a new industry or market.
Which cloud you use and how you do this depends on the needs of your business. However, remember that Industry 4.0 technologies, big data, and analytics, as well as apps and mobile services, all run on the cloud. The cloud allows data to be available, accessible and connected to deliver new processes and apps.
Innovation is a long-term investment
Jacob says you need to see innovation as a long-term investment. He adds: “We accept within sales that there is a certain amount of effort and time required to win a new deal and that it works in cycles.
“This is no different to innovation – it should be a continuous function rather than a project. We also incentivize sales teams. Again, this should be true for innovation teams with incentives for employees attached to ideas which generate new revenue or efficiencies.
“Also, in the same way that not every lead will need to a new sale, not every idea will succeed and generate revenue. The message from senior stakeholders needs to be that we accept this and that as an organization we’re happy to place a series of small bets on every idea generated in the knowledge that only some of these will prevail but that those that do will have significant returns for the business.”
Creativity may suffer if profit and growth is the starting point of whatever is done in the name of innovation. However, remember that ideas need a clear link to the requirements of the enterprise at large. Innovation is not about random, free and unrestrained thinking. It must align with a business strategy, with a clear process around turning wonderful ideas into business solutions with real value.
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