The Little Book of Innovation – Chapter 4
WHAT DOES IT TAKE TO MAKE INNOVATION WORK IN BUSINESS?
Implementing innovation into a business, negotiating real & perceived obstacles in the way can seem a daunting task, but with careful planning & persistence your reward will bring long-term profits.
Top Ten Tips for Success
1. Where to start: Leadership & Ambition
Most business leaders tend to recognise need for innovation & know where they want to be, but how to get there? R&D language is often alien in the boardroom, leading to frustration & miscommunication. In our experience organisations that succeed invariably have three key things in common:
> Strong Leadership & a clearly articulated & ambitious vision – creating the need for an innovative culture
> Company KPI’s that incentivise innovation
> A seat at the boardroom table
2. The “LEAN” Innovation Audit
Measure your innovation capability versus your competition & your customer expectation. Set out the following metrics to audit your capabilities & support delivery of your vision:
> Innovation strategy
> Creativity & idea management
> Portfolio management
> NPD implementation success rate
> People structure, performance capability of Innovation teams
> Service innovation
>Process innovation
> Technology
3. Organisational Design: does your structure reflect your ambition?
The correct structure to reflect ambition is vital, key innovation studies have shown the following edicts support innovation delivery:
> If innovation is vital, give it a seat at the table
> Align senior team behind the structure
> As leader, make it part of board agendas
> Invest in your team: the right people drive the right results
4. The burning platform: What is the cost of not innovating?
It’s easy to ignore things we don’t understand or things that seem impossible. Build a business culture that allows ‘risk without retribution’. The boardroom need to understand the potential positives, reward this & equally the cost of not innovating
Examples of innovation impacting established market leaders:
> Barnum’s Circus to Cirque du Soleil – Innovated business model
> Microsoft XBOX to Nintendo Wii – Innovated consumer legacy barriers
> Nokia to Apple – Innovated by making the competition irrelevant
> Electrolux to Dyson – Innovated with patentable invention
> Robinsons to Innocent – Innovated with brand & product creating new market space
The above companies have two things in common:
They significantly outperform their competition & the market
They have well developed innovation management systems & cultures
5. The LEAN virtuous circle
The Virtuous circle is common sense; do it well & your innovations will see returns:
> Engage your customers continuously; listen carefully
> Identify insight: ones you can act on promptly, others for the future
> Can you meet customer’s needs better than the competition? Can you create new needs?
> Create the plan – overlay technology – overlay plan enablers – deliver
> Get it right & you will increase frequency – brand trust – relevance – PROFIT
> Use additional profit to invest in further consumer insight
6. The ‘HOW TO GUIDE’
The process is key: don’t underestimate how impactful a good process can be or the destruction a dysfunctional one can cause. Successes will build the belief, behaviour & momentum when implementing innovation into a business. Whether gated NPD, continuous improvement or portfolio management systems, the principles remain the same.
> Customer voice at the heart of the process
> Created & socialised cross functionally
> Flexible to business needs – capable of evolving
> Measurable & accountable – key KPI’s
> Improves ROI on innovation
> Well trained & sponsored within the enterprise
7. People Power
Building capability into the team with training & development is the quickest way to accelerate change; you can achieve this by creating:
> Innovation advocates & sponsors
> Training & development tools
LEAN Innovation = Less cost + higher return
People make this happen. The toolkit tells them how. The quicker you build competence & capability, the quicker you get results.
8. Balancing the Plan
A good plan consists of projects & activities that align to business strategy. Beware of those that look at the innovation plan as ‘blue-sky’, with little relevance to the day to day.
Ensure you manage the NPD portfolio across short, medium & long-term projects, rank them using the key metrics the business plan demands.
Balance is key, it is important to feel & understand the ‘pulse’ of the business: too ambitious can scare the; not ambitious enough, no one gets excited. Managing the ‘tone’ is key.
9. Measure Progress Celebrate Success
KPIs can make or break the strategy implementation; they need to support the broader business objectives not just the expected commercial reward. Equally important is staying true to brand trust & quality. The following should be answerable:
> What is the total cost of R&D?
> What are the gross & net benefits?
> How many products/ services did we launch?
> What was the success rate at 3/6/12 month windows/intervals?
> Pipeline portfolio NPV (net present value) YoY increase
> Pipeline length – horizon
> New services – new markets entered: penetration, frequency, repeat rates
> Socialise the success of the plan to the stakeholders; reward success
10. CHALLENGE – LEARN – PERSIST
Two great questions to ask of your activity at regular intervals are:
>Are we doing the right project?
>Are we doing the project right?