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Corporate Innovation Needs a Simpler Approach

October 5, 2015
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I’ve been lucky enough to work in some very high-performing organizations, from Apple to Gap to Victoria’s Secret to Ahold, the Dutch grocer. One dynamic I’ve observed again and again, as companies try to put in place structures and processes to make new things happen: complexity is Public Enemy #1 when it comes to innovation. You may have the budget. You may have the CEO’s explicit support. But when things are too complex, innovation initiatives die.

Complexity Thwarts Innovation

It’s easy to place blame when an innovation program doesn’t bear fruit. There are too many people involved, or silos in the organization that don’t interact well. Resources and capital are too difficult to acquire. These impediments to innovation are created by people. Guess what? That is all of us — we are the corporate culture.

One way to change this culture is to develop a simple innovation platform. This requires minimizing the process and approvals that surround innovation, and finding the right people in the organization who support this approach.

As I see it, there are three areas we need to focus on to simplify innovation and pave the road for success:

  1. Politics and partnerships. Innovators must understand the nuances of the political environment in which they’re working, and that they can’t accomplish much alone.
  2. The need for speed. Making an idea tangible is essential for building momentum and early support. The key is to be nimble, stay small, manage initial expectations, and quickly demonstrate some results. You can then expand, modify, or stop quickly, which builds credibility not only for the initiative, but the team as well.
  3. Resources/financial support. Ideas are often set aside due to the perceived inability to garner financial support. This should be the last consideration. If the idea is strong, supports a strategy, and has the potential to improve the business, you will get the funding. The key is to prove those things quickly, in bite-sized pieces, with “seed” levels of funding. If you prove it, the money will come.

Within all three areas, you need to consider the business side and the people side.

The Business Side

Understanding “what” we have to deliver on the business side of the equation can be fairly straightforward. It’s the “when” and “how” that can be tricky. To tie back to the organization’s overall strategies, you need the right data to conceive and shape your innovation, and the right metrics to monitor its success.

Necessary data includes not only what exists and how it’s performing (from customers to products to image), but should also include what’s missing, needs that aren’t being met, or what could be. The data must reveal or reinforce the need for innovation in critical areas of the business. What groups have not been engaged yet? What trends may impact the business or society?

Next, go get the data, and then begin to develop metrics that will be able to track key factors like brand loyalty and financial impact. As an example, a food retailer left behind its traditional research approach to instead do a detailed analysis of “how” the customer shopped, “what” influenced their purchases, and what adjacencies for ease of shopping were critical to them in their decision-making process. Conversations with the customer about what was not being fulfilled revealed the potential for very specific placement and adjacencies of certain products. This not only led to increased sales, but also raised customer brand perception scores.

Keep Metrics Simple

Establish only one or two metrics for each success category: customer satisfaction, positive financial results, strengthening the brand and brand vision, and employee satisfaction. Any more than one or two metrics detracts from what you are trying to accomplish in each category, and including too many will skew the analysis away from the financials that are critical to success.

Understand that as you test and learn, results will vary dramatically, so a reasonable timeframe is required to flush out inconsistencies, a-ha’s, and improvements. Also, financial results often lag behind customer acceptance or rejection. Solicit constant customer feedback and data analysis, and react with timely and targeted responses (reacting to all feedback creates additional work streams that often do not tie back to your key metrics.) The best ideas rarely chalk up successful metrics on several dimensions right out of the gate, so determine the most important, drive to meet those few, stay the course, and the rest will eventually come as you further develop and improve.

As an example, a leader in the women’s apparel industry determined that only three key metrics were needed to drive the success of a new product line and environment that was geared to a customer they were not reaching. While other financials were reviewed, considered, and managed to, the decision-making process on what and when to stay the course, modify, or move to another tactic was based upon just three metrics. The concept was realized, implemented, and is now a critical business within the parent brand.

The People Side

You cannot excel at the business side of innovation without addressing the people side. Often, this can be the biggest challenge.

  • How do you engage individuals to suspend their disbelief, move beyond their comfort zone, and risk their current status to support and advocate for what is unknown?
  • How do you convince people that what you propose can be successful?
  • How do you generate support for the human resources, and ultimately capital resources, required to realize innovation strategies and initiatives?

Politics and Partnerships — Keep It Simple

Today, organizations include a combination of senior leaders on a tenure continuum. Relatively new leaders to the organization need to deliver results and change quickly. (Some of the latest research finds that the average length of time for a CEO currently is two to three years.) On the other end of the continuum are longer-term, 20+ year leaders, who are loyal to the organization and its way of operating, and often have a lot of credibility and clout within the organization.

During innovation discussions, one of the most prevalent assumptions is this: for innovation to be realized, you must have “Leadership” (namely the CEO, COO, CFO, or Board of Directors) behind you. If that happens, you’ll be supplied with the human and capital resources to support your mission. Unfortunately, even with strong support from the top, your organization will not sign up for something they cannot see yet. It’s your job to quickly and efficiently show them — to make the vision tangible.

Not Everyone Can See the Future (Or Wants To)

Many individuals within an organization may not see the same potential future. Expecting them to jump onto a bandwagon when they do not yet know the tune they will be asked to play can push some colleagues out of their comfort zone. Once they get a sense of their role, only then can they decide what part of the band they should play in, and if they should invest in learning the new tune.

The simplest way to help them visualize the potential is to show them early (and often inexpensive) demos, mock-ups, and prototypes. A successful method to creating these demos is to look externally, and work with capable business partners, vendors, communities, and institutions. Many desire to be on the forefront of thought, discovery, or realization, and they may offer resources or assistance to become a part of the journey early in the process.

CEO Support — Start Somewhere Else

While having the support of the C-level leaders certainly improves your chances of initiating and realizing innovation, it may not be the best first step in the innovation adoption process. If you have the “outspoken” support of the top, you should of course use it. But if you don’t, start elsewhere.

In fact, starting at the C-level may significantly increase the time, political, and human capital you have to expend, which can impact other efforts. Once an executive speaks, multiple aspects of the organization start moving, and often not as coherently as needed.

Find your most suitable ally

Establish a strong alliance with a single key stakeholder/business leader, from a critical area — a person who realizes the importance of what you are developing. This will give the organization a “conductor” to keep everyone aligned during the process.

Ask yourself these questions:

  • What is the innovation initiative and what level of disruption (distraction) will it have to the business or specific functional area?
  • Who are the most impacted business stakeholders? Who has the most to gain and will be the most affected by potential change from the initiative? (I recommend limiting yourself to one or two stakeholders.)
  • What specific internal business/function would be the key driver of the overall success, and does that person have political clout to aid in realization of the initiative?

Be very specific in your partnership roles and expectations within each phase of innovation. This will be critical, especially if the organization is consensus-driven or a matrix organization, as it will minimize the politics and reinforce partnership support later in the process.

Depending on the innovation strategy or initiative, it is helpful to understand that this person who will help ensure innovation adoption may not be the innovation lead, but rather a specific business lead or function lead. This requires a level of humility, and setting aside egos, to accomplish what is best for the business. You also need the ability to educate and communicate well with your partners.

Getting the Organization Involved — Limits Are Important

One misperception is that there is power in numbers. The thought is that bringing a broader segment of the organization onboard early will start to change the culture to a more innovative one, thus allowing the opportunity to move our initiatives forward. After all, a grass-roots approach is best, right?

Unfortunately, this “more buy-in is better” is one of the most common hurdles innovation teams and organizations create (albeit with good intentions.) But it is hard to overcome. Navigating an entire organization, or even a large cross-section of an organization, is not only a challenge; it’s also very time-consuming, especially at the beginning of ideation. I have witnessed more innovation squashed before it ever takes off when new ideas have been prematurely introduced throughout an organization.

One fashion apparel retailer utilized a very simple approach in the development of their new store concept to align with their brand vision. They created a very small team with one lead from three initial critical areas: Store Design, Visual Merchandising, and Operations. These leads worked together to come up with an approach, simplify the deliverables, and develop an overall timeline. With a common goal of elevating the brand and increasing sales productivity, they obtained the support of the Brand President, who became their sponsor and top advocate. As the development progressed, other cross-functional partners such as Marketing and IT were engaged at specific times, which limited distraction and allowed these business partners to focus for short periods of time on key developments and decisions, with minimal distraction to their core business.

Start With Small Steps, Then Go Big

This is by no means a recommendation to bar a larger segment, or even the entire organization, from the initiative. Rather, I recommend layering different parts of the organization in at strategic and very specific steps along the process. A clear, streamlined innovation platform and execution strategy are required.

The dichotomy is that those of us who are charged with leading innovation are inherently filled with hope and a singular focus. Our soon-to-be partners are focused on meeting day-to-day business challenges, evaluating financials, and creating presentations to executives, board members, and committees to keep their businesses or functional areas moving forward. Their goal is to operate the business with as little disruption as possible — until absolutely necessary.

Acknowledge the Pressures That Create Short-Term Thinking

The influx of constant global influences — not to mention Wall Street’s and investors’ need for consistent short-term financial results — exerts extreme pressure and expectations for immediate results.

The reality is all short-term strategies should align with the organization’s long-term goals. It is the emphasis on speed that is the differentiator.

Define an end result and stay maniacally focused on it. This will allow you to develop an incremental plan including specific stage gates, each with its own metrics. That way the leadership and broader team can see the potential endgame while witnessing progress, small wins, and correctional shifts without a lot of initial investment. It’s when you’re going through the early stage gates that your leadership will become inspired by the potential — or steer in another direction — so stay vigilant and realistic.

Keep Stage Gates Minimal

Focus on showing the progress and potential of the initiative. Do not try to solve for everything early. Instead, focus on the one or two things critical for learning and approval to move to the next stage gate. The key is to show results against the metrics for each stage gate.

Speed naturally reinforces urgency and requires faster decision-making. If results are positive — to the customer, financials, or brand image — there will be a willingness to invest the resources and funding to make things happen more quickly.

Streamline Governance to Ensure Speed

When innovation is run through a governance process built for daily business decisions, it often gets bogged down by complexity. The result: new ideas stagnate or become obsolete before they’re born. This often occurs in matrix organizations, due to the many influencers and decision-makers who want a say. If you truly want an organization to think differently, and move faster, it is often best to start by establishing streamlined governance or oversight of innovation.

A top technology company adopted a very streamlined governance structure, which only included five decision-makers — one from each critical business unit charged with realizing the initiative — along with the CEO. Strict decision rights were determined, and each functional expert owned the decision rights related to their area. Constructive collaboration and debate took place among the five, and decisions got made faster.

Get Going With Your Existing Budget

Every innovator is under pressure to serve up tangible results ASAP. It has been my experience that usually the first couple stage gates must be done with existing resources and budgets. As a result, simplicity at the early stage gates is essential.

There are many ways to garner funding for innovation projects. A few examples:

  • One apparel company established a “Presidents Fund,” which the President has discretion over to allocate to development of new ideas, investments, etc. The key was to establish a business case and reasoning that supported the business.
  • A player in the food industry had established a separate “Innovation” budget as part of their overall financial plan.
  • Seek and ye shall find. Across multiple industries, there is always the ability to attract funding from specific functional areas. Innovation initiatives focus on certain business units, which will endeavor to support ways to improve and grow their business. In the past, I have found funding from technology budgets, merchandise budgets, real estate budgets, operational budgets, etc. So seek out those business partners that have the most to gain, and describe how your work can upgrade their business and help it thrive.

Start Small, Then Leap

When you hit your goals at each successive stage gate, the key is not to “go big” in requests for funding and resources, but rather inspire leadership to desire bigger and faster results. Positive results are wonderful, but if a setback happens and quick corrections are made, this can provide leadership with the confidence that the innovation team can react quickly, and is deserving of further support.

As we strive to realize new ideas, it is also important to strive for simplicity in our approach. The ability to stay simple, nimble, and small allows our progress to be more easily demonstrated, understood, and accepted.

Being simple in your innovation strategy means putting limits on yourself and others. It means identifying the right people to support your strategy — not necessarily the most senior people. It means setting up light-weight oversight with a tight group of decision-makers and defining, aligning, and focusing on a few key metrics. Staying small and incremental on your stage gates, demos, and prototypes using limited internal and external resources lets you quickly prove or disprove your initial assumptions to gain support to go to the next level. Build confidence quickly and you build success.

Steve Jobs once said that “focus and simplicity” were one of his mantras. “Simple can be harder than complex. You have to work hard to get your thinking clean to make it simple,” he said. “But it’s worth it in the end because once you get there, you can move mountains.”

Mark Nitkey is a Contributing Columnist and former executive at Apple, Victoria’s Secret, and Ahold.

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