As members of InnoLead know all too well, the corporate world is changing at a dizzying pace: digital platforms are up-ending traditional business models, advances in robotics are altering our labor assumptions, and machine learning and AI are expanding our predictive capabilities.
There’s not an executive out there who is not transfixed by the possibilities and threats of innovation-driven transformation.As a result, many companies already have innovation programs in place — but not all of them. For companies just beginning to design and implement their innovation approaches, the following list should help orient you to the most important steps — as well as the cultural and leadership changes required — to set you up for success.
And even for those companies that think they’re already on their “A” game, this might be a useful checklist to review and evaluate the effectiveness of what you’ve already put in place — or what may be missing.
Secure Genuine, Visible, and Committed Leadership Support
It’s a truism to say that any major corporate initiative requires strong senior leadership support, but it’s even more imperative for innovation.
Unless there is vocal and consistent support from the top of the company, managers tend to default to a mindset where current business operations are prioritized and innovation is secondary, even discretionary.The CEO and senior team must continually emphasize the criticality of innovation to the future success of the organization in highly visible forums.
But rhetoric is not enough. Employees are keen observers of any discrepancy between rhetoric and action, and without demonstrable changes to funding and incentive design, they will eventually become cynical and disengage.There are two important signals that senior leadership — and only senior leadership — can send to convince the organization that they’re serious about innovation:
- Funding: The first signal regards the allocation of meaningful funds to the innovation initiative. There are a variety of ways to structure that funding, and how it’s structured is far less important than letting employees know it’s there to be used. Some CEOs set aside earmarked funds during the annual budgeting process to be disbursed to high-potential ideas. For example, at Navigant, we set aside a specific pool of money to pursue the top-rated ideas coming out of our business plan competition.Other companies prefer to commit to dedicating a certain percentage of revenue or budget to innovation. Still others adopt a dynamic-funding process that’s not tied to a specific dollar amount, but leaders can point to individual grants for high-priority ideas as proof of their commitment.
- Rewards: Leaders also have to convince employees at all levels that, when review and bonus time rolls around, they’ll be appropriately rewarded for their contributions to innovation.Building innovation expectations into the formal review process is the most sophisticated approach, but many organizations develop other ways to reward innovation, like meaningful cash or equity prizes for winners of idea competitions, or shifting some of their job responsibilities so they can spend more time cultivating a project. Professional services organizations tend to struggle with balancing utilization expectations with the need for organizational “slack” to innovate, and may need to offset some percentage of billable time for individuals or teams working on new ideas.
Assemble Layered Communities of Innovation Champions
Innovation at its best is a full-contact discipline within organizations. Many companies starting innovation programs mistakenly think they can stand up a single, very senior oversight council. It is indeed necessary to engage senior leaders across the organization, but it is by no means sufficient.
Senior leaders are best positioned to provide overarching guidance around topics like innovation themes, program selection and design, and innovation portfolio management. They are not particularly effective in driving excitement and engagement throughout the organization, or building a vibrant culture of innovation. To accomplish those objectives, you need a second and third stratum — and perhaps even more layers, depending on the size and complexity of the organization — of progressively more junior innovation evangelists.
At Navigant, we initially established an advisory council of a handful of senior executives, but we learned pretty quickly that we needed to build out our innovation architecture. In the first year, we added a slightly larger community of senior service-line leaders, although mostly still at the Director and Managing Director level. The specific attributes we recruited for in this second community included:
- a significant following among others in the organization
- capacity and ability to coach innovation teams, and
- proven willingness to support orthodoxy-breaking ways of doing things.
In the second year, we added a larger community of 35 consultants at the Project Manager level. Within this group, we were looking for high-performing, energetic, and well-regarded individuals who were willing to roll up their sleeves and implement the various innovation programs. These groups were collectively able to penetrate right down to the front line of the organization to help make the case for innovation and persuade individuals and teams to enlist.
Effectively managing these various communities is time-consuming for sure, but the return far outweighs the investment. We orchestrated monthly calls and quarterly meetings to build cohesion and camaraderie, and to facilitate the cross-company exchange of best practices.
One note on organizational structure as it relates to community formation: you’ll need to model your innovation communities on the primary “axis of organization” within the company. For some companies, like manufacturing and distribution, geography is the most important organizing attribute; for professional services firms, service-line membership is often the primary organizing attribute. Ultimately, a blended approach may work best, particularly as the organization grows over time. At Navigant, we initially stuck to our four industry segments in forming our communities, but after the acquisition of a major new business in India, we actively recruited from that geography as well.
Architect “Mixed-Use” Internal Innovation Events
Harnessing the creativity of the employee base is often the first thing — and sometimes the only thing — that innovation leaders implement. And there are many good reasons to host internal “idea competition” events. They do indeed tap into the creative thinking of individuals at all levels who best understand the business; they offer employees the chance to become “intrapreneurs” within a corporate environment; and they can produce solid ideas.
- Be Specific: “Open Season” on innovation — with random, on-demand idea upload ability — is much, much less effective than hosting a carefully curated series of idea generation events. If you can submit an idea any old time, it becomes very ho-hum to the employees, and fails to build the sense of urgency that accompanies deadlines. And as others have written in InnoLead, open calls not only yield mediocre ideas that are off the strategic roadmap, but they can detrimentally impact morale as employee submissions are rejected or — even worse — simply ignored. So invest in architecting a robust, but realistic, calendar of idea-generation activities that are appropriately marketed and that generate real excitement and initiative. As I mentioned above, offering meaningful rewards is a powerful motivator — it could be a cash prize, time off to work on an idea, or just the opportunity to present to the senior team.
- Clarify / Purify: Second, your curated set of idea generation events should focus and “purify” the submissions for any given event.At Navigant, our business plan competition for the first several events invited submissions of both revenue-generating and efficiency-enhancing ideas. However, we quickly learned that it was extremely difficult to fairly evaluate such a broad range of ideas.
- Be Topical: Your idea generation events will also be more successful if you organize them around specific topics or themes, like applying AI to the current business model, or modifying today’s offerings to reach entirely new customers.It may seem counterintuitive, but the human brain can function at its highest level of creativity when it tunes into a particular problem to solve. You can help enhance creativity among your employees by structuring high-potential problems for them to solve.
- Take Advantage of Tools: While managing these idea-generation events can be done manually, if you’re going to scale these efforts, you should consider investing in an innovation management software platform.There are several strong vendors in the market who offer minimal implementation time, customized modules, and well-designed interfaces at reasonable cost for both hosted and licensed solutions. (Some of those companies can be found among InnoLead’s directory of Strategic Partners.)
Implement a Transparent and Dynamic Portfolio Management Approach
Employees find it very frustrating when they don’t know how their innovation contributions are being evaluated, developed, or deployed. You should therefore commit to periodic updates on the overall pipeline of ideas within the company (barring highly confidential projects, of course).
In order to do this well, you’ll need a system and process to manage this entire pipeline of ideas. This sounds easy, but it is one of the most difficult things to do well in innovation management.There are a few elements you’ll need to have in place to succeed.
- Be Intentional: First, you should be very intentional about limiting the number and type of ideas that make it into the formal innovation pipeline. Idea generation events provide a helpful way to do just that: only ideas deemed worthy of further consideration are introduced into the pipeline.
- Process: Second, you should consider a formal stage-gate process with clear expectations about the hurdle each idea needs to clear before being advanced to the next stage. Stage gates are often considered “old school” in an era of lean startup, but they actually serve an important role that shouldn’t be neglected.
- Ownership: Third, you need to ensure each idea has an assigned team or champion to ensure accountability. Without it, the flow of ideas through the pipeline can slow to a crawl or stall entirely.
- Oversight: Finally, you need an oversight body that regularly reviews the entire pipeline at each stage of development and makes go/no go decisions.
As you can imagine, there’s a heavy administrative commitment to support this level of pipeline management. Again, there are software solutions available, often from the same vendors who offer idea management software. Just remember that these tools are simply a means to an end — the ultimate objective is to align the senior leadership around the highest potential set of ideas available to the company, and to secure the necessary resources to make those ideas successful.
Celebrate, Celebrate, Celebrate — Both Successes and “Fast & Early” Failures
I started with a truism about the need for top-level support, so let me end with another one.
A culture of innovation cannot thrive in a risk-averse environment where failure is punished.
Companies need to think about innovation investments the way a venture capitalist thinks about his or her portfolio of investments: around 70 percent will lose money, 20 percent will break even, and 10 percent will yield extraordinary returns.
Your job as a corporate innovator is to collect enough intelligence about an idea as quickly as possible to determine which category it’s going to fall into…and to shut down the 70 percent that initially looked promising, but aren’t going to pan out.
Unlike a VC firm, you have the advantage of detailed knowledge about existing product line economics, your customer base, your track record of success and failures in new idea development, and other valuable insights. And you should be in an advantaged position to make those go/no go calls and help ideas pivot where necessary into more promising incarnations.
But not a single one of your employees is going to sign on to be an intrapraneur if career failure inevitably follows idea failure. At Navigant, we partnered with teams to create detailed idea-development plans that hewed to our stage-gate process, and we helped the teams expedite execution of those plans.
For example, most ideas fail at market validation, so we helped them develop a new offering just to the point where we could test it with potential buyers. One team learned through a handful of testing interviews with buyers that there was no latent demand for a new product; another team found out that a proposed product offering introduced unattractive liability for the buyer that made the idea a non-starter. But for both of these teams, we hosted a company-wide webinar so they could recount their journey and lessons learned, and to celebrate the enhanced market understanding that resulted in the no-go decision for their proposed product.
If you want to win at innovation over the long haul, keep the 70/20/10 mix in mind — and don’t let a few early failures get in the way.
Renee Dye is Associate Professor, Goizueta Business School, Emory University; and former Chief Strategy & Innovation Officer, Navigant Consulting