Innovation Isn’t the Answer to All Your Problems15 June, 2015 / Articles
What should leaders do to boost their organization’s ability to innovate? There’s a seemingly endless list of options to consider. Set up a new-growth group. Launch an idea contest. Change the reward systems. Run an action-learning program to develop the top leadership team’s ability to confront ambiguity. Form a venture investment fund. Take a road trip to Israel or Silicon Valley. Build an open innovation platform. Bring in outside speakers. Hire seasoned innovators. Paint the walls blue. Buy a lot of books.
And what’s the point of all these approaches? To infuse innovation into day-to-day activities of your company so your frontline workers will identify customers’ problems and solve them in novel ways? To create an elite squad of business builders that can launch a disruptive business? To change the way senior leaders think so they are more comfortable with ambiguity? To developing a structured approach to rolling out a series of new-growth ventures? Some combination of all of the above?
Too frequently, companies decide what they’re going to do before determining why they’re going to do it. That’s challenging, because developing innovations that have a lasting impact requires going beyond doing one single thing. Improving innovation is a system-level issue, requiring a coherent and consistent set of organizational interventions. To begin to determine what set of interventions makes the most sense for your company, first you need to step back and answer a fundamental question: What problem does innovation need to solve?
The answer to this question matters substantially because it determines in which part of the organization a company needs to intervene, what resources leaders need to be ready to commit to, and how long it will take before any impact is felt.
One clear problem innovation can solve is creating new growth. An executive who has this problem recognizes that the company needs to push the boundaries of today’s business to achieve its financial objectives. Perhaps competitive intensity has increased, a new disruptive development has emerged, or a company’s core business has begun to slow. Hitting growth and profit objectives, then, requires boosting the ability to create new businesses that wouldn’t naturally result from day-to-day operations.
If this is the only problem innovation needs to solve, efforts are best isolated from the core business to minimize distraction. A good starting point is to build what we have called elsewhere a minimum viable innovation system, a focused but connected set of interventions designed to kick-start new growth.
Competing more effectively in existing markets is a completely different problem. In this circumstance the organization might still be seeking to spur growth but be confident it could if the creativity and ingenuity they see occurring in spurts throughout the organization could be more systematically harnessed. Perhaps frontline salespeople and customer service representatives could find innovative ways to attract and retain customers. Maybe internal support functions could find innovative ways to actually deliver more with less. If an organization tapped into its full innovation potential, perhaps employee engagement and loyalty would increase.
The fundamentally different nature of this problem demands a different set of interventions. Rather than isolating innovation efforts, here innovation mind-sets and behaviors need to be infused into the day-to-day activities of a broader population. High-leverage interventions might include investing in employee training or dedicating a team to help others with common innovation activities, like designing and executing experiments. DBS, one of Singapore’s leading banks, has set up just such an innovation function under Paul Cobban, the chief operating officer of its technology and operations group. One thing Cobban’s team provides is “experimentation as a service” to other teams in the bank working on new ideas, helping them design, execute, and draw insights from such experiments as consumer use tests, operational pilots, and the like.
Organizations may wish to tackle both of these problems simultaneously – reaping new growth from existing operations while also pursuing business beyond its current boundaries. Executives in this circumstance recognize that they need a portfolio of innovation efforts that balance current and future needs. Here, efforts should focus on institutionalizing innovation by working on underlying systems that govern resource allocation and decision making. This kind of intervention requires serious senior leader commitment because of the scale and scope of the effort. In describing our work with Procter & Gamble, we used the metaphor of a factory for new growth. Just as building a factory takes time to build, truly institutionalizing innovation takes years of hard work.
Investing in innovation isn’t a cure for all ills. If the core business is in crisis or is struggling with basic operational issues, leaders ought to focus on fixing those problems first. Innovation also isn’t a quick fix for a struggling business: the full benefits of investments in innovation are only fully apparent years in the future. Finally, innovation is not a one-size-fits-all proposition. Leaders need to make the strategic choice: whether to isolate new growth efforts, infuse everyday innovation into daily routines or truly institutionalize innovation. Taking the time to determine which choice is appropriate for you will focus your attention and accelerate the impact of your subsequent innovation efforts.