Business Solutions Issue 22

D R I V I N G

S U C C E S S

Leadership: The Art Of Asking The Right Questions Page 40 How To Manage An Experienced Manager Page 44

Getting To The Bottom Line Of

Innovation nitty gritty sales & marketing

ISSUE 22 FEB/MAR 12

$9.95 inc GST

ISSN 1835-842X

| law | innovation | leadership | professional development | hr | online | strategy | technology | finance

Cover story

Getting To The Bottom Line Of

Innovation | By Dr Amantha Imber | Another year, another buzzword. In 2010 and 2011, ‘social media’ was the phrase on everyone’s lips and on many job titles, and in 2009, we heard all about Web 2.0.

However, over the past few years we have heard another buzzword that just does not seem to want to go away. This buzzword is ‘innovation’. Every company wants to be more innovative and every company website proclaims that its vision is to be the most innovative company in its industry. And while innovation is being stuck on the wall as one of the core values of many businesses, it must be determined that those introducing innovation understand what it actually means.

022

Australian

Business Solutions

Australian

Business Solutions

023

Cover story

There is no correct definition of innovation and many organisations have very different definitions of what innovation means to them, from a simple change that adds value to groundbreaking ideas that change the game.

In its most simple form, innovation is all about good ideas implemented successfully. The result of these ideas is that they are often responsible for an incremental change or a breakthrough transformation. There is no correct definition of innovation and many organisations have very different definitions of what innovation means to them, from a simple change that adds value to groundbreaking ideas that change the game.

An Unfair Competitive Advantage Whatever your definition, there is one big reason as to why innovation should be considered critical for business: it gives you a competitive advantage.

There are five key ways it does this.

First, and most obvious, is that companies that are serious about innovation bring to market more profitable products and services. Apple, for example, is serious about and focussed on innovation and as a result, has launched a huge range of highly profitable products. In fact, Apple was recently found to have the highest sales-persquare-foot than any other retailer in the USA. Second, and often less celebrated but just as important, is that innovation gives organisations an internal competitive advantage. By focusing your innovation efforts internally, you can often save your organisation millions of dollars. You might not want to innovate your products, but rather shave money off your manufacturing process within a short timeframe. Like the concept itself, when it comes to innovating, it is not black and white; the opportunities are endless.

Since the launch of its innovation program INNOV8, in 2007, Coca-Cola Amatil has implemented hundreds of ideas that have been focussed primarily on improving process efficiency.

Ideas implemented as a result of the program include an iPhone application for hospitality staff training for licensed customers called FORMULA, multiple equipment innovations that have significantly improved production performance,

024

Australian

Business Solutions

and environmentally friendly solutions which have reduced the company’s carbon footprint as well as the energy consumption of Coca-Cola Amatil’s refrigerated equipment at customer outlets.

Third, if you focus on training people to be better (and more creative) problem solvers, then you will end up with employees who can outthink the competition. Having the smartest and most creative workforce is a huge competitive advantage in the complex and fast-changing world that businesses operate in today.

Fourth, many studies have found that a focus on innovation and a commitment to innovation programs leads to a significant increase in employee engagement and productivity. Derek O’Donnell, who heads up Coca-Cola Amatil’s INNOV8 program, says “In almost every team or function that has embraced INNOV8, we have seen an improvement in engagement. In one particular team, over the journey of INNOV8, the engagement score has risen from 32 per cent to a sustained result of low to mid-70 per cent”.

O’Donnell believes that INNOV8 has had a direct correlation with engagement for several reasons.

Firstly, it gives all employees a sense of influencing and contributing to CCA and its customers, no matter what level they are in the organisation.

Secondly, it provides a simple mechanism for leaders to engage with their teams and coach them through their innovation. And thirdly, it allows leaders and managers to practice how they deliver feedback as well as test their ability to inspire those around them.

The fifth and final competitive advantage that innovation offers to companies is a perceptual one; it is where you become an employer of choice, such as Google and Facebook, where people are literally queuing up to get in.

Introducing Innovation There is a huge amount of fluff and misinformation that is spread about innovation and it can

make it hard to know where on earth to start.

Furthermore, it seems as though every man and his dog claims to be an innovation expert, and although their advice might have worked once, there is no evidence to suggest it will work again in your specific organisation.

However, what we do have to draw on is a huge body of scientific research that has been conducted on what actually drives innovation.

According to this research, there are six key elements that every organisation needs to have success through innovation.

Lead The Way While people talk about bottom-up innovation, where innovation efforts are driven using a grassroots approach, it is quite rare that this kind of approach can result in real, transformational change. Innovation requires committed and dedicated resources such as time, money and people, and it is critical that leaders support innovation actively and provide the necessary resources to introduce it into an organisation’s culture. If you want to innovate your business, you need to start from the top.

Research has shown that there are several key behaviours that leaders must exhibit in order to drive innovation. One such behaviour is idea support, which is how ideas are treated by leaders.

Leaders who wish to inspire innovation must listen to their team and receive their suggestions in a supportive and attentive way. Possibilities should always be explored and the atmosphere should be constructive and positive. People are more likely to produce creative ideas if they have licence to do so by the situation or by explicit instructions, and this supportive and informative evaluation of ideas increases motivation for innovation.

Giving people autonomy is another key behaviour that leaders must drive. When leaders provide autonomy, people have independence and freedom as to how to do their job, as well

Cover story

By focusing your innovation efforts internally, you can often save your organisation millions of dollars.

You might not want to innovate your products, but rather shave money off your manufacturing process within a short timeframe. Like the concept itself, when it comes to innovating, it is not black and white; the opportunities are endless. as a sense of ownership and control over their work. Studies have shown that people produce more creative work when they see themselves as having a choice in how they can go about accomplishing the projects they have been given.

The opposite is behaviour that is rule-bound, which encourages people to stay in established boundaries, and where leaders tell people how to get from A to B rather than letting them discover it for themselves.

Leaders also need to have a tolerance for risk taking, and this comes down to how well leaders tolerate uncertainty. When this behaviour is high, decisions and actions are prompt.

Concrete experimentation is preferred to detailed investigation and analysis; the latter drives a cautious and hesitant mentality. The leadership team at TataGroup launched an award program that not only recognises great ideas but also has a category of awards called the ‘Dare to Try’ awards, which reward failure where the lessons learned were particularly pertinent.

Create A Culture Where Innovation Flies, Not Dies There are many different things that people say must be present in a culture for innovation to thrive. Meta-analytic studies of innovative organisations have shown that there are 13 key drivers of an innovative culture. However, not all drivers are created equal and there were three that have stood out as being of particular importance.

Intellectual stimulation is critical for ideas to develop and thrive, and is one of the top three drivers. This creates an environment in which

026

Australian

Business Solutions

debate and discussion of ideas is encouraged and supported in the organisation.

An environment where employees perceive a sense of togetherness and cohesion in the organisation is also important. People feel as though they are working towards a common goal and support each other in getting there.

Finally, people need to feel that their jobs and projects are challenging, complex and interesting – yet at the same time not overly taxing or unduly overwhelming. When people feel challenged but not overwhelmed, they produce their best creative work.

Create A Process Where Innovation Can Flow Through Innovation process is about having a solid endto-end framework for identifying challenges and opportunities for the business, generating great ideas, making effective decisions about those ideas, prototyping or piloting and, finally, implementing them. The process for innovation is similar to Christmas tree lights – if one light is not working, all the others will not work.

A lot of companies start with idea generation as the first step in their innovation process. They tell employees that the sky is the limit and to go far and wide with their creativity. However, asking your team to go berserk with ideas is like playing darts without a dart board; you simply don’t know where to aim.

Instead, you want to make sure that idea generation is focussed around problems and opportunities that are in line with your organisation’s overall strategy. That way, you

ensure that your innovation efforts are in line with and complement where the organisation is going, rather than drift off course.

Decision-making is another key part of the process, and a lot of companies get this very wrong. Many companies will ask for in-depth business cases about things that they cannot possibly write a business case for. The very nature of innovation is that it is a relatively risky activity and it is quite often impossible to write a legitimate business case, especially if the innovation relates to creating a new market or category-changing product.

Peter Williams, CEO of Deloitte Digital, says “Business cases are bad for innovation at the first stage because it requires you to rely on untested assumptions. They also require you to make predictions five years out before you have even tested the idea or really understand the opportunity. Prototyping and testing in the areas where the idea lives or dies allows you to rapidly bring the idea to life and learn by doing.”

Business cases often suck the life out of innovative ideas because the business case process is esoteric and assumption-based rather than based on learning. They tend to require a lot of work and create an illusion of certainty and progress, without advancing the idea. They also tend to lock in your key design decisions when you have the lowest level of knowledge.

Building Your Innovation Muscle Many creative types believe that the ability to come up with great ideas is something that you are either born with or not. And if you were

Cover story

Creativity and innovation are like any workplace competency – with the right training and support, anyone can become capable of generating transformational ideas. not lucky enough to have this gift bestowed upon you, then there is no hope for you ever coming up with an original idea in your life.

However, hundreds of scientific studies have shown us that nothing could be further from the truth. Creativity and innovation are like any workplace competency – with the right training and support, anyone can become capable of generating transformational ideas.

One of the most critical things to consider is what an organisation is doing to build up its employees’ creative muscles. What are you doing to train your team to be brilliant at spotting the next big opportunity, or to come up with the next breakthrough idea? You need to remember that these skills are highly trainable and they are just as – if not more – important than all the usual suspects that appear on the training agenda, such as presentation skills, communication skills or generic leadership skills.

You also need to give serious thought to your company’s recruitment and selection strategy. If you want to have an organisation that can outthink its competitors, you need to actively identify top creative thinkers as part of your recruitment process. Google is famous for this, with a ratio of one recruiter per 14 employees, because they take recruitment so seriously.

028

Australian

Business Solutions

The five key ways that innovation gives companies a competitive advantage: • External – bringing more profitable products and services to market • Internal – saving money throu=gh making internal processes as efficient as possible • Ability – having people who can genuinely out-think their competitors • Cultural – a focus on innovation leads to a significant increase in employee engagement • Perceptual – companies that live and breathe innovation become a workplace of choice for the best and brightest.

Know What You Are Talking About An often forgotten element in many innovation strategies is communication, and this begins with internal communication.

Leaders and managers often talk about how they want innovation to become a habit – something that people think about and do as part of ‘business as usual’, as opposed to something that happens sporadically. And the reason why

Cover story

this often does not happen is because there is a huge gap in what leaders want in terms of innovation and how it is communicated.

If you want innovation to be habitual, you need to firstly keep it top of mind and secondly make sure that individuals are clear as to how it relates to their day-to-day jobs. Many organisations want their employees to be innovative, but when you look at employees’ individual job descriptions and key performance indicators, they have nothing to do with innovation or breakthrough thinking.

Communication is also critical at an external level – if you are ramping up your innovation efforts and achieving great things, you need to promote this externally, otherwise employee motivation can be dampened. There is no point working for a company that wins incredible awards when no one outside of the organisation is aware of it. This creates a disconnect from the pride employees should feel for being part of such an organisation.

Communicate what you are doing to the community and the industry to ignite a sense of pride and motivation within your team.

You Cannot Change What You Cannot Measure Last but certainly not least is measurement.

This is traditionally a very tricky area because innovation often lends itself to softer, qualitative measures. Indeed, many organisations ‘doing’ innovation do not have any formal ways of measuring their results.

Having effective measures in place is critical for understanding how to improve a company’s innovation efforts. Ideally, they want to identify three to seven key measures that show how well

030

Australian

Business Solutions

they are tracking. If their measures are not linked directly to driving behavioural change, then they are probably not worth measuring. Examples of useful measures include the number of quality ideas submitted (as measured by how many ideas move on to be prototyped); the quality of decision-making (as measured by how many ideas that are given the go-ahead make or save money for the organisation once implemented); the number of media hits generated for new ideas launched; and the organisational culture assessments that specify which key drivers stimulate innovation and which need to be worked on.

The absolute worst crime that can be committed regarding innovation is inaction.

Unfortunately, this crime is rife. So those who are feeling overwhelmed about where to start, should jump straight in and just do it.

Dr Amantha Imber is an innovation psychologist and the founder of innovation and creativity consultancy Inventium. Inventium runs an annual program for leaders who are trying to drive innovation within their organisations. She can be contacted at amantha@inventium.com.au or through www.inventium.com.au

The six key elements of a successful innovation program: • Leadership – ensure that your leadership team exhibits the key behaviours necessary for innovation to thrive • Culture – having a culture that supports innovation is critical to having a company that produces great ideas • Process – have a clear and defined process that starts with the business problem or opportunity, rather than ideas • Capability – a strategy for building skills around creative problem solving and implementation, and recruiting creative thinkers into the organisation • Communication – keep innovation top of mind to ensure it becomes a habit, rather than a nice thing to have • Measurement – a set of metrics for tracking what has worked, what has not, and what can be changed as a result