Innovation Climate A conditio for making innovation work The need for business innovation In today’s dynamic business environment product life cycles are becoming shorter and consumer preferences are changing faster than ever. In the global economy new emerging competitors can popup from anywhere. And, these new emerging competitors are more than ever able to quickly develop successful business concepts and capture large shares of market. At the same time radical new technologies are advancing and are near the edge of their commercial breakthrough. Traditional products and business concepts run the risk of becoming obsolete within a short period of time. These trends compel the established corporations to innovate and develop alternative business models. Satisfying Innovation results? In many corporations the urgency to innovate is very well understood. Nevertheless, we find more than once a striking discrepancy between companies’ strategic intentions and the actual innovation performance when one looks at the innovation and business development results. Despite the plethora of warnings, intentions, statements and plans, the actual outcome of innovation activities is often rather dissatisfying. Critics see corporations as inflexible archaic conglomerates that fail to generate streams of really profitable revolutionary ideas, needed for sustained growth and strategic renewal. Is their claim unjustified? Why innovating is so difficult Especially large, focused organizations have a finely tuned immune system to combat deviations from plan, i.e. “deliver according to expectations”. This same immune system has a tendency to wipe out innovation initiatives, which are in essence deviant in nature.
The immune system expresses itself in elements of the corporate culture (e.g. beliefs, values, leadership style, teamwork style and other issues of group behavior) combined with structures (e.g. rules, procedures, systems). These are often root causes for the innovation difficulties. Innovation cannot emerge or be developed because of the organization’s very own inhibiting climate. For over a decade we have assisted our clients with innovation programs. We have helped to launch new products, services and businesses. In these years we have seen a lot of the corporate innovation practice. Based on our experience and insights we came to understand what important success factors are for innovation. Managing the innovation climate A fact of innovation life is the point that you have to simultaneously manage different innovation issues that are often contradictory. One of the closely held notions about innovation is that the individual intrapreneur is the essential ingredient in every successful innovation. It is argued that it is the personal effort of an intrapreneur that determines the innovation success. But it may be evident that the single innovator cannot accomplish anything without help. To achieve results the innovator needs a supportive organization around himself and his idea. So, it is a matter of both individual and collective effort. In the same vein you need balance between analytical planning and intuition. Innovation is often a process where creativity, inspiration and gut feeling are needed. But once the decision is made to develop the idea into real business – analysis, effective planning and project management are crucial. We found that for effective innovation, a bridging between collectivity – individuality, and planning intuition is needed. In our model these form our four basic dimensions.
1
Twelve success factors determine the climate for innovation
Collectivity strategic coherence 10
shared responsibility
9
enabling bureaucracy
8
Analytical planning
7 6
collective pride
business realism
5 4 3 2 1
evolution time
need for speed
0
innovation champions
creative dreaming
committed innovators
informal underground
Intuition
freedom to experiment
Individualism 1
In every dimension we have found three success factors – a total of twelve success factors. Every single success factor represents an extremity of a so-called innovation axe. We discern, as follows, six axes: strategic coherence ↔ freedom to experiment enabling bureaucracy ↔ informal underground business realism ↔ creative dreaming need for speed ↔ evolution time innovation champions’ ↔ collective pride committed innovator ↔ shared responsibility. You need to balance these axes in your organization. Innovation failure is often the result of the organization’s underperformance on certain success factors and/or because of the lack of a balance between the success factors. We designed a diagnostic model that can help to determine how well your organization scores on each of these success factors. Climate Change Our climate scan model is a tool that helps organizations obtain an objective statement about the 12 success factors for innovation. The model can reveal whether your organization has a balanced innovation climate. With the help this tool we scan the innovation climate of the organization
and can advise on required changes. Changing the organization's innovation climate is a matter of on the one hand establishing systems and procedures, and on the other changing employees’ and management’s behavior, attitudes and beliefs. The development of systems and procedures is fairly easy. It is the “people-factor” that requires a lot of attention. Promote change – just start! It is our conviction that the best way to embed innovation in the organization is by “just doing it”. Based on results of the climate scan, the main barriers to innovation can be identified and tackled. In a (cycle of several) innovation pilot program(s), organization members are invited to participate in new business development. In a number of sessions, people are helped to recognize business trends and formulate new business ideas, promising ideas are selected, concepts are refined and projects are developed. As the company rehearses “innovating”, the systems/procedures are designed, used and finetuned and a shared innovation culture can be brought to life. This kind of innovation pilot programs is the perfect instrument to start the change program quickly and effectively!
2
The twelve success factors juxtaposed and explained in more detail
Strategic coherence
↔
The company has outlined a strategy in which innovation is a key-issue. This intended strategy is widely known among the organization members. In the long term strategic direction there is a basic consistency. As a result the employees are provided with a clear strategic direction and know what to aim for. Employees at all levels understand the need for continuous business renewal through the development of innovative products and new businesses. People feel inspired by this strategy. They understand the challenge and are eager to contribute to the achievement of innovation goals.
Enabling bureaucracy
↔
To enable innovation in the organization effective systems and procedures have been established. Organization members know according which paths innovation may be developed. People know where to submit their innovation ideas, how to present proposals, where to get approval and funding, etc. Decisions to continue are made against clear criteria.
Business realism
↔
Innovation is more than just creatively generating ideas. Innovation is about developing ideas into profitable business. Organization members are aware of the fact that their idea, invention or technological novelty has to have a sound business meaning. People therefore think from the very first developing stages about the profit potential their idea may have. That is why innovators in the company are not just handling the technical realization - they have a clear opinion of how the idea will be appreciated by customers and how it can help the company to yield profits.
Freedom to experiment People in the organization are encouraged to look across the boundaries of the known business. They are entrusted to scan the outside world for new business- and technology trends. If they get track of a promising idea/concept they have the freedom to do some small market research and start small experiments. What is more, they are allowed to foster their pet projects.
Informal underground The organization is an open environment for a so-called innovation-discourse. People share ideas and discuss the feasibility of innovation plans. People from different internal functions and business units participate into this discourse and input from customers is appreciated. Ideas are not immediately made into official proposals, but are rather first debated in the informal circuit. Ideas will often not officially surface until they are ready and have gained significant meaning. In this discoursecircuit often coalition of supporters are forged that later will help the innovation-project progress.
Creative dreaming The organization consists of a diversity of people with different backgrounds. As people have different backgrounds, interest and opinions they can bring surprisingly new views on issues and problems. Because of this diversity in the organization innovative thinking is stimulated. Non-conformist thinking is not ridiculed but applauded and approached with a sense of curiosity.
3
Need for speed
↔
Once the decision is made to proceed with the development of an innovation initiative - the innovation project is managed in an effective manner. The organization members highly understand the importance of time-to-market. Projects are managed against clear deadlines. As the mechanism and systems to enable innovation are rather straight forward, intrapreneurs can obtain the resources they seek without excessive paperwork. Progress updates to management are handled easily in a time-effective manner. The organization does not loose itself into paralysis through analysis.
Innovation champions
↔
In the organization successful entrepreneurs and innovators are known and praised. A number of people in leading positions in the organization have been successful innovative entrepreneurs themselves. Their success stories are widely known and shared in the organization. Successful intrapreneurs are the manifest role models in the organization. In addition to that, a number of higher level and/or senior managers are sympathetic innovation and intrapreneuring a great deal. They will often use their influence to help the new generation of innovation initiatives progress. Committed innovators
↔
Ideas and innovative concepts are developed by selfselected intrapreneurs, i.e. people that spontaneous have stepped forward to champion ideas and lead projects. The self-selected intrapreneurs work in small core teams on their projects. The members of this core team are not top-down assigned to the projects - they are also volunteering to participate. The core team consists of small number of dedicated team members which all contribute to the project with their specific expertise and enthusiasm. This team is to a great extent empowered to make decisions concerning their own project.
Evolution time Ideas and concepts are given time to mature. People are given time to contemplate on concepts and ideas. Getting meaningful insights is sometimes a matter of serendipity. Every now and then in the society or business environment some unexpected trends emerge that make the launch for an innovation right for that moment - not sooner and not later. Starting initiatives are carefully sheltered from too much attention. Innovation initiatives are kept low profile and are given time to evolve. Intrapreneurs often will follow a tactic of under-promise and over-deliver.
Collective pride People are proud to be part of the organization. They take great pride in the products and services they deliver. As a collective they have a track record that shows that they are successful innovators. Organization members will help each other to achieve new innovation successes and maintain product leadership.
Shared Responsibility Innovation is not the task of a select group of people or one or two functions (e.g. marketing, R&D). People from all functions and business units contribute to innovation. People in the organization will not discard innovation initiatives - however small - as irrelevant. All organization members feel they can and must help innovators. As a result it is rather easy for intrapreneurs to tap into the knowledge sources of several departments. Intrapreneurs can directly approach their colleagues for assistance without having to ask for some kind of official approval high from department chefs or business unit managers.
4