Executives are well aware that times are changing and that they need to adapt fast or disappear: 80% of them believe that their business models are at risk (McKinsey, 2015).
- How can organizations stay relevant and competitive when everything is constantly changing?
- What are the most effective ways to face margin-crushing competition?
- How can they continue pleasing and retaining customers, when they are constantly looking for the next big thing?
The answer lies in those organizations’ ability to innovate. As Gary Hamel, Wall Street Journal bestselling author and innovation guru, puts it: “Innovation is enormously important. It’s the only insurance against irrelevance. It’s the only guarantee of long-term customer loyalty. It’s the only strategy for outperforming a dismal economy.” (Forbes, 2012).
And executives know this: 84% of them believe that innovation is key to their growth strategy. They are clearly convinced that innovation is of the utmost importance… but they are also vastly disappointed in their own ability to innovate. Indeed, only 6% of executives are satisfied with innovation performance. (McKinsey, 2015).
In a world of relentless change and evolution, the question is no longer “should we innovate” – it’s “how should we innovate”?
So why do so many innovation initiatives miss the mark so badly? Having good intentions and enthusiasm about innovation isn’t enough. The problem lies in the way organizations set up innovation initiatives.
One of the big risks is to confuse innovation with incremental performance gains – and this mistake is made by 82% of executives! (Accenture, 2015, U.S Innovation Survey). Incremental performance gains stem from a series of small improvements to an existing product, and while this usually helps maintain or improve its competitive position over time, it shouldn’t be confused with true innovation.
Another hurdle lies in the way innovation strategies are set up. If they lack any of the foundational elements that help drive change and generate investments, they will remain disappointing and won’t deliver expected results. Currently, and despite being fully aware of the importance of innovation, organizations are facing what we can call an innovation crisis. For instance, only 5% of US business leaders with innovation programs say employees in those programs feel highly motivated to innovate. On the other side of the spectrum, employees very often feel like their new ideas are poorly reviewed and analyzed. Furthermore, those same employees lose interest in innovation programs because they believe that they won’t receive any benefit or recognition for developing successful ideas. (MindMatters Technologies, survey of 150 U.S companies with innovation programs, 2015).
The Dos and Don’ts of effective innovation
When trying to fix their innovation initiatives, executives and operational teams should bear in mind the following – it is essential to adopt a disciplined and structured approach to boost an organization’s innovation power. Innovation initiatives are critical, strategic projects, and should be treated as such. This means putting in place the right tools and the right processes to avoid slow innovation pipelines that lack agility and do not deliver transformative innovation.
Another key recommendation is to avoid focusing only on products and incremental innovation, as mentioned above. Although incremental innovation is important, focusing on customer needs and expectations is what will ultimately return business value for the organization. It’s essential to make the switch toward becoming a customer-centric organization, making sure to always draw inspiration from the big-picture ideas of clients.
Fixing innovation also means opening it up to new contributors. Relying solely and systematically on Research & Development teams for innovation is a crucial mistake. It’s essential to harness the collective intelligence of the entire organization by involving members of all teams in innovation discussions. This means providing the right support system for employees, showing them that the organization values their ideas and following up on the best ones. This will necessarily trigger an outpouring of new voices and new ideas from the workforce. The added benefit of creating a company-wide movement around innovation and new ideas is to boost engagement among employees; the chance to contribute to the organization’s bigger purpose is a powerful motivator.
This leads to the last recommendation, which has to do with organizational culture. In order to foster innovation, it’s essential to create a culture of entrepreneurship and to make sure that employees learn how to think like true business innovators. This means promoting originality as a value by encouraging employees to voice their opinions and defend their point of views. It’s also essential to inspire curiosity among them, and to encourage them to question everything, even the obvious. Asking “why?” systematically helps getting to the root of a problem, and coming up with creative, innovative solutions to solve it. Finally, a culture of business innovation involves keeping an open mind – to do this, it’s important to build bridges between employees, job titles, departments, and even hierarchies.
For organizations that want to remain competitive in a world of continuous change, these concrete, actionable steps can help foster a powerful culture of innovation from within.
To learn more, listen to the On-Demand version of our exclusive webinar with Gary Hamel at the following link: http://www.crossknowledge.com/media-center/events/webinar-innovation