Innovations are commonly thought of as new and game-changing. However, many innovations are improvements on something that already exists. For every invention like the iPod or the television, there is also a faster car or a stronger material that is being produced. All of these are innovations. What’s more important than the type of innovation is creating a culture of innovation within your organization.
In his book, The Innovator’s Dilemma, Clayton Christensen classifies innovations into three types: evolutionary innovations, which improve a product in an existing market in ways that customers are expecting; revolutionary innovations, which are unexpected innovations that do not affect existing markets; and disruptive innovations, which create a new market by applying a different set of values, which ultimately (and unexpectedly) overtakes an existing market.
I believe there are only two types of innovations: those that work and those that don’t. And there are only two types of organizations: those that succeed and those that fail. As you can imagine, innovation and success are closely linked.
For the purposes of this article, innovation will be defined as the improvement of an existing product or service to achieve better outcomes, or the development of a new product or service that achieves positive outcomes.
A successful organization is one that: grows constantly by balancing innovation with Operational Excellence; integrates innovations into daily operations; encourages risk and rewards good ideas, even when they don’t work; excels at turning ideas into usable products and services.
At companies like Google and Apple, employees are encouraged to spend up to 20% of their work hours investigating new ideas and improvements, even if they have nothing to do with the employees’ actual job responsibilities. Many great innovations have come from employees working on challenges during their free time.
But what separates the innovative companies from those that just say they are innovating? There are two key factors.
The first is the size of the organization. Typically, smaller organizations are more innovative. There are some large organizations that are the exception. Companies like 3M, Apple, General Electric and so on are leaders in innovation. But for everyone one of those companies, there are a plethora of other large organizations that are not innovating at all. Smaller companies tend to innovate more in order to be competitive. Since they often compete against large multi-nationals, sometimes their only competitive advantage is the speed and delivery of new innovation.
The second key factor is having a culture of innovation. This means an organization encourages new ideas, challenges the status quo and is comfortable with failure. Ground-breaking drug treatments go through years of trials before they work successfully on humans. The Wright brothers failed hundreds of times before finally achieving flight. The culture of innovation is a mindset, not a process or a methodology; and that mindset starts from the top. How do you treat employees who make mistakes when they try to develop a new solution or solve a customer problem in a different way? This question alone will tell you whether or not you have a culture of innovation.
The visual below depicts the cycle of innovation. These stages will help an organization become successful in not only identifying new ideas, but also implementing them and integrating them into the company’s operations. You must engrain this cycle into the DNA of your organization.
The different stages of the innovation cycle revolve around the empowerment of your employees. This empowerment means you give employees the ability to make decisions, to try new ideas, to collaborate with others and most importantly, the ability to fail productively. If employees aren’t encouraged to think this way, you will fail to grow as an organization. Think of how the planets revolve around the sun. Without the sun, none of the planets would survive. Similarly, without empowerment, innovation will not be sustainable.
Let’s discuss each stage in more detail.
It is essential to instill a culture where new ideas are generated and employees are encouraged to think of different solutions and improvements to the way the company operates. The key at this stage is not to focus on details, but ideas. This becomes a company-wide brainstorm where no idea is too far-fetched. Hubspot holds monthly “sprints” where teams are organized around developers and product managers. These teams avoid detailed specifications and plans and focus on generating new ideas. These new ideas may come from employees, customers, suppliers or other business partners.
Once ideas are developed in the Gather stage, they need to be reviewed for impact and usefulness. What this really means is that the risk of each idea needs to be assessed. What will be the impact of the idea? What are the risks associated with it? What is the level of effort required to implement the idea? These are all questions that need to be answered.
Establish a review team and some parameters around how ideas are to be chosen. Then create a short list of the ideas that have the best potential for success and the highest potential impact (and a tolerable amount of risk). Having guidelines around the selection process makes reviewing the ideas easier and more transparent, and gives the review team the ability to focus on certain decision-making criteria. It’s important that the review team be comprised of representatives from different departments within the organization to ensure a broad view of each idea.
Once all of the ideas have been reviewed and the short list has been made, you need to prioritize the remaining ideas to ensure that some progress can be made. Select one or two ideas that can have the greatest impact or can provide the company with the best results, and move forward with only those ideas. It’s important to recognize from the outset that not all ideas are going to be addressed so you need to establish how they will be prioritized. Is it based on senior leaders making arbitrary decisions, or using clear, transparent decision-making criteria? Do you move forward only if there is dramatic financial impact, or because it is the right thing to do for your customers?
Apple had the idea for the iPhone and the iPad at the same time, but Steve Jobs decided to pursue the iPhone first because he wanted to change the way that people interacted with their cell phones. Apple only built the iPad once they saw how poorly built other tablets were.
Now that you have one of two ideas to move forward with, develop an execution plan on how to get those ideas to market. Identify who will work on the idea, what the timelines for completions are, what success would look like and who is accountable for that success. This plan can then be tracked and measured to ensure progress is being made.
Those organizations like Google that plan their product releases very carefully, create an advantage over the competition. They assign project managers to each release to ensure accountability is sustained and activities are completed on time and successfully.
Begin executing the plan that was developed in the previous stage. This means that resources have been assigned to the idea, there are clear roles and responsibilities, everyone knows their accountabilities, and most importantly, things actually get done. Someone must have overall accountability for the success of the initiative, whether a project sponsor or senior executive, and this should be clear to everyone involved.
The Execute stage separates market leaders from the rest of the field. Those that can execute most effectively will dominate by combining speed and quality. For years, IBMdominated the personal computer industry. Due to a lack of execution of new ideas, IBM no longer even makes personal computers. Toyota cars used to be synonymous with quality, but after growing too quickly and executing poorly, their reputation, and even more importantly, their sales, decreased.
The ongoing execution and support for the innovation needs to be integrated into the company’s daily operations. This would include transitioning of any knowledge and ensuring accountability for success was maintained. After this step has been completed, the new idea should be fully integrated into your operations and your support function.
At this point, you should review the success of the initiative and integrate any lessons learned into your organization’s way of operating. Identify what went well and should be repeated and what needs to be improved upon in your company’s innovation cycle so it works more smoothly next time.
After the integration is complete, you can begin the cycle again, generating new ideas and innovations. You may even be able to fast track to the Prioritize stage if you had previously generated ideas that can now be acted upon. Make sure that your company is constantly moving forward one step at a time. Too many organizations breathe in their own exhaust and become complacent after one or two successful initiatives. Focus on establishing a culture of innovation that will ensure your company’s success for years to come.
Innovation needs to be like a flowing river, constantly changing and moving and going in different directions. When the water stops flowing, the river becomes stagnant and dried up. Just like your ideas and eventually your results if you don’t figure out how to harness the power of your people and encourage them to take risks.
Andrew Miller is a consultant, writer and speaker who has helped world-class organizations increase profitability and performance. With a focus on operational excellence, he integrates his experience from both the private and public sectors to help his clients increase speed, maximize performance and improve effectiveness. His clients include McKesson Canada, the Bank of Nova Scotia, 3M Canada, renowned hospitals and many other world-class institutions.
Contact him at email@example.com