Organisational Innovation: Mastering the Innovation process
Innovation’s innovation – isn’t it? Certainly not. The challenges differ greatly as organisations get larger. However, breaking larger organisations down into smaller “divisions” clearly helps us to implement a successful innovation process.
Our Study for Lancashire County Council: Get Innovation
A while ago, we performed a range of studies into innovation within Lancashire. Within the study we addresses a wide range of factors including company size, successes, barriers, and willingness to invest. We found that investing in larger SME’s (typically 30 people plus) optimises the return on the public purse. The reasons for this were simple:
- There was a higher level of commercial maturity (and hence lower “fail rate”)
- The magnitude of the benefit was naturally greater in larger organisations, presenting greater value for money.
However, the fact remains that every organisation will perform better through investment in innovation. In addition, every company NEEDS to invest in innovation in order to remain at the top of their game. The question we ask is whether the innovation process differs as organisations grow in size. Actually, we’ll tell you the answer – it’s a resounding YES. Buy why?
Innovation Processes in different size businesses
The basic rules of innovation are the same for all organisations, and surround our 3R’s – Risk, Reward and Resources. Management of these is achieved using a basic set of tools which any organisation can master irrespective of size. The degree of success that a company achieves depends on how well they mix, match and optimise their toolset. The differs depending upon their own specific organisational situation and objectives.
Generally speaking, smaller organisations tend to have less spare resources (financial, personnel and time). This means that they have to be more selective about their innovation portfolio. These companies need to minimise unsuccessful projects and invest resources towards the low risk, low reward end of the spectrum. This is a relatively safe bet which we call the “Play to Stay” strategy. One of the reasons for start-up failures (particularly in tech) is that companies start with the opposite high-risk strategy. This comes with a high failure rate – so they’re setting themselves up against the odds from the start.
Larger organisations tend to have greater resource at their disposal. They have more money to invest and are able to handle greater losses from unsuccessful projects. This means that they can afford to invest in a wider portfolio of innovation activities. Typically, they range projects from low risk, low reward “safe bets” to more speculative high risk, high reward projects. The latter have a much higher failure rate, but this is compensated by the value of success. This is complemented by the sum of the other smaller, successful projects from the total portfolio of activities. This is what we refer to as a “Play to Lead” strategy. You need to have the resource (and courage) to invest in high risk projects in order to get your rewards.
Innovate or Die: How to survive in a changing world
The phrase “Innovate or Die” may seem drastic to some. However, there a significant number of companies who could have survived, if only they’d have thought and planned ahead.
Ultimately, success comes down to your ability to manage your innovation processes. This includes how you select a good portfolio of suitable projects relevant to your own conditions. You’ve got to understand the relative success potential and probability for each project you choose to invest in. You then need to select a suitable range of activities to provide the optimal combination of survival, growth, and prosperity.
Business Insider recently presented a story about a packaging firm in Lancashire that went into administration. They blamed the introduction of the 5p charge on plastic bags in England for a drop in demand. While the loss of jobs is devastating, one key question has to be asked – could Innovation have saved them?
When companies do not continually address what they do and how they do it, one small change can destroy them. There’s no denying the “bag charge” is an environmental win – Tesco report a 78% drop in carrier bags purchased. But, if you’re in the business of plastic carrier bags, then you’ve got to be prepared to change ahead of the rest.
Change is inevitable – be prepared
This isn’t new. The aerospace world moved from metals to composites, the music world from records to tapes to CDs and then digital. Change has always been a driving factor, and will continue to be.
Innovation isn’t just something you do to stay ahead, it’s something that you have to do to survive.
You’ve always got to be asking a set of key questions which become your growth and survival bible. Where is the world going? What technological, environmental or regulatory changes may come and affect our business? Is there anything we can do about it and if not, how can we react? What are our core skills and competencies? Do we have any diversification opportunities – whether markets, services or products? Should we lead change or be ready to respond if and when it happens? These are a small number of the questions that should be asked when developing your survival, growth and innovation strategies.
How Entrepreneurs and Intrapreneurs manage innovation processes
Productivity is key to growth. Innovation is the future. Entrepreneurs will drive our economy. These are all statements that we keep hearing in some size, shape or form.
Lets’s just take a step back to clarify some basic definitions:
- Productivity is the measure of output per unit of input
- Innovation is to gain benefit by doing something different
- Entrepreneurism is about setting up businesses to turn investment into profit
- Intrapreneurism is about demonstrating the traits of an entrepreneur within a larger business
So, Innovation is basically about making things better, and entrepreneurs / intrapreneurs tend to be the conduits to drive that change. The differences between an intrapreneur and an entrepreneur are about risks, safety and security. Intrapreneurs tend to have the safety, security, backing and resources within an organisation which is not their own. They can take more risks without the danger of personal loss or repercussion. However, they need a highly supporting senior management team to achieve their goals.
Typically these titles are applied to individuals who demonstrate success in achieving the definition. Few people set out to become an entrepreneur or intrapreneur, and those who do rarely succeed. They usually set out to make money or improvements and are given the title by others who recognise their contribution. In one way, this is not unlike the tag of a “leader”.
Developing a culture of entre- or intrapreneurship
Lets spread our thoughts a little wider. Can someone demonstrate basic entrepreneurial and intrapreneurial “traits” without having to make this what defines their character? Of course they can – and this is the key to productivity and success.
To achieve this you need to understand how a successful entrepreneur or intrapreneur things and acts. You then need to replicate aspects of this behaviour across your people.
Growth is enabled by not being afraid to identify areas where change would drive improvement. It’s not being afraid to discuss suggestions with senior managers, and having a culture where such behaviour is proactively encouraged. It’s having the resource to turn your ideas into actions. When this is achieved, you will boost your productivity beyond your expectations.
Understand the rules around innovation processes
Innovation uses defined rules which draw the best from the people who use it correctly.
Those who follow these rules are able to gain great benefits by doing things differently. This applies to ANY part of your business, not just science, technology and product development. To draw the maximum impact from innovation it isn’t something that should be restricted to a single team or individual. It should be a cultural asset ingrained in the heart of your business and apparent in everything you do. Get it right and your business will grow without taking the valuable, limited time of your senior mangers and directors.
Think about this a little more. In our businesses, we max out the resources. We max out our time. We max out pretty much everything we have – apart from one obvious asset that nearly every business takes for granted. This asset is the collation of the intellectual capabilities of our workforce.
People drive your Innovation Processes
People – more so, their intellectual capacity – are one of the most under-utilised assets within our workplaces.
Ask yourself, how much to do you really know about your people? Do you know their strengths, weaknesses, creative abilities and desires outside work? Do you realise how much these aspects can have an impact on how they operate in work? The answer is most likely to be “probably not”. So, how can we build on this and gain maximum benefit from the people who work for us?
The answer to this is hidden in another question – “why are successful entrepreneurs so good at what they do”? The answer, is because they make best use of their knowledge, experiences and creativity. If we support our people to think like entrepreneurs, they will be more effective, efficient and successful in their roles. Remember, this is exactly what an Intrapreneur is.
We’re going to take the role of an intrapreneur and change it a little. Imagine that you had these intrapreneurs scattered around your business, acting as facilitators for innovation within their departments or projects. They would drive innovation projects and activities to achieve the desires of the Senior Management Team (SMT). They would also encourage and promote creative ideas to improve any part of their business within their own work areas. For the sake of convenience, we’re going to call this “Functional Innovation”, and these people are our “Innovation Influencers”.
Our Innovation Influencers work in every area of the business developing Functional Innovation projects on a daily basis. They encounter a range of micro and macro opportunities which if addressed, would positively impact on business performance and productivity. Group the sum of these impacts together and the total benefit can be potentially phenomenal.
Innovation Influencers weave around the business casting their skills to encourage the entire organisation to think creatively and solve problems. Realistically, they would engage around 90% of the workforce.
Innovation influencers operate more effectively with the support of a suitably skilled individual sitting between them and the SMT. This person will have a more strategic role, developing the wider innovation capacity within the business. We’ll call this “Organisational Innovation”, and the person our “Innovation Champion”.
We’ve now established the structure for continual growth through innovation. But what do our Innovation Influencers and our Innovation Champions actually do? What sort of people should they be? What impact can they have?
Your Ideal Innovation Influencers
Innovation Influencers are individuals who are trained in identifying problems and opportunities and turning them into solutions. Typically, businesses operate best if around 5% of their staff become trained in this particular skill. With this philosophy, the Innovation Influencers are usually able to engage around 90-95% of the wider workforce.
The main role of an Innovation Influencer is to make things happen in their teams and departments.
They will hold sessions to develop ideas and solutions to specific problems and opportunities. These opportunities may be departmental, project based, or will often be defined by wider corporate requirements. Innovation Influencers will also be the point of contact and development for other staff members with ideas. They will draw upon the diverse skills, knowledge and personality base to allow everybody to contribute to innovation activities.
These people work together to develop projects and activities which move an aspect of the business forward. This can be anything from an idea to incentivise staff through to driving a whole new product, service or marketplace. As everybody is contributing to the innovation agenda, problems are continually solved and new opportunities continually identified. This way your business operates in the most effective and efficient manner, like a well oiled and maintained machine.
Issues arising at the working level are addressed without the need for managerial intervention, before they become a greater challenge.
Your Ideal Innovation Champions
Innovation Champions drive your innovation processes, ensuring the company continually improves by making best use of its people. Ideally, around 2% of your people will train as Innovation Champions, acting as conduits between the Innovation Influencers and SMT
Innovation Champion(s) work with the Innovation Influencers to make sure they’ve got access to all of the resources they need. They support issues that require assistance, and drive the high growth ideas up to senior management for consideration and development.
They also work with the SMT to understand the core corporate drivers. These are used to set periodic innovation activities and challenges for the Innovation Influencers to take back to their teams. Examples could include identifying new markets for a product, methods to improve productivity, or schemes to provide flexible staff arrangements.
The main role of the Innovation Champion is to become the strategic innovation expert in your business. They advise the SMT, support and drive projects with Innovation Influencers, and ensure that culture is embedded in the company. While senior managers usually want to be involved in driving an innovation initiative, it does require a specific and individual skill set. This is the remit of the Innovation Champion.
Spreading the culture through the business
This will typically involve a higher level approach which looks at the macro activities within the business. The Innovation Champions select the right projects for an innovation portfolio which supports the overall business strategy. They work with a range of people throughout the business to understand and appreciate the risks, reward and resources. Innovation Champions will also understand how to measure the impact of innovation, developing methods to recognise and reward efforts.
When Innovation Champions operate in unison Innovation Influencers and the SMT, you’ve developed perfect conditions to drive productivity and growth. As one company said to us, “my company now grows itself – I just provide the overall direction”.
To summarise, here is an overview of your Innovation Influencers and Innovation Champions:
Managing your Innovation Process
Once an organisation has the basic infrastructure established very little external support would be required. Networks are essential, but an organisation shouldn’t be dependent upon the support of consultants. More often than not, the majority of the information they require to identify, solve and implement solutions resides in the experience and knowledge of their people.
One of the best companies we visited which demonstrated this has a great system for developing ideas within the workforce. Every month, the MD would stay behind for an evening in the office. He would invite two employees, and ask them to each bring two other people (non-employee family or friends). The company would pay for pizza and a few drinks, and they would talk about the business, identify an area for improvement, and brainstorm a series of ideas. This built on the suggestion that technical naivety often questions in-house assumptions and can present revolutionary ideas.
The next morning, the MD would review the suggestions from the night before with his management team. If there were any they liked, the two employees would be given a budget and resource to progress the idea further. This was a great way to develop new ideas but also draw the workforce in to the philosophy of continuous growth through innovation.
So how can you optimise your Innovation Processes?
The challenge with the innovation process is that there’s no specific right or wrong way to do things. While there is a system of rules and procedures to optimise the process, the balance and trade-offs depend on various factors within your organisation. In most cases, there needs to be a period of experimentation to get to an ideal system – and even then, you’re always learning and improving the efficiency of your innovation systems and portfolio.
The only wrong way to innovate, is not to try at all. The likelihood is that you’re innovating already, but you don’t know it, and you’re not doing it in the most efficient manner. Take some time to learn the rules of innovation – and your growth journey will amaze even the greatest of doubters!
Geminus Training provide a range of courses to help your staff think more innovatively. We can help you create a culture of continual improvement simply by using the knowledge, experience and creativity within your workforce. For more information, please contact firstname.lastname@example.org send me a private message.
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