INNOVATION: IT'S NOT THE IDEA, IT'S WHAT YOU DO WITH IT

Just to clarify, we’re talking about groundbreaking innovations here — things that cannibalize existing markets, things that disrupt the old models, and services that challenge the embedded ways of thinking and working. (Think Uber, Tesla, iPad.) We’re not talking about an incrementally better version or a brand extension or a new fruit flavor. Those incremental improvements and extensions are expected; they are built into the slow, organic growth line projections.

With groundbreaking innovation driving company valuation, there is a bigger set of questions and implications. Perhaps the biggest question is this: If we see that correlation to be true, what can we do to increase an organization’s ability to deliver big innovations? (Now you know why we attended and presented at the Back End of Innovation Conference.)

Among all the great presentations and panels, there were a number of powerful lessons. The good news is we are seeing a convergence and a sophistication of thoughts, approaches, and practices that help front-end innovations successfully make it through to the back-end — to implementation. The daunting news is that the challenges and barriers that still stand in the way are equally sophisticated, but long-standing issues. What makes them so difficult to overcome is that they are the human issues.

Here are some examples:

Existing hierarchical organizations are rarely nimble enough to innovate at speed and are rarely able to both deliver against the demands of today AND think about the opportunities of tomorrow.

• Innovation is enabled by and depends upon the connection of strategy, process, structure, and capability.
• Execution is the multiplier of innovation — meaning that an organization that can execute well on a few good innovations is more powerful than one that has lots of great ideas with no way to execute.
• Growing complexity, accelerating pace, and increasing demands are creating a capacity issue for our existing resources — and these resources are the best sources of great ideas.
• Employees want to work on “stuff that matters.” If you give people some freedom to contribute and think outside their box, they will amaze you.
• Recognition of wins and communicating progress is critically important.
• A critical enabler or significant barrier to an organization’s ability to innovate remains its culture.

How do you get a large organization with silos, divisions, project teams, brands, and existing products and revenue streams to not only think outside their box, but know what to do with the great/threatening/groundbreaking idea that is staring them in the face?

The amazing part of the conference came when solutions were discussed. Sure there were the “Aha!” moments in the presentations and the panel discussions … hopefully including mine. What was really interesting, were the spectacular insights that occurred when people went off-script, when they were talking at the networking lunches and open times. Some of the greatest observations were:

• Connections: Give people (existing employees, not consultants) dedicated time, forums, and physical space to make connections with people from across the organization.
• Ownership: Establish processes and feedback loops that encourage people to contribute ideas and have the opportunity to work on them throughout the process.
• Confidence: People throughout the organization will dedicate their time, energy, sweat, and creativity if they believe in what they are doing and believe their ideas will come to fruition.
• Flexibility: Passion > policy. This is evident in the turnover seen in organizations with cultures that stress the opposite.
• Management Examples: Cultures get stronger the lower in the hierarchy you go. Truly innovative cultures will start at the top and get dramatically accelerated and amplified by middle management. This is also true of risk-adverse and punitive cultures.
• Risk Tolerance: Learn, learn, learn. Even if something fails at first learn, adjust, and adapt. If that doesn’t work, abandon. Failure is to be expected and at times rewarded.
• Action, Now: Fail fast, prototype early, and share the concept with customers. Ugly, now, shared, and prototype is better than pretty, held in isolation, demo model, and useless later.

For me, the best part (slightly ahead of having someone in the audience live tweet all my best lines from my presentation) is that if you asked any of our clients they would have told you much the same things. Whether an organization is innovative or not is ultimately a decision — specifically a series of decisions — made at all levels. Do we ask that critical question? Do we punish the person who tried and failed? Do we promote the schmoozer or the producer? Do we give our people the time and space to contribute?

The pressure to innovate is greater than ever. The pressure to make numbers is greater than ever. The opportunities to create are greater than ever — either inside large organizations or starting something small.

The rewards are clearly there, and so are the risks. The real question to leaders is: What are you doing to enable innovation and create the capacity to act on it? If the answer to that question has not changed dramatically in the last five years you may want to re-evaluate your strategy — before someone else smaller, faster, more nimble, more risk embracing, and maybe even better funded steals your most valuable customers, recruits your most critical talent, and turns your offering into a commodity play — in essence, eats your lunch.