Innovation. It’s one of those things people love to talk about – even dream about – that many, if not most, don’t really understand. Let’s face it, if everyone really understood innovation, there wouldn’t be almost 6 million results on Google News as I write this post, nor would innovation have been in the top 3 challenges cited by The Conference Board’s annual CEO Challenge for the last three years, and maybe, just maybe, we wouldn’t keep calling everything new and interesting “an innovation.”
Want further proof we don’t know what we’re doing with or about innovation?
I hadn’t actually looked before, but Amazon.com currently lists over 67,000 titles on innovation, with nearly 1,000 released within the last 90 days and over 300 listed as “coming soon.” That’s a lot of reading. As a business leader trying to ensure your organization has a sustainable competitive advantage in its current markets or when you’re trying to create a whole new market to enable future growth, it’s easy to get overwhelmed and, frankly, just a little lost.
We don’t want you lost. We want to see you successfully innovate by creating the right culture so you can do it again and again.
Innovation isn’t about applying the latest tools and technology. They may play a part, but they aren’t what’s really important.
Innovation comes from clever people trying to solve compelling problems, getting it wrong – sometimes very wrong, and repeatedly wrong – and still not giving up. Innovation comes from exerting control over the things you can change or influence in your environment and accepting and working around the things you can’t. Innovation comes from individuals being empowered and accountable for the decisions they need to make and from also being held accountable that any resulting solution to that original, compelling problem is viable, valuable and aligned with the world, society and, if relevant, the organization in which they operate.
Yes, I said “if relevant to your organization,” because your current organization may not be the right place to solve the problem for many reasons. Ideally, it is, or you can get it there, but the reality is that sometimes it takes something new to deliver the solution. Richard Branson often says that it’s far easier to create something new than to change the culture of an established organization, and he’s completely correct. However, culture change is possible if you focus on the right things.
Constraints, control and accountability—these are the keys to innovation, and they’re also the real levers of cultural change.
Constraints? Are you crazy?
Constraints are a key and often invisible aspect of innovations once they reach the market or are in everyday use. The Cirque du Soleil example of disruptive innovation from Blue Ocean Strategy is an excellent example of this point. What were the constraints? Well, it’s just like a regular circus except:
- No animals
- No stars
- One arena
- A unifying performance theme
- Only performed in refined venues
- Focus on artistic acts
- Deliver better margins than a regular circus
In practice, that means it’s nothing like a regular circus at all, and that’s the point. It defined something totally new—not with abstract, off-the wall, unfettered ideation, but instead, it very carefully and deliberately identified a core set of constraints and thought creatively within them to define a new type of entertainment experience.
Only one of the above – deliver better margins than a regular circus – directly addressed the problem of delivering business value. After all, that’s the purpose of innovation, right?
An idea – no matter how unique, timely or relevant to solving that original compelling problem – isn’t worth anything to you or your organization unless you can deliver it, and, once delivered, it ultimately adds value to your business through revenue and/or reputation within the time required by the leadership team and the shareholders.
Here then lies the source of one of the most important, yet often overlooked, set of constraints: your organization itself.
A member of your team has a great idea for solving a compelling problem. However, if –
- you don’t have (or can’t get) the resources to deliver it, or
- your organization doesn’t have the capabilities to deliver it, or
- your organization doesn’t understand it, or
- your organization is afraid of it, or
- your organization just isn’t ready for the changes it requires to deliver it
– it can never deliver business value.
This is why organization is often the biggest constraint—much more than any offered by your current or potential markets and competitors. You simply can’t make the idea a reality.
In the book Enterprise Architecture as Strategy, the authors liken organizations to athletes, saying that over time, organizations develop their core capabilities focused around delivering on what the company is about and its essential, defining characteristics. Some capabilities are emphasized and developed – like the muscles and motor skills of athletes – and others are not. An Olympic weight lifter isn’t suddenly going to become a world-class figure skater unless they invest a lot of time and effort into the level of change required to switch sports.
Your organization is much the same, I’m sure. Not every idea is viable—not because of lack of market opportunity, but because you don’t have the organizational muscles and motor skills to make it real. This isn’t a bad thing, but it is something that needs to guide your innovation efforts.
Of course, you always have options if you really want to deliver the idea. You could start another company, spin out a division or form a joint venture and deliver business value through shares, dividends, profit sharing or other instruments.
The point here is that innovation is something truly new and groundbreaking because it happens within a set of constraints. Those constraints form the context in which the problem is solvable and action is viable.
Innovation may come from leveraging existing capabilities in new ways or in new markets, or innovation may come from within the organization to reduce complexity, tear down silos and disrupt the traditional ways of working, processes or communicating (see also value networks). Both have dramatically different contexts and constraints, but both can potentially represent true, disruptive or radical innovation to your organization.
Note as well that we’re not talking about simple optimizations, enhancements or cost cutting changes, sometimes called “incremental innovation.” Of course, to the organization as a whole, new functionality may be possible or costs may be reduced from the application of both approaches, but it’s the nature of the change – within the context in which innovation happens – that really defines the difference between incremental or disruptive innovation.
Control and Accountability: two inseparable partners
If you take control or have been given control of something through delegation by someone else, you become accountable for that thing. However, accountability can also come from your constraints as well, because they may specify regulations you must follow, laws you can’t break or simply other types of externally-imposed requirements you must meet in the course of solving that original, compelling problem.
While you can’t affect or influence your constraints, everything else is up for grabs.
You may be responsible for following someone else’s rules and may need to demonstrate to them on a regular basis that you’re doing it, but within what you control, you make the decisions. You become accountable for your actions and the decisions you make about what you do and how you do it within your sphere of influence because you own the risk to the outcomes. You make the choices. You have the power to influence the outcomes.
Accountability comes from having responsibility—the only difference is perspective and ownership of the outcomes.
All too often, organizations delegate responsibility without ensuring appropriate accountability for the results. How can you tell if this happens? It’s a question of risk ownership: who controls the uncertainty of the outcome?
Do you want to ensure your innovation efforts deliver the business value you desire? First, you have to be able to express what you want to achieve in a way you and everyone else can understand and measure. These are your criteria for innovation success, and it includes not only what you want to achieve, but when you want it done.
Second, you need to decide on your strategy for achieving those results. Maybe you establish a new division. Maybe you appoint an expert. Maybe you share it with partners or the public.
What you’re doing is making someone responsible for delivering your objectives. They become accountable for how they carry out the task, but as long as they report their progress to you in terms of what you want, you’ve empowered and enabled them to do what needs to be done. There’s no question of what they can and can’t influence, because they know and understand the constraints; you’ve made them responsible for delivering what you need; and you also hold them accountable for how they do it.
You’ve established the objectives and the boundaries of their domain, and in it, they have the freedom to innovate—to solve that compelling problem. And yet, you still know what’s happening. You understand the progress and the setbacks, not in the details of their domain, but in terms of your own objectives and requirements.
What have you also done? You’ve changed the culture of your organization. You just happen to have made innovation a priority in the process.
Culture? I thought we were talking about innovation
Yes, and yes.
Earlier in the week, I had a conversation with John W. Lewis about priorities of selection illustrated with the story of the Apple 1984 Super Bowl ad and how Anya Major was eventually chosen. The short version is that originally, they were trying to find actresses and models and then try and get them to throw the hammer through the screen with pretty dire results. Then, the casting effort re-focused on the most important criteria: being able to throw the hammer. Ms. Major, as an experienced discus thrower, passed the test and also met the aesthetic criteria.
Are you focusing on the right criteria to enable innovation in your own organization, or are you simply expecting the same skills, thinking and actions – your organization’s status quo – to suddenly deliver innovative new products or ways of doing things?
Saying “go innovate” and not delegating responsibility, demanding accountability or giving the freedom to make decisions – and, most importantly, make mistakes – is exactly like Ridley Scott expecting a model or an actress to suddenly be able to perform like an athlete.
True, there’s a chance it could happen, but is that really a risk you’re willing to take? Do you have the money to invest waiting for your innovation lottery ticket to pay off, or would you rather stack the deck in your favor to reduce the risk and increase the odds of bright people solving interesting problems for your existing and potential customers?
The point: the right culture can do anything. Innovation is a skill like any other. Try and innovate without the right culture, and you’re going to have a much harder time.
Culture is “the ideas, customs and social behavior of a particular people” so you need to embed, enable and reward organizational customs and behavior that can deliver innovative results. The top innovation strategy cited by business leaders in the last CEO Challenge was to “create a culture of innovation by promoting and rewarding entrepreneurship and risk taking.”
It’s a good plan, but it’s only part of the story. The devil is in the detail of “promoting and rewarding” the right behaviors.
Encouraging risk taking and rewarding entrepreneurship still needs to be done in a context that is aligned with the overall capabilities and objectives of the organization. It isn’t a blank piece of paper or a playground with no rules.
To be successful, we, as business leaders, need to guide, encourage and govern the innovation process so we end up with tangible results undeniably tied to what matters to the organization. To do this, we need rules, and we need to establish boundaries and constraints. If we don’t, we may observe people taking more risks or thinking in more entrepreneurial ways, but the odds are that they aren’t going to deliver ideas or results that are actionable for the organization.
In innovation discussions, you often hear the words “risk taking”, “ideas”, “entrepreneurship” and “being creative”. Unfortunately, the word you don’t hear as often is “action.” As we said before, ideas without action are worthless. Everyone has them, and there’s an endless supply.
Our goal here is to enable better execution of what we know we want to do and create a culture that safeguards the future viability and longevity of our organization for the benefit of all our stakeholders: our employees, our customers, our shareholders and the communities in which we operate. That takes ideas and action directed in the right place to solve the compelling problems important to our organization. That’s what makes us unique, and that’s what will enable a sustainable competitive advantage and differentiate us from our current and future competitors.
Those ideas, actions and priorities are a function of and directly influence and reinforce the culture of our organizations. It’s who we really are—our identity.
Jack Welch once said about GE, “innovation is something we do every day.” What do you do every day? What does everyone in your organization do every day?
Are you innovating and building a sustainable, vibrant and thriving organization with a strong reputation to attract the best talent and draw a large and diverse investment community, or are you feeling kinda stuck in the drudgery of the day-to-day march of the status quo?
It’s up to you to build the organization you want.
If innovation is a priority and you’re finding it difficult to make it happen, or even if you don’t quite know where to start, give us a call, drop us an email or fill in the form below. We’re confident we can get you on the right track.
Let’s get started today.