Innovation today is deemed a strategic necessity. But despite significant investments of time and money, it remains a frustrating pursuit for many organisations. Innovation initiatives often fail, and those companies that are successful find it difficult to sustain their performance. Why? Many organisations overlook the importance of a clearly articulated strategy – one that’s closely aligned with that of the business. Innovation is something to be managed, not something to simply throw money at.
The importance of strategy
As was noted in a June Harvard Business Review article, companies regularly define their overall business strategy, and specify how various functions will support it, but rarely do companies articulate strategies to align their innovation efforts with their business strategies. Since innovation is a complex, company-wide endeavour, it requires a coherent set of interdependent practices and procedures to structure, organise, and encourage it, which make up the organisation’s ‘innovation system’. A good strategy will promote alignment among diverse groups within an organisation, clarify objectives and priorities, and help focus efforts around them. The three aspects of a successful innovation strategy are culture, process and structure.
The best companies find ways to embed innovation into the fibres of their culture, from the core to the periphery. A recent article in CIO Magazine says organisations can enable a culture of innovative thinking by articulating innovation as a pillar of the corporate strategy. This way, employees, partners and customers alike are inspired to question the status quo and bring new ideas to the table. Managers need to reinforce this culture through robust and regular interaction between business units, as well as recognising and rewarding both those individuals who succeed at innovation and those who ‘fail smart’.
Whether an innovation initiative is technology driven or not, it is unlikely to be without any IT implication. The CIO is therefore well poised to play a role in developing and nurturing an innovative state of mind within an organisation. The CIO Magazine article encourages CIOs to participate in the idea review process, or serve as an enabler since they have the technical expertise required to take an idea from whiteboard to market.
An organisation may have no shortage of innovative ideas, but without an implementation process, they will never be realised. Yet in large enterprises, cautious governance and approval processes tend to stifle innovation. McKinsey&Co recommends a healthy balance: “Bureaucracy must be held in check, yet the rush to market should not undermine the cross-functional collaboration, continuous learning cycles, and clear decision pathways that help enable innovation”.
One way to achieve the freedom necessary for ideas to thrive is to set up a cross-functional innovation team in a central location away from the host organisation; an innovation laboratory that sits separately from day-to-day activities. Australian companies are embracing this concept, with Telstra recently opening its own R&D lab, described as an “open innovation environment where Telstra, its enterprise customers, partners, incubators, vendors, research institutes and other members of Telstra’s innovation network can connect and collaborate on cutting-edge technology all under one roof”.
By nature, innovation is creative, but there still needs to be a formalised approach to change. A high profile example of ‘structured innovation’ is Toyota, which implemented a process called Kaizen, meaning ‘continuous improvement’. Kaizen forgoes large-scale pre-planning and extensive projects in favour of making small changes that improve productivity using machines and computing power. Without the revolutionary breakthrough-style innovations that are standard today, Toyota has managed to become one of the auto industry’s most profitable companies. The difference is that Toyota’s innovations have focused on process rather than on product, and on the factory floor rather than on the showroom. The innovations are harder to see, but they’re no less powerful.
Committing to innovation
Innovation can be a complex task that requires a structured approach, but with an explicit strategy, it can succeed in any organisation. The ingredients for success include culture, process and structure. It’s important to view innovation as a commitment rather than a campaign – as well as a mindset, it’s a series of ongoing activities that must be continually embraced and practiced. This means investing in the creation of an innovation culture, and developing the appropriate implementation processes and structures to carry out any changes. These strategic and organisational factors are what separate successful enterprise innovators from the rest of the field.
To learn more about innovation and to find out how to develop a strategy for your organisation, download our complimentary how-to guide, 'The age of innovation: When change is no longer an option' here.