Emerging technologies and innovative new business models are transforming life, business and the global economy at unprecedented speeds. As digital technologies reshape the modern world, businesses established in less fluid times are having to make increasingly complex and critical decisions against the ticking clock of change.
The importance of innovation to business longevity and the potential it holds for economic growth has never been disputed. Collaboration and connectedness now bring a truly external perspective – essential for organisations to respond to.
In the Covid-19 era, the way we work and interact with each other and the environment will forever be altered. Going back to how things were before will simply not be possible and it will be innovation, and how we manage it in our organisations, that will help leaders find novel ways forward.
Organisations by large understand the innovation management imperative and many invest in innovation in pursuit of a more agile, competitive organisation.
The winners in any industry over the next five years will be those whose innovation prowess exceeds that of the competition. It will be the collaborators, those who go to much greater lengths to tap the creative potential embedded in employees, partners and stakeholders.
It will be the organisations who placed people and ideas at the heart of their management philosophy; instilling a desire to be innovative; creating the right organisational climate; and involving all employees and their knowledge about customers, competitors, and processes.
Innovation is about tomorrow, and business leaders need to be more forward-looking instead of overly fixated on maximising current proven products and services, a situation that Innocentrix’s Innovation League study demonstrated unfortunately, not to be the status quo at many organisations.
In this assessment of the recent innovation management approaches adopted by organisations, the following key elements were emphasised as essential drivers of innovation value:
- Leadership Enablement,
- Process and Infrastructure,
- ROI Tracking and Innovation Measurement,
- Innovation Culture and Skills Development,
- External Networks and Linkages,
- Continuous Learning Loops.
A truly connected picture was presented by organisations, as the role of innovation as an enabler of future-orientated potential took prominence. The main findings of this innovation study as well as the prominence of the six drivers of innovation value, are unpacked in more detail below. More detail on the Innovation League results, methodology and history is presented in the Innovation League Report, downloadable here.
According to the study, Leadership by now really gets innovation, but a widening gap is evident between strategic intent and practical application.
Innovation is still viewed by many as a project initiative, and it erroneously gets relegated to lower levels in the organisation or becomes an ad-hoc activity, as leadership turns its focus to existing pressures and present-day strategic targets.
The study was executed pre-Covid-19, at a time when economies already struggled to keep the lights on but for the first time since its inception six years ago, the results did not hail Leadership and Ambition as the strongest pillar of innovation capability. At the same time, the Organisation and Collaboration pillar (demonstrating organisational investment in infrastructure, support and collaboration for innovation) declined with it.
Could it be that our organisations let slip on leading innovation when times are hard? Precisely when doing so is more important than ever?
Many would agree that this sentiment came back to bite many slow-to-innovate organisations in the months that followed, and it will continue to do so especially as the impact of Covid-19 forces us to create alternative ways of working, living and interacting.
The development of innovation leadership skills is not getting the attention it deserves in many organisations. Lower scoring organisations (as opposed to the winners) are expecting staff to innovate with little or no support on where to focus or how to make it happen. It is widely accepted that a participative, open leadership style enables growth and is more effective in the long-run, but in most cases, even though the leadership pillar scored high in general, this was not consistently translating into effective innovation cultures.
According to the research, successful innovation leaders have five main areas of focus, they:
- Create strong strategic alignment
- Focus on process enablement and adequate budget allocation
- Empower employees and executive management alike, by actively addressing innovation skills development at all levels
- Expose people, across the board and from all levels of the organisation to the external environment and business landscape, so that innovation becomes relevant and impactful
- Adopt a truly open and collaborative approach to innovation, across the innovation value chain in support of more diverse outcomes
Process and Infrastructure
Successful organisations match innovation ambition with support and enablement and the results echoed this. A 14% increase in the use of separate innovation departments was evident as 62.3% of the organisations surveyed now has innovation departments and a shift from passive innovation process management towards active management of not only the front end of innovation (FEI) or the ideation stage, but also in getting to market, albeit amidst a decline in infrastructure investment and budget allocation.
Innovation intent is evident in organisations, however, follow-through and enablement left much to be desired, resulting in unfocused, low impact results. Process and infrastructure considerations include more than stand-alone innovation events, hackathons and brainstorming sessions.
Various well-performing organisations employed definite open and collaborative innovation approaches and adopted agile methodologies and “war rooms”, amongst other things, to make innovation happen. Also getting more airtime amongst those that performed well was the involvement of external stakeholders and ecosystems in the organisation’s innovation processes.
ROI Tracking and Innovation Measurement
Innovation measurement and delivering return on investment (ROI) is an area that traditionally performs sub-optimally. In the latest results, this pillar moved to be the second weakest pillar overall, up from being the weakest in the previous assessment. It is however clear that the measurement of innovation output is still a major stumble block for many.
Any strategic initiative needs to be monitored and tracked for impact. High-performing organisations know this and in the past six years that the survey has been conducted, this area saw an increase of 13.5%, as organisations actively start to better track innovation. Yet, less than half (39.4%) of the organisations surveyed track investment and returns made in innovation, across development, bids, projects, and idea capture phases. Organisations excelling at innovation consider innovation metrics related to:
- Culture and
- Speed to market
Innovation Culture and Skills Development
The People and Culture pillar has always been the second strongest pillar for participating organisations. In the latest assessment and for the first time since the League’s inception, this pillar performed better than the Leadership and Ambition pillar and emerged as the strongest pillar overall. This may be an indicator of increasing organisational focus on culture building for innovation, or it may be that winning organisations’ greatest asset are their people, who are becoming more knowledgeable about innovation management as a key business driver regardless of adequate leadership support and enablement.
Meaningful innovation remains premised on the capabilities and engagement of a committed workforce. Organisations that do innovation well start with culture, in particular innovation skills development and effective, engaging ways of communicating innovation intent.
Areas of focus that deserves special mention in terms of managing people for better innovation output are:
- Defining what innovation is, its context and why it is important for the organisation.
- Setting innovation targets and objectives throughout the organisation, its business units and creating strong strategic alignment
- Skills development related to innovation and creativity tools and techniques – aimed at all levels of the organisation
- General innovation awareness creation skills e.g. what is happening externally (external orientation), what does that mean for the business and where can I start (internal orientation) – aimed at all levels of the organisation
- Strategic innovation management skills – How to support, facilitate and enable innovation in the organisation – aimed at leadership level
- Knowledge and know-how in terms of innovation management systems and processes – aimed at senior and executive level
- Continuous learning from an organisational perspective but also about what works for the organisation and what not, in terms of managing innovation
The above indicates that successful innovation in organisations has a lot to do with strategic innovation management, culture enablement and the supporting infrastructure and processes. The main elements to be considered by the manager of the future is therefore related to the effective alignment of innovation strategy, people, process and technology, together with effective execution.
External Networks and Linkages
It is important for the organisation to understand its internal as well as external environment and how it will influence and impact its ability to cultivate a successful innovation management system. Creating successful linkages to its overall context will also assist the organisation to identify new opportunities and entrench overall awareness about business and industry trends and imperatives.
Organisations that manage innovation successfully act in anticipation and regularly scan its internal as well as external environment to stay abreast of global developments and projected disruption. It understands its own internal opportunities and areas for improvement.
This includes identifying gaps in the planning and support structures required for innovation.
Continuous Learning Loops
Continuous measurement and review of the organisation’s innovation strategy, policy and overall innovation activity is a common-sense approach to ensure constant innovation performance improvement. Performance evaluation and the resultant learnings emanating from implementing corrective action will help drive innovation growth and is an action organisations should implement regularly. Organisations that did well in the Innovation League displayed superior integration of learning and feedback loops in the way they manage innovation. What worked well in the way you managed innovation, what were the gaps and how can you improve on it for better results in the future?
Once a new offering gets to market the need to create adoption and sustain momentum becomes an immediate, on-going consideration. Waiting for the initial life-cycle to be executed in its totality before learning takes place is futile as innovation (and the management thereof) cannot be viewed as a linear stage-gated process from ideation to commercialisation.
It is necessary to create continuous “innovation learning feedback loops” at every stage of the innovation life cycle to ensure new value to the market, and to integrate learning as soon as possible to sustain market momentum and increase chances of success.
Creating learning feedback loops, and especially external points of view are not something that organisations particularly excel at, as results show that collaboration mainly takes place in the thought gathering (21.3%) and concept and business case development phases (29.5%) and not much beyond that.
The graph below provides an overview of the drivers of innovation value, as apparent from the research results over the years.
Figure 1: The drivers of innovation value (Source: Innocentrix Innovation League)
Summarising the top 5 innovation lessons demonstrated by the results
- Innovation’s Achilles heel for organisations remains to be effective collaboration and providing adequate enabling structures and resources in support of repeatable innovation competency.
- Most participating organisations (80.4%) stated that innovation is key to success and many (70.4%) allocated responsibility for innovation output at Board and CEO level. Leadership is still a strong pillar for innovation, but its focus has waned as short term goals receive immediate preference.
- Innovation intent was strongly evident from the 86.9% of respondents that translated strategy and business unit-specific goals into clear innovation goals (e.g. reduce cost, or improve customer satisfaction) but of these, few tracked the investment and return made in innovation across its lifecycle.
- Organisations are not necessarily placing a conscious, strategic focus on output, nor are they building the necessary know-how on the subject matter.
- Innovation skill development in general lags behind other training initiatives. Culture is built by people and this is the organisation’s greatest asset. Winning organisations create robust, undeniable innovation capability by focusing on their people and supporting them in making innovation happen!
Parts of this article was first published by Innocentrix in the Innovation League Report: “Driving Innovation Value – Making innovation happened beyond 2020”. For more information about the Innovation League, and to download a free copy of the report please click here.