Get innovation rolling: discover your Wheel Inbetween
Everyone knows that innovation is vital, and there is lots of great published thinking on smart ways to develop winning innovation ideas. What’s less well charted is how to deliver innovation, especially in a large organisation that will naturally resist anything beyond incremental change.
The conventional response
Accepted wisdom has it that large organisations will struggle to learn new tricks, so innovation is outsourced to more nimble alternatives, often with higher risk and high opportunity cost. Consequently, the full value of successful innovation is diluted.
The conventional response tacitly accepts the immiscibility of ‘business as usual’ and ‘breakthrough innovation’. It also fails to appreciate the ability of an organisation to evolve when the right leadership and processes are put in place. Central to this is the concept of a carefully curated process of organisational evolution that sits between the processes of everyday performance and exploratory innovation – the wheel inbetween.
Not what, but how
In our competitive world of volatility, uncertainty, complexity and ambiguity, being good at innovation is more important than ever. If you are a large, well-established product-centric organization that wants to innovate, how do you do it well?
Most management thinking centres on the challenge of creating, developing and proving innovative ideas. i.e. WHAT you should offer to achieve preference and differentiation. This is the terrain of innovation specialists, often lean/agile proponents who try to school their clients in the ways of design thinking. So far, so good.
But innovation today is rarely about product alone. Once you have added blurring category boundaries, service delivery, digital technology and new channels and you are faced with business model innovation challenges that are typically beyond the experience and know-how of any one organization.
It is no longer enough to frame innovation in terms of WHAT you will offer. You also need to consider HOW you will do it. Metaphors of oil tankers trying to change course or elephants learning to dance are often deployed, pointing to the strategic, technical and cultural challenges of getting a complex organization to do something differently.
The how menu
What’s on the menu of potential approaches to deliver innovation? Here are four options, in no particular order…
The first and most fashionable approach is to throw it all over the wall to an innovation agency or incubation lab. While this may give you fast access to skills and ideas, you risk outsourcing your brain, ceding value and forgoing the development of new capabilities.
The second and most complex approach is to find partners to work with who can fill the gaps with complementary resources and capabilities – in the form of alliances or partnerships. This can be a great way to ‘test the water’, enabling different organisations to play to their strengths. However, alliances are notoriously unstable and often suffer from governance and decision-making issues.
The third and highest risk approach is to buy your way into new space. Fast access to new talent and IP through acquisition can be a very effective growth accelerator, although more often it is a case of ‘acquire in haste, integrate at leisure’, with synergies overstated and the burden of integration underestimated.
The fourth and most valuable approach (if you can get it right) is to evolve your own organization to be able to do new things, extending capability and retaining value. It’s also the hardest and least glamorous option, therefore not so well researched and written about as the others. Let’s examine this unloved and seemingly intractable option a little further…
Two wheels good, three wheels better
Imagine your organization comprising two cyclical processes that operate continuously (spinning wheels). The first wheel is the Performance Cycle and it’s what creates value for today. It is where core capabilities and processes reside, with focus on consistency, repeatability, targets, control and strong governance.
The second process is the Innovation Cycle, to provide stimulation and inspiration and identify where future value growth is going to come from. The Innovation Cycle takes into account trends in customers’ needs, technology, competitor activity, regulatory change and social / cultural influences, delivering an output that will vary from an articulation of high-level opportunity areas through to proven customer value propositions.
All organisations will recognize the challenge of the interface between the Performance and Innovation Cycles. You need different types of people, different capabilities, different processes and different KPIs. It might as well be another organization. The obvious disconnects lead many to jump to other options above, without adequate consideration of option 4 above. Core to this is the rarely acknowledged existence of a third wheel – the Evolution Cycle. It sits between the Performance Cycle and the Innovation Cycle. It enables the continuous innovation of the established Performance Cycle, catalyzed by the stimulus, ideas and business plans that are output from the Innovation Cycle
The Evolution Cycle does much more than just manage the friction at the interface. It also determines what new capabilities and activities should be added, what core processes should be changed, and what should be stopped or outsourced (framing the task of change management). The Evolution Cycle is appreciatively disruptive; building on what’s working and what’s valuable while infusing innovative ideas and challenging received wisdom. The Evolution Cycle creates a movement for change through involving a broad cross-section of people in the co-discovery of the strategic, operational and behavioural consequences of an innovative proposition.
We have encountered aspects of the Evolution Cycle in our work, although it has never been called out in its entirety. It has been variously talked about as
- The ‘diamond cog’ that sits between legacy operations and future innovation, fusing an appreciative understanding of the established business with a customer-centric view of where future value lies
- The ‘membrane’ that wraps around the entire organization, maintaining the integrity of the whole and preventing the new ideas from never getting off the ground in the first place, drifting away or being picked-off by competitors
- The ‘bridge’ between strategic innovation and execution, ensuring that organizational delivery is fully considered as part of the formulation of strategy, with both domains viewed as a continuum rather than as discrete activities
- The change management capability that helps the established organization to continuously evolve towards what it needs to become in order to deliver a business plan for a new, innovative initiative
How to spin the third wheel
Whatever we choose to call it, we can begin to describe the essential characteristics of the Evolution Cycle. Our empirical, non-exhaustive checklist includes
Resource: a dedicated team providing
- Leadership that is energetic, positive, persuasive and collaborative – from a leader who is known by and commands respect in the core organization
- Deep knowledge and appreciation of the Performance Cycle (core business operations, assets, capabilities and ‘how we do things around here’) – as a grounding for the bridging of business-as-usual with innovation
- Expertise in disruption and innovation – fully appreciative of fresh thinking and new ideas, driven by customer insight, based on observation of the world outside and congruent with the organization’s purpose and values.
- Expertise in organization development and change management – covering the structural, political, diplomatic and technical domains of organizational change
- Expertise in scaling-up the outcomes and learning from tests and prototypes
Process: integrated, interlocking processes, providing
- Strategic and operational connection between the dynamic pipeline process of the Innovation Cycle and the mid/long-term strategy and planning process of the Performance Cycle – to ensure that organization innovation to deliver proposition innovation is a regular topic on the leadership team agenda
- Active, structured facilitation of the conversation to manage the inherent tension and conflicting priorities of the ‘improvers’ versus the ‘disrupters’ – making explicit the criteria being applied, the choices being made, the goals and KPIs being agreed and the issues that need to be elevated for executive discussion
- A regime for continuous development of prototypes, formulation of experiments and live testing of new ideas – to ensure consistency, shared learning and habituation of the process of evolution.
Values: a foundation of common purpose and culture
To maintain the integrity of the organization overall, it may seem obvious that purpose and values must be aligned across the Performance Cycle and Innovation Cycle. However, it is a natural consequence of an effective Innovation Cycle that new opportunities and new ways of working will emerge that challenge the strategic and ideological underpinnings of the core.
In large organisations that need to innovate, the real challenge is not WHAT to do to, it’s HOW to make it happen in a way that leads to a sustainable, developing organisation. Part of the solution is to pay more attention to the usually neglected ‘wheel inbetween’ – the cycle of continuous organization evolution.