Companies that can harness the energies that propel innovation succeed. Easier said than done.
What’s holding back innovation at your company? We summarize some answers using material from a thoughtful piece, “Overcoming four big barriers to innovation success” by our peers at BCG. For those in the experimentation industry, many of the solutions proposed will sound familiar.
The authors start by highlighting that… “Innovative companies on average generate annual total shareholder returns that are 3.6 percentage points higher than those of their peers,” according to BCG research.
Nothing new there. The pain point is that while we all want innovation, only a few of us can deliver it. “80% of innovation executives said innovation was a top-three priority at their companies, but only 30% said their organizations were good at it,” report the authors.
We take the four barriers proposed by BCG and break them down into problem and solution using material from the article. Have a look and let us know what you think.
The problem: “All torque. No traction.”
“Many organizations have plenty of people willing to innovate, but they remain unclear about the company’s innovation ambitions and each unit’s role in achieving those. People therefore work busily on new ideas, but they are not pulling in the same direction.”
The solution: “Sell the dream.”
“To escape this trap, effective leaders sell the dream: they articulate a vivid image of innovation success. They anchor their compelling ambition to the corporate strategy, with specific targets for growth and value creation. They then formulate the strategy that will deliver value, and they define what kind of innovator the organization wants to be—consistent with the company’s current and future capabilities.”
The problem: “…Ambition alone is not enough.”
Solution: No map. No problem. There’s still the customer.
You can’t manage what you can’t measure. Fair. But the unknown is implicit in innovation. Rather than rely on traditional metrics, empower and challenge top talent to create customer-centric ones to measure progress toward creating a culture of innovation.
“Effective innovation leaders choose their players, and they clarify the role of each innovation vehicle and what it should contribute to the target portfolio of activities.”
“Microsoft uses what it calls “power metrics”—nonfinancial customer-centric indicators of success over the next few years—to link innovation ambition and company purpose and to encourage more experimentation, collaboration, and customer orientation.”
Problem: “…’it’ never leaves the “ivory tower.”
“What’s more, such strategies are often not linked to customer-centric idea generation taking place in the broader organization. There’s a lot of high-minded talk about innovation, but it never leaves the ‘ivory tower.'”
Solution: Be bold. Dare. Embrace risk, not recklessness.
“Great innovators are clear about where they choose to compete. They start by staking the ground—defining the domains and the most attractive market spaces in which they intend to innovate.”
Problem: Expecting change while relying on the status quo.
Solution: Invite new perspectives.
“New ideas often arise at the intersections of disciplines, or when people with different perspectives look at the same problem.”
“…the most effective teams combine creative or human-centric approaches with a healthy dose of analytical thinking, evaluating market and technology trends through innovation analytics—mining vast unstructured datasets, such as patents, academic publications, venture financing, and social media to reveal new opportunities and risks.”
Problem: Perfect is the enemy of the good.
“Some organizations develop lots of ideas—but far too few take flight and make a material impact on performance.”
Solution: Solving a clear customer-centric problem, launch MVPs.
“Leading innovators empower cross-functional teams with shared goals to discover and pursue customer-centered growth opportunities—and then work in sprints to create, launch, and learn from minimum viable products (MVPs) in the real world. By failing, failing again, and winning, they empower teams to learn through real-world experiments and maximize for outcomes, not output.”
“Agile puts a priority on speed to market. Teams are free to test MVPs, watch them fail, learn, and move on quickly.”
Problem: “Past performance does not guarantee future results.”
Solution: Have “…Clear processes in place to guide projects or kill them.”
“To get around this pitfall, top companies lead the transition from the old to the new by managing innovation programs transparently and with discipline, regularly assessing progress and moving quickly to dismantle internal impediments to promising ideas.”
“…innovative cultures use a guiding structure of governance and process. Both companies encourage risk taking, but they also have stringent capital controls, resource-allocation mechanisms, and clear processes in place to guide projects or kill them.”
Problem: Ticking the box.
Solution: Look at innovation as a journey, not a destination.
“Leading companies see innovation as a journey that needs to be managed systematically, on multiple dimensions, to drive excellence and impact.”
“Top innovators understand that the journey never ends—the point is to keep moving forward, reaping the rewards as you go.”
Experimentation harnesses agility to create innovation
Whether a startup or an incumbent corporate market leader, rapid technological advances require that all companies move with intelligence, speed and coordination to be competitive. Experimentation mechanizes innovation and business growth by leveraging:
- agile product development best practice;
- customer insights from data; and
- the ability to affect, measure and understand customer behavior.
Better yet, experimentation builds a long-lasting culture of innovation, as both the practitioner and the executive can monitor in near real-time the impact of their customer-centric solutions. And we know that a healthy of culture of experimentation pays off.
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