Giving Enterprise Innovation a Fighting Chance

December 01, 2017

Organizations are facing external pressures which necessitate innovation for long-term relevance, if not present day survival. Traditional business models in industries such as finance, automotive, and energy, are being challenged more than ever, forcing organizations to look inwards for ideas on how to compete. Organizations rely on their human capital to generate ideas which can be turned into either stable business models, or be used to gain a competitive edge in existing models.

One popular approach is to download these responsibilities to ground-level teams as they are closest to operations, hoping that ideas bubble up. It’s common to see a Sharktank-type setting used to filter out ideas and fund ones that executives feel carry the most promise. There are plenty of strategy frameworks available to categorize the generated ideas based on temporal relevance and maturity. However, the quality of the ideas is often poor because the people tasked with idea generation do not understand what being innovative entails, let alone come up with ideas. It is not uncommon to see mediocre ideas being paraded where executives have to pick the best of the worst while feigning excitement. If this comes out as harsh, it is intended to be.

There are steps organizations can take to equip teams with the knowledge and context which will result in richer ideas being generated during these exercises:

  1. Explicitly describe the organization’s known near-, mid- and long-term challenges.
  2. Communicate the innovation strategy which describes what innovation means to the organization so people from diverse backgrounds (e.g., technical and non-technical) can participate.
  3. Provide coaching and facilitation services to teams tasked with coming up with ideas, so they aren’t left in vacuum with the pressure of coming up with the next Uber.

Communicate the biggest challenges

Senior leadership has to openly, honestly and explicitly convey the biggest challenges the company is facing. For innovation to have the biggest impact, organizations have to have their people focus on the most important problems, not just low-hanging fruit. Though quick wins result in confidence and a sense of accomplishment, they have to be balanced with the magnitude of impact the organization is seeking. At the very least, leadership has to convey their view on what problems, if solved, will result in the biggest impact.

There is a tendency to under-communicate these challenges by assuming people just know what to focus on. This is dangerous and wastes time because with knowing what the challenges the organization faces are, people’s attention and energies are wandering to non-essential items. There is a argument that we might be constraining people by putting boundaries along their thinking. This is incorrect because what we’re doing here is giving people a true north, rather than putting a box around them.

Some examples of challenges include:

  • Banking: We are losing market share with customers who want small loans, and these are the most profitable customers
  • Medical: Post-care surveys indicate that patients were unsatisfied with the level of care and attention they received
  • Education: The time it takes for graduates from technical programs to find employment has increased by 30% in the last three years

The above doesn’t explicitly constrain thinking, but gives an idea of the nature of the problem and forces one to contemplate on what the root cause might be, so that innovative solutions can be designed.

A clear innovation strategy

Strategy is one of those words that can mean nothing and confuse people if we’re not careful. However, there needs to be an innovations strategy in place and communicated to the organization. The communication part is what’s missing in most cases, because organizations will hire the MBBs of the world to come up with something, but not necessarily communicate its essence downwards, therefore losing any value it might have brought.

Rather than regurgitating what an innovation strategy is, this HBR article by Gary Pisano sums up what the essence of a strategy is. The key takeaway relevant to this post is that innovation can happen on multiple dimensions. Two of the main ones are technological innovation and business model innovation, and that these innovations need to be linked to the larger business strategy.

People in the organization need to understand what the existing business models and technical competencies are, and where their innovative ideas fit in the landscape of the organization — some examples:

Leadership can decide which types of innovations to focus and allocate resources on based on the business strategy. This allows employees who are tasked with idea generation to have a firm understanding of how their ideas fit into the larger business strategy, and what the impact and implication of their ideas can be.

Depending on how well the problem is defined also requires what kind of tactical support teams require to come up with innovative solutions. This concept is described in another HBR article by Greg Satell, but that discussion is beyond the scope of this post.

Provide coaching and facilitation services

There are facilitation techniques which can be used to make the most out of brainstorming sessions, instead of leaving people to their own devices. These can range from retrospective techniques to innovation games. The point being that an experience facilitator equipped with agile coaching experience can result in a night and day difference between what is produced when a group of people are brought together to problem solve.

Reading between the lines of Paul Graham’s startup ideas essay offers some basic tips on how a facilitator can structure such discussions. For example, pretend you are living 20 years into the future and try to notice what are the things that are missing. These missing items can be innovations today.

This ground-level support for teams is critical to an innovation strategy as without it, we are not maximizing the yield of our most important resource: people.

Innovation is a very interesting topic because there is no mechanical method which guarantees innovation. To date, the best we have figured out is that we need to provide environments and support for people where they have a chance to produce innovative ideas. That’s essentially it. I predict that at some point neuroscience and brain mapping will intersect with what it means to innovate, and in the future we may be able to control and optimize the types of people and processes we need to marry to maximize our innovation output. That is a different story.