The Number One Killer Of Corporate Innovation


Ken Blanchard and Scott Blanchard .FAST COMPANY. July 23, 2012

Selling an idea to top leadership before it has generated tangible results can be difficult; very few innovative ideas can stand up to the scrutiny of a core business model. But understanding the four most common ways people interpret change will help you get there.

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Innovation is essential to keeping an organization alive–everyone knows that. Then why do so few companies innovate?

Part of the answer is that it’s very hard for people who are invested in the current business to truly embrace disruptive new ideas. Tom Peters talks about this when he says that innovation never happens vertically in a company. One of the fastest ways to kill a good idea is to take an exciting innovation discovered at the front line and move it up the chain by asking your boss, having them ask their boss, and so on. When you run an idea up the chain of command, you almost never get the permission or the resources to innovate well.

People at the top of the organizational pyramid are usually running the business using lagging indicators. In general, their focus is on defending present revenue streams. More often than not they are nervous about anything that might cannibalize, compete with, or distract from the company’s core business.

It’s understandable. In many ways, this is exactly what top executives should be concerned about. But that’s also why true innovation usually happens in the corners of the business and works its way up. Building horizontally gives the idea a chance to develop and gain momentum. It also gives the innovation a chance to generate tangible results that can be used later in making the business case to senior leaders.

In our experience, you are usually better off moving forward after receiving just enough permission to experiment with and develop the innovation. Trying to sell an idea to top leadership before it has generated tangible results can be a very difficult hill to climb. Very few innovative ideas can stand up to the scrutiny of a core business model. Things that are new and disruptive are rarely as good as the present product or service, even though they have the potential to be game changers.

Don’t overlook assumptions and mindsets

People have different levels of readiness and capacity to understand change. Robert Marshak, senior scholar in residence at American University and author of Covert Processes at Work: Managing the Five Hidden Dimensions of Organizational Change, wrote a wonderful article that we’ve referred to several times when we’ve come up against change in our company. It’s called “Managing the Metaphors of Change.”

In the article, Marshak points out that when most people think about change, they assume that others will respond to it the same way they do. Marshak describes four different mindsets, represented by different metaphors, which affect how people view innovation.

1. Fix and maintain. The theme here is, “If it ain’t broke, don’t fix it.” It’s a minimalist approach to innovation that only kicks in when something is broken. One of our consultants ran into this attitude with a prospective banking client. In speaking to a group of senior leaders, our consultant was having trouble getting the group to grasp the concept of a future vision. Slightly exasperated, our consultant asked, “What do you want this bank to look like in five years?” The general consensus was that since the bank had recently been redecorated and since they expected to get seven or eight years out of a typical facelift, they expected the bank to look pretty much the same as it did today. Needless to say, radical innovation was going to be a challenge for this group.

2. Build and develop. People with this attitude are more open to innovation than Fix and Maintainers. These people are about incrementally improving and building something better than they have today. This can be seen in the way they focus on improving processes—for example, taking a paper process and turning it into a more paperless process.

3. Transitional. Those with a Transitional mindset are willing to examine current market forces and are looking to stay current. In our company, for example, a Transitional mindset allowed us to continually evolve as training moved from classroom-based delivery to a virtual approach.

4. Transformative. Those with a Transformative mindset are open to ideas that look completely different from what currently exists. Today’s smart phones are a good example of the product of a Transformative mindset. A complete departure from original cell phones, smart phones allow us to make and receive calls from anywhere, surf the web, read e-mail, access a wide variety of apps and product reviews, map locations, watch videos, and stay in constant touch with friends and family. Central to everything we do, the smartphone has transformed our lives.

Understand yourself and others

The different mindsets aren’t necessarily good or bad. What’s important is to understand both your own mindset and the mindset of your audience.

What is your relationship to innovation? What are the key assumptions and beliefs currently limiting your possibilities for change? What about your peers and colleagues? How can you address different mindsets to encourage them to see new possibilities? Finally, as an organization, how do you develop leaders with the ability to challenge their own assumptions and beliefs?

Your organization is only as innovative as the people who work within it. As a leader, it’s important that you look in the corners of your organization and your industry for the next innovative idea. Especially seek out and encourage the people developing ideas on the fringes. Consider what you can do to make it easier for yourself and others to see, understand, and leverage new ideas. These are the beginning steps to building a company whose innovations will keep it relevant and competitive now and in the future.

Step-By-Step Guide for Business Innovation


 

 By David J. Neff and Randal C. Moss. CHIEF EXECUTIVE.May 31, 2011

 

Innovation, true institutional innovation, makes indelible, positive impacts on a business’s corporate culture and ability to drive revenue. When implemented, successful innovation programs can attract top talent, improve staff retention, drive new lines of business, and create an agile organization able to adapt to changing environments.

A culture of innovation requires executive leadership to engage the entirety of their staff to take ownership of innovation development, and incorporate it into their daily job functions. Every employee has a unique view of the organization, and can identify opportunities to better serve their constituents. Identifying these gaps should be an organizational priority, because each gap is an opportunity to innovate a new program or fill a need.

These days, it is insufficient to rely on a suggestion box in the break room to drive innovation. You need to present your employees with the resources and support necessary to effect a change on the problem they have identified.

Step 1: Create Opportunities for Awareness and Innovation

When the American Cancer Society initiated its Futuring and Innovation Center in 2002, they were inundated with ideas on how to solve constituent challenges. The Center drove a cultural change within the greater organization by developing a structure through which even the most junior staff were able to submit ideas and participate in their development. Beyond the value of the new programs, and beyond the new revenue from them, The Center fostered a culture of individual responsibility and gave every staff person the tools and opportunity to make lasting and meaningful changes to the way that the organization operated.  The lesson?  Encourage your employees to extend themselves outside of the prescribed job descriptions.

Additionally, Royal Dutch Shell PLC was a pioneer in organization awareness, able to engage their entire company — top to bottom level.  Shell developed and implemented an innovation identification and development program called “Game Changer,” which actively sought outside ideas for energy production, distribution, and even new sources that could drive profitability and overall growth of the company. Shell calls out to its entire network asking “If you have a creative mind and you believe your invention can transform the energy industry, perhaps you should be speaking to us. We invest in novel, early stage ideas that could impact the Energy System to help you get them from your mind to ‘proof of concept.’”

But awareness need not solely be an external effort. Air Products and Chemicals considered awareness as an internal challenge. Air Products employs a vast array of engineers with diverse background and interests. However, this vast resource was not being tapped, simply because the interests and skills sets of each engineer were hidden. Air Products recognized the challenge and created an internal system to catalog all of their engineer’s technical expertise and passions. Now, project managers leverage the system to create high relevance ad-hock technical teams that align people with their technical skills and passions. The result is better products and engaged employees.

Step 2: Take A Systematic Approach

In the Innovation and Commercialization 2010 McKinsey Global Survey, one of the biggest challenges expressed by participants was the need for better organization of innovation. In fact, 42 percent of survey respondents said that improvement in innovation organization would make a profound positive impact on their ability to drive innovation.

Interestingly enough, “organization” was closely followed by “developing a culture and climate that fosters innovation” as the second biggest challenge.  The report is telling when it says, “Organizational factors, including innovation-specific processes and links to support functions, remain a challenge. As hard as it is for companies to implement organizational changes in increasingly complex environments, the results suggest that when companies make the effort, they will experience more success with innovation.”

The lack of a highly functioning innovation system is one of the preeminent barriers to developing a culture of innovation. An innovation structure provides individuals with great ideas the resources and corporate support to usurp the standard business development process.

The Shell Game Changer is a strong example of how a large organization can act nimbly by creating a separate pathway for ideas to route. Game Changer relies on a stage-gate process to bring in, evaluate, validate, test, and launch new innovations. The American Cancer Society leveraged the success of the Shell system and adopted a similar framework for their innovation development program called Springboard. Both programs took a regimented and systematic approach to innovation development, passing hundreds and thousands of ideas through screens until they were left with only the most viable innovations. At which point, those ideas received not only funding, but developmental support.

Step 3: Turn Ideas into Business Reality

Here is an easy guide for transforming all those wonderful innovations from words on an email, to actionable programs or products:

  1. Discovery. Gather business concepts from your staff and volunteer network. Create challenges for them by posing particular questions and asking for solutions, and have an open channel for people to send in their unique ideas for consideration.
  2. Scoping. Give concepts an initial review against your carefully selected criteria. Some key criteria are: Scalability, Sustainability, Cost Basis, Tie to Organizational Mission, and Capacity for Execution. This is where your process begins to pay off. By weeding out unsustainable ideas early on you preserve development energy and funding for viable ideas.
  3. Create a Business Case. Once approved, engage the person who submitted the idea to draft a business plan of their concept. The business plans should thoroughly outline the mission, goals, evaluation tools/metrics, and resources to test the viability of the idea as a prototype. A review committee should consider a completed business plan as a formal application for funding.
  4. Conduct Constituent Market Research. Engage the idea submitter to commission a market research study to determine what demand exists for their concept. Ideally, you already know the problem it is going to solve, and the value it will bring your customers or constituents. Now you need to see if there is a market for it. Your research can be as complex as engaging a firm, or as simple as creating an online survey.
  5. Development and Testing. Create a rapid prototype to prove the concept works. We suggest that you aim to prove the concept within a nine- to twelve-month time frame. We strongly encourage limiting funding to encourage bootstrapping, and keep the effort focused on proving the viability of the concept, not creating a full-fledged program.
  6. Launch. If chosen for implementation, work closely with the idea submitter to identify the resources and department support best suited to deliver the program to market, and arrange the smooth transition and success of the new program.

From the outside, brilliant business innovation may seem like art.  But it’s more science than you think.  We work in nonprofits, where innovation is the name of the game: Now, you know our strategy for success.

Further Reading.

My Inconvenient Truth – part 1

 

How To Lead In Turbulent Times


By Alan S. Berson and Richard G. Stieglitgz|FASTCOMPANY |December 4, 2012

The times, they are a-changing–constantly. Luckily, the rulebook for leading in the midst of unpredictable change remains constant. Follow these 10 steps for great leadership no matter what happens.

In any moment of decision, the best thing you can do is the right thing and the next best thing is the wrong thing–the worst thing you can do is nothing.–Theodore Roosevelt

Today’s global economy is characterized by rapid and unpredictable change. The challenge of such turbulent times can only be met by employing an appropriate blend of the leadership and management mindsets.

Leaders in all sectors–industry, government, the military, academia, and non-profits–are being challenged to do more with less to better utilize their people’s time, physical assets, and budget. Your first response to a shrinking budget might be to do more yourself. An alternative is to delegate more to team members either proportionally or by getting your high potentials to take on extra work. In the first case, you are likely to burn out and have insufficient time to lead. In the latter two cases, you burn out either everyone or just the best people on your team. There is a better way: eliminate low-value tasks.

Stefan, an associate director in a government agency, received a constant stream of Freedom of Information Act (FOIA) requests, which by law must be addressed promptly. He lamented that answering the requests was making it virtually impossible for his people to perform their core mission; his thinking was rooted in ways that worked well for him in the past. Doing everything that was asked was one of Stefan’s core values and a source of pride for him. We asked him to consider other approaches he could use to process the FOIA requests. Stefan met with his boss and asked her to assign some of them to her staff. A few hours later, she agreed that her staff would handle the more controversial requests because they involved policy issues. The impossible became possible, and his team continued to excel at their core mission.

Budget limitations are often less of a barrier than executives make them out to be. One private sector client, Adrienne, desperately needed additional funds to finish a priority project by the year’s end. We encouraged her to contact her peers to see if any of them had funds remaining in the current budget year that could be transferred. It turned out one of them had just cancelled a project, and funds were indeed available. After brief negotiations with the CFO’s office, the budget authority was transferred, and a vital project was completed on time–within the existing overall budget.

The core lesson in these two stories is to think broadly in your definition of your team–it is more than just you and your direct reports. It includes everyone who has a stake in your success. Look for alliances that can dramatically expand the capabilities, resources, and reach of your team. A second lesson to understand is that when you do not ask a question, you are really the one who is saying no. When you ask questions, you tap into others’ knowledge so as to create new possibilities. The boundaries of your possible actions are no longer what you know, but rather what the organization and community know and can do.

At the end of the day, only action produces results. Building relationships, developing others, and making decisions lead to more effective actions; but it is the actions of you and your team along with the outcomes they produce that will build your reputation as a great leader.

Ten Ways To Practice Great Leadership In Taking Action

1. Choose action or inaction wisely. Deciding when to take action is a basic leadership choice. You can lead your people into action quickly or let the energy build while they prepare for what must be done. Both approaches are appropriate at times.

2. Make teamwork a priority. Even high potentials must perform as a team to be successful. Conflicting actions or complaints about difficulties in getting agreement are symptoms of poor teamwork. Fix the teamwork issues first, and other challenges will be easier.

3. Hold planning conversations. The time you spend in up-front conversations will be less than the time you otherwise would spend correcting the unintended and costly consequences of poorly planned and misaligned actions.

4. Ensure that the plan is understood. Ask high potentials, especially those who did not participate in planning, to describe your organization’s goals and strategies. If their answers are accurate, congratulate yourself. If they are not, improve the methods you use to communicate the strategic plan to your people.

5. Plan obsolescence. Look at the products and services you offer today. Which will be irrelevant three years from now? Are you developing the next generation of offerings? Whether you are or not, someone else is.

6. Create a people strategy. Invest as much in creating the people strategy for your next major change as in developing new processes and systems. People will accept change when they feel it is necessary, when their inputs are heard, and when they believe that the process of change is fair.

7. Learn from success. Looking back, would you say you learned more from your failures than from your successes? If you said yes, spend more time examining your recent successes to determine how you can repeat and expand them.

8. Stretch the comfort zone. Think about your team’s biggest achievement last year. What have you learned since then that could have made it bigger? Push your people into the uncomfortable learning zone and coach them to higher levels of success.

9. Confirm alignment. Next time you finish a key meeting, ask each person what he or she plans to do–especially to support each other. Agreement is real only if all parties share the agreements, the actions to be taken, and the expected results.

10. Get comfortable with silence. Silence can be the prelude to a big decision or decisive action. Use silence in your conversations as thinking and reflecting time.