Six Things you NEED to know about Innovation
The pressure on companies to innovate, evolve, and adapt is unrelenting. With rapid advances in technology and global economic shifts, building the momentum to translate fresh ideas into reality can seem like an impossible task. This is why many people struggle with the question: What are the best ways to innovate? The following six points provide practical advice on how businesses can implement innovation programs in their own firms. 1) Risk compatible KPIsThe KPIs of an innovation team need to be risk compatible: they need to allow you to fail, but to fail fast and fail cheap. To find the right KPIs you need to measure leading indicators and not lagging indicators. A lagging indicator looks at the past, it’s easy to measure and difficult to influence (body weight, for example). A leading indicator looks at the future; it’s hard to measure but easy to influence (calories intake and calories burnt, for example). Once you’ve found the KPIs that are right for your innovation program, make sure you have executive sponsorship against them.2) Decide how innovation will take placeBusinesses need to decide whether their innovation departments are part of the company or a separate entity. Both have benefits, but making a conscious choice is essential. An internal innovation department needs to focus on the cultural challenge, as they’ll be challenged by the mind-set of those already within the organisation. However, once they win the hearts and minds of the key stakeholders, they can leverage on existing go to market assets, such as marketing, sales and customer base. A separate unit or company makes it easy to build ideas and prototypes, but taking an idea to market, or bringing it back into the organisation, can be much more difficult. 3) Focus on achieving a resultInnovation is the art of translating ideas into money. You can spend your time setting up the perfect idea tracker and collaboration portal, or you can focus on a few ideas and accelerate the time to market of the most promising. When you reach a good maturity level, and ideas are brought to you in the hundreds or even thousands, you will need a tool to rank ideas and reach wide agreement on which one is the most promising, but if innovation management becomes managing a tool I can guarantee you’ll lose executive support (and your job) very quickly.4) Think as a lean start-upEstablished companies typically focus on creating a perfect product before taking it to market. An idea is just that and only becomes innovative, when that idea begins to make you money. Do not concentrate on the idea, you can develop and grow the idea in time. Instead, focus on taking the idea to market. Make a minimum viable product and test your hypothesis with real customers (a few) using your real (partial) product. Read Eric Ries’ The Lean Startup to understand how start-ups are beating you to market. 5) Be pragmatic and openYou’ll be surprised of how many people, inside and outside of your company, have "little black books" full of product ideas for your company. Your first task is to make those people feel valued and to surface the ideas from those little black books. Hiding in a lab to come with ideas will just create yet another little black book, adding no value to the company you’re working with. Listen and facilitate the emergence of innovators instead.6) Respond to disruptive technologiesA disruptive technology changes business models and by changing the model, it changes the value chain that is involved in delivering a specific service. A mobile operator introducing picture messages (MMS) beside SMS is doing incremental innovation. A company developing a cross-device, cross-network messaging App (e.g. WhatsApp) is doing disruptive innovation and changing the value chain. Companies should first decide on how they want to play in the new value chain that will result from the disruptor, and then be consequential and execute against their decision. Both a clear decision and a fearless execution are essential to success.