4 Innovation traps your organisation should avoid.
Stuck in an Innovation Black Hole?
Rediscover your mojo with our transformational innovation tips. Companies are stuck in an Innovation Black Hole; delivering incremental (or core) innovations that defend the company’s baseline, but failing to bring disruptive (or transformational) innovations that create new offers, serve new markets and drive new customer needs. Headline-making innovations are in short supply. Google co-founder Larry Page told Fortune magazine the company strives for a 70-20-10 balance of resource allocation to core-adjacent-transformational innovation. Not a ‘one size fits all’ formula, but a useful jumping off point nonetheless. Now let’s consider the bottom-line gains companies can expect to enjoy as a result of their innovation efforts. A Harvard Business Review study found the return ratio is roughly the inverse of this allocation. Core innovation efforts typically contribute 10% of the long-term, cumulative return on innovation investment; adjacent initiatives contribute 20%; and transformational efforts contribute 70%. The danger? If companies lean too far towards the easy ground of core innovation, and neglect the aspirational territory of transformational innovation, business growth will steadily decline. Transformational innovation is tricky. So how can you get you help your business get its mojo back….? Don’t let your Skunk Works get out of control.
The companies with the strongest innovation track records are those that can articulate a clear innovation ambition; the ones who have struck the right balance between core, adjacent and transformational efforts. Successful companies do this by managing for total innovation via a dedicated business unit, composed of people whose responsibility it is to bring breakthrough innovations to market, evaluate their success and learn from that. But a word of caution; to succeed, a crack team of innovation champions must maintain an agile, entrepreneurial spirit of free-thinking. Amazon’s Lab126, responsible for developing the ill-fated Fire Phone, evolved from a small SkunkWorks subsidiary into a hardware maker with nearly 3,000 employees. As the recent swathe of redundancies at the organisation demonstrates, a dedicated innovation business unit can rapidly become bloated and stifled by process and politics. Exile knaves, but fight for divas. A knave is a ‘bad egg’; someone who doesn’t add value, and worse, actively roadblocks those who do. In the world of innovation, a knave is an inhibitor; taking credit for other people’s work, dismissing great ideas at the first hurdle or refusing to think differently. But not all difficult employees are knaves. And not all difficult employees should be eschewed. According to Google’s Jonathan Rosenberg, some of the most difficult employees are exactly the ones you should fight to keep. These divas are exceptionally talented (and they know it!), but crucially, their talent matches or exceeds their egos, and they want their team to win. These are the people you need on board in order to bring transformational innovations to market. Look beyond the competition.
Transformational innovation pushes the boundaries; it challenges existing thinking and creates new markets by doing differently. Many companies are guilty of using the competition as an innovation catalyst. This might work for core, or incremental, innovation, but not for transformational. The more you look at the competition, the more you will be like the competition. Etihad Airways recently unveiled new cabin interiors on the A380 and B787 aircraft. They have redefined first class travel, creating a three-room penthouse in the sky and, for lesser mortals, private ‘micro-apartments’. Etihad started from a simple design philosophy; ‘my private universe’. Forget air travel, this is about how people want to stay, experience, consume. Shunning the confines of what was known from existing first class air travel, they looked to luxury accommodation, private yachts and premium experiences to design spaces and services. In short, they forgot about the competition and expanded their horizons. Etihad inspired a new way of thinking and created a new market, serving new customers with new needs. Competitors are already looking to the incremental innovation opportunities; Emirates is launching its own ‘bedroom concept’, British Airways is sprucing up first class on jets entering service next year and Air France is offering privacy curtains in their La Premiere suites. Seek out external experts. Managed poorly, innovation results in short-term, tactical, pedestrian ideas that fail to revolutionise categories and deliver long-term growth. To manage innovation well, companies need to strive for fresh thinking, visionary outlooks and imaginative foresight. Historically-biased viewpoints and firmly entrenched inward perspectives all limit a company’s ability to seek out non-traditional, transformational innovations. Companies don’t suffer from a shortage of data. In fact, it’s the very opposite; the challenge is how to translate that data into real insights that spark change. Bringing in industry or technology specialists, bloggers, commentators and observers, academics, entrepreneurs, venture capitalists and consultants is vital to challenge beliefs and help companies to do things differently. Without an outside spark to ignite fresh thinking, companies will consistently fail to tap into the holy grail of truly transformational innovations. These are just some of the challenges we all face when trying to be truly innovative. All of them are issues we identified after many years working on innovation projects.
We recently worked with a well-known software company, they were two thirds of the way through a new product development programme but progress had stalled, with the above reasons all playing their part in this malaise. We were tasked with reigniting the programme. Firstly we helped them better understand the original insight that was driving the new product development and more so clarify from a user perspective the product enhancements that resonated with their customers. The focus then moved on to implementation, we drew up a road map, work streams were developed and responsibility allocated with champions identified to drive individual streams. Knowledge dissemination became the final piece of the jigsaw. To be successful work streams require key data and insights to enable them to deliver against their objectives. Developers need information to direct their work, strategy teams need key facts and figures and the communication teams need to understand what the key messages are around the new product. A period of data analysis was needed, key information extracted and presented to each team (often via workshop) in a clear and engaging way. Everyone now understood their role and responsibilities, each team was armed with the right information. With our help the new product got to market on time and it was indeed a success, but it could have been so much easier.