The Innovation Sophistication Index

How can you assess the level of innovation in your business today? Well, a good way is to use my Innovation Sophistication Index, and it consists of 24 statements, and you see how many you can agree with, how many of those statements are true for your organization today, and the higher your score, the more sophisticated you are, the further along you are on the path to becoming a truly innovative business. So not only is it a questionnaire and a diagnostic tool, it's also a checklist of things that you can do to move up the ladder to become more innovative. In order to do it, you'll need pencil and paper or pen and paper, so please pause the video now, get yourself a piece of paper and a pencil and maybe a cup of coffee, and then we will go through the 24 statements quite quickly and you can assess where you are on the Innovation Sophistication Index. So here we are with the Innovation Sophistication Index, and as I mentioned before, it is simply a list of 24 statements, and you see how many you can completely agree with. So you give yourself 1 mark for each one that you agree with. It starts off with 6 fairly basic things about innovation— that's the launch period, we talk about need, vision, audit, budget, and so on. Then we move through to the slightly more advanced stage, progress, where we're looking at metrics, suggestion schemes, training, goals, brainstorms and so on. Then the acceleration phase where we're looking at questions, statements which would indicate you've got an open innovation strategy, an incubator in place, you've changed the culture and so on. And finally to the achievement level which is the highest level where you've got a Open innovation fully integrated, minimum viable product, you've got revenues from innovation, recognition and results. Okay, so are you ready? We'll start with phase 1, which is the launch phase, and here's the first statement: leaders recognize and communicate the need for innovation. Is that true? There is an agreed vision statement for a better future. Which everyone knows. So if it's something that was written a long time ago and it's on the wall and nobody knows, that doesn't count. It has to be something that pretty much everyone is aware of and buys into. You've carried out an innovation audit to assess the current barriers to innovation. It might be just a small survey or something more sophisticated, but there has been an assessment of where you stand as regards innovation today. A budget is allocated for innovation training and initiatives, so there is money available for training and for prototyping and experimentation. It might be a small budget, but there is nonetheless money available. Entrepreneurship, empowerment, diversity, and risk-taking are seen as core values in the desired corporate culture. We may not be there yet, but the desire has been expressed. We know we want to be more entrepreneurial, we know we want to empower, encourage diversity and risk-taking, so that is acknowledged. If you can say that, then you give yourself 1 point here. And the 6th question in this phase: innovation ambassadors are appointed in different departments to coordinate and stimulate innovation activities and initiatives. So these are people, you might call them a different name, but there are people who have a level of responsibility for helping make innovation happen in their departments. If those people exist, then you give yourself a point here. Good, so let's move on to the next set of 6 questions. There's 4 sets of 6 questions. Targets have been set, there are metrics in place, for example, number of ideas submitted, number of ideas going through to initial prototyping, or through to business case, revenue projection, and achieve this. There's some kind of measurement of the funnel of activity and targets have been set. Training has been carried out for the senior executive team and for the innovation ambassadors, so the senior-level team has received some training on innovation and what it means, and so have people further down the organisation who are going to help facilitate the process. Can you agree with this statement? An internal suggestion scheme is in place with adequate resources to evaluate ideas and implement the best. It may be a box in the staff cafeteria, it may be quite a sophisticated piece of software, and there are many such available around at the moment, but if you've got such a scheme in place and it's being used and it's adequately resourced, Then you get 1 point here. Number 10, regular brainstorm meetings are held with diverse teams, clear objectives, and expert facilitation. The ideas are evaluated and the best ones are implemented. Is that a true statement? 1 brainstorm a quarter does not count. Regular brainstorms, probably at least once a month, I would say. Statement number 11, is this true? Innovation goals are included in people's objectives and appraisals. People, particularly department heads, have their objectives and people are appraised on whether or not they have been involved in innovation projects and champion new initiatives. Number 12, innovation successes are broadcast and celebrated. We heard about something, you've Notice that the chief executive has celebrated a win from an innovation, that's important. So how many of those can you tick? Let's move on. Acceleration, so in this phase, statement number 13, an open innovation strategy is agreed and initiated. Open innovation means that we are deliberately going to look outside the organization to try and attract ideas for new products and services. 14, an innovation incubator unit is established, a group internally whose job it is to incubate promising ideas, prototype, pilot, carry them through, typically a cross-functional team who bypass normal channels in order to get things up and running quickly. Give yourself a tick if you've got that. Approval processes have been streamlined to speed up implementation. We've looked at our approval processes and we've found ways in which we can speed them up so as to very quickly move to a minimum viable product, a prototype which we can get out on the market. This is a good measure: how many suggestions per employee per year are implemented, not received. Receiving is important, but implementation is the acid test. And if more than 2 suggestions per employee are implemented, that's good. So if you've got 200 employees, we're looking for 400 suggestions implemented. I mean, they're not all new product suggestions. They might be to do with cost saving or productivity or customer service, but you have an active suggestion scheme and you are implementing suggestions. Blame culture has been replaced with openness and challenge. So can we really honestly say that we are no longer risk-averse, we're happy to take on risks, and that people don't get blamed if they take on a risk and it fails. If you can say that honestly, then you give yourself a point here. Number 18, the minimum viable product concept is fully adopted. This is the concept that you build a small trial version of any new product or service idea to put in the hands of prospective customers as soon as you possibly can in order to get feedback and to evaluate the idea. And this is a completely imperfect thing. It's very, very small. It's inadequate in many ways, but it's adequate to serve the purpose, which is to validate the idea. So the minimum viable product is a very, very powerful concept in terms of accelerating innovation. Okay, so the final set of 6 questions. How many of these can you agree with? An open innovation programme is implemented and integrated fully into the company. A significant proportion of innovations originate from outside. If that's true, it's true of companies like Procter Gamble or Reckitt Benckiser or Johnson Johnson. If it's true of your organisation, then that's a big mark there. New products and services represent a major portion of revenues. So at least 30-40% of our revenues come from products that we've launched. Within the last 12 to 18 months. Employees are empowered to try new initiatives and they do so, so up and down the organization people are free to try new ideas if they think they're worthwhile, if they think they will seriously improve customer service for instance, and they're not penalized if those initiatives fail. They're given considerable freedom, they don't have to go through tremendous approval processes before anything's allowed. Risks are encouraged, failure is allowed, and lessons are shared. This is a major step forward if you've achieved this in terms of the culture of your organization, and it's really a tremendous help to innovation if you can achieve this. 23, more than 5 suggestions per employee per year are implemented. This is tough, but the really top companies are doing this. Siemens, for example, the German company, gets significantly more than this every year implemented. Toyota get 2 million suggestions a year in their suggestion scheme and they implement most of them. So the really innovative companies are reaching this sort of level. I know it's tough, but it can be done. And finally, you are recognized externally as an industry leader in innovation and as a dynamic and rewarding place to work. Can you honestly say that people outside know of you in that way, that you have that reputation? If that's the case, then well done, and you certainly deserve a point there. So those are the 24 statements. I want you now to add up your total score, and how many did you get? You should get more in Stage 1 than Stage 2, Stage 3, or Stage 4, but you could get agreement on different statements in different parts. How many have you got in total? 24. So let's very quickly assess that. If you've got 6 or less in terms of your score, then probably the need for innovation has been recognized, but you haven't achieved very much yet. You haven't really set out down the road seriously, and you need to look at the list and see what you can implement next. 7 to 12 is a typical score. Many of the organizations I work with score at this sort of level, 7 to 12. You're taking serious steps to change the corporate culture and practices in order to generate and implement more ideas, but more needs to be done, and you know this. You're making steady progress up the hill, but more work needs to be done. So you've made a good start, and that's, that's good, well done. 13 to 18 is a good score, and here you're moving up the ladder. Things are really happening with innovation, you're starting to see improvements in performance, you're starting to see new products flow and revenues. And innovation can now become a serious competitive advantage for you and enable you to compete much more seriously because of the new products and services that you're bringing through. And finally, if you did manage to get up here, 19 or more, congratulations, you're in the Premier League, you are an innovation leader, very tough to get here, you're up there with the Apples, the Googles, the Facebooks and the Samsungs and those kinds of really innovative organisations. So I hope you found that useful. Go over it again, discuss it maybe with your colleagues. If you're a senior executive, discuss it with your executive team. What steps can you make? And now use it as a checklist. Use the 24 statements as a series of steps that you can take to move up the ladder, to become more sophisticated, and to become more innovative. I hope you'll start to do that. So thank you.