Strategic Innovation

In today's world of emerging technologies and new market demands, innovation is no longer a nice to have, but a must have for any business. Because real economic growth depends on real innovation, and technology will play a key role in enabling those innovations to become reality. In this episode, we'll consider why innovation is a prerequisite for legitimate transformation and how large organizations can can succeed at it. My name is Rob Llewellyn and as you know, companies need people with the right capabilities to manage and lead transformation. As you know, orchestrating successful transformation isn't that easy. And I mean innovative transformation, which creates a new future without the constraints of the past. Which is why I hope that what I share in this episode will help you get better equipped to perform at your best as a manager, leader or consultant. If you want to learn more, go to studythrive.com youm know, in today's world of emerging technologies, markets and consumer demands, innovation is no longer a nice to have. It's a must have for any business, because real economic growth depends on real innovation, and technology will play a key role in enabling those innovations to become reality. Without innovation, efforts at digital business transformation are likely to lead to some very uninspiring attempts to keep doing the same things, but with new technologies, which of course might cut some costs, operational costs, but that's neither innovative nor transformational. This is why innovation capability is such a key component of effective digital business transformation. The word innovation conjures up different definitions for different people. And while most people do at least agree that it's good to be an innovator, how companies translate good intentions into action can vary dramatically. You know, big companies don't easily reinvent themselves as leading innovators, and they've traditionally struggled to innovate in their business models particularly. Too many fixed routines and cultural factors get in the way. But big organizations can be disruptive if they identify and overcome their limiting beliefs about how to do business. Few things frustrate creative people more than empty talk about innovation. And yet the innovation word is now so commonplace, with almost every company proudly claiming that they innovate. Many leaders announce to their workforces about their commitment to innovation. And yet there are no innovation processes in place, no high caliber innovation experts in the company, and innovation often isn't encouraged. And so these companies fail to demonstrate any real success with innovation, although they'll do their best to persuade their workforces and stakeholders and shareholders that the latest cost saving IT project was innovative. So does your company really innovate? Are your people motivated, organized and rewarded? To repeatedly innovate. Does your innovation create new business models? Do you develop and launch innovations rapidly? How do you motivate, support and reward innovative behavior among the right groups of people? When strategy defines a direction and innovation defines the exciting unknown, and how can you combine the two? These are just some of the questions that can test how good companies really are at innovation. The innovation strategy firm Dublin, which is actually part of Deloitte, suggests that there are 10 distinct types of innovation that need to be orchestrated to bring about game changing innovations. They say that if you carefully orchestrate five or more of the ten innovation types, particularly those types which most organizations typically ignore, you'll almost always get disruptive innovation. Now that's a very bold claim, but let me briefly introduce those innovation types and the three categories that they each reside in. First, there's the Configuration category. This focuses on the innermost workings of the enterprise and its business systems. The profit model is how you make money. The network is how you connect with others to create value. The structure is how you organize your assets and talent and the process is using superior methods for doing your work. The next category is the Offering category which focuses on the enterprise's core product or service or a collection of them. The product performance is how you develop distinguishing features and functionality. The product system is how you create complementary products and services. And lastly there's the Experience category and this focuses on more customer facing elements of the enterprise and its business system. The service is how you support and amplify the value of your offerings. The channel is how you deliver your offerings to customers and users. The brand is how you represent your offerings and business and the customer engagement is how you foster compelling interactions. Go to doblin.com to learn more and you can even pick up a copy of the books which is called 10 types of innovation. The Discipline of Building Breakthroughs by Larry Keeley, Ryan Pickle, Brian Quinn and Helen Walters. And another methodology is the Business Model Navigator, which was developed by the Business Model Innovation Lab in Saint Gallen, Switzerland to help companies innovate their business models. This methodology structures the process of innovation of a company's business model and encourages creative thinking, which is a key prerequisite for successful business models. The book the Business Model Navigator describes how through extensive research involving hundreds of companies, they discovered that 55 business models are responsible for 90% of the world's most successful businesses. Now, again a very bold claim, but let's go with this. These 55 models can help you innovate your current business model through four dimensions. Now These four central dimensions used in the Business Model Navigator are who, what, how? And value. Who prompts you to consider who is your target customer? What prompts you to consider what you offer that is of value to the customer? Or in other words, the value proposition. How suggests you ask yourself how is the value proposition created? And value leads you to answer the very important question how does the business make money? While the purpose of innovation is to create business value, the value itself can take many different forms, including incremental improvements to existing products, breakthroughs such as new products and services, cost reductions, efficiency improvements, new business models, and new ventures. The process used to innovate is to discover, create and develop ideas, to refine them into useful forms, and to use them to earn profits, increase efficiency and or reduce costs. The innovation process is similar to a funnel with many ideas at the input stage that get whittled down to a few completed, useful innovations at the output stage. The trick to making it work is knowing what's supposed to happen inside the funnel. Remember, ideas are the seeds of innovation and often are not the end result. Many innovations never see the light of day because the innovation process itself isn't aligned with the firm's strategic intent. For example, if the CEO has assured the board that the firm is going to reach destination A, you'll find it very difficult to get the CEO and their executive team to get behind an innovation that will get the firm to destination B, which is why you need to innovate strategically and be seen to be supporting the realization of strategic intent. Now, that's not to say you can't be bold and in your innovation. If the CEO doesn't know what they don't know, you should at least help guide them towards new possibilities. You need to think about how innovation is going to add value to your firm's strategic intent and how it might create strategic advantage. If you have no innovation process in place, let me suggest an innovation exercise. Don't impose any constraints on your creativity at this stage. Be brave. Bold and possibly outrageous. The success stories we all read about involved people and companies who didn't care about how things have been done in the past. They created a new future, which is what transformation is all about. Limiting thoughts such as we can't do that. That's against policy. It's not done that way. It's stupid. We don't have the budget and they never approve. It should be excluded from this exercise. The people who say things like that are often the people who get in the way of transformation because while they might talk about the notion of transformation and innovation. Their mindset is clearly stuck in the past. So here's the challenge. First, define your firm's strategic intent for the next 12 to 24 months. For example. Next, answer the question what are the top three threats that your firm is or could be facing within the next three years and from where? Next, consider what problems can innovation solve for your workforce, your customers, your operations? Then think about what competitive advantages do you want innovation to create again for your workforce, for your customers, and for your operations? In step five, aim to establish what innovative business models might disrupt your competitors. Be brave enough to consider what seems impossible to do in your business today. But if it could be done, what would fundamentally transform what your business does? Next, capture to do this, have each person in your group spend perhaps 15 minutes on their own writing all their ideas on a Post IT notes. Working in their teams, each person can then place their post IT notes onto an affinity diagram on the wall or flip chart. Then you need to create a short list. But before going into this exercise, depending on the nature of your firm and the number of people involved in this exercise, agree on a short list and that each team should reduce their list of best ideas to 10 per team might be reasonable. Finally, you need to justify which involves describing how each idea supports your firm's strategy and objectives. If possible, you really should involve an innovation expert in this exercise, someone who can help guide you along an innovation process. Because just like HR and finance, etc. Innovation is a specialism and you shouldn't assume that people can become overnight innovation experts. Innovation sounds fun, but it's a serious profession and companies need to be serious about it. So if you don't have an innovation professional in your organization, bring in an innovation consultant for a few days. It could pay huge dividends later down the line. And measuring innovation performance is critical to understand if the investment, the time, all of the activity and all the capabilities being built to push innovation is actually amounting to anything. You need metrics that can prove the value of innovation, but that's for another day. So in summary, although well established firms tend to be better executors than innovators, innovation now needs to become a permanent activity across the organization. It needs to become a permanent function like finance and HR to not an occasional novelty event. Unless innovation gets processes to structure, organize and encourage it, it'll become a random and poorly managed activity which will often result in little if any real value for the business. I appreciate you listening and here's a quote to finish off the day from Jeff Bezos. I think frugality drives innovation just like other constraints do. One of the only ways to get out of a tight box is to invent your way out. How can you help your company invent its way out of the past? If you want to take your transformation capabilities and credentials to the next level, go to studythrive.com.