Innovation is the process that links technology to a market need and results in a product or service of value. But what are the key elements that need to be in place for a company to be innovative? That’s not a simple answer. Every industry, technology, and company is different so what works for one, may not work for another. Every senior manager responsible for their firm’s financial performance and concerned about long-term growth, whether a CEO, president, or owner, wants their organization to be innovative, but what does that really mean?
You might argue that the key elements, or what might be termed an “innovation infrastructure” would include a combination of the right new product development (NPD) processes, organization capabilities and structure, a culture that supports innovation, and a high level of engagement and leadership by the senior manager. After all, NPD is a key business process and should garner a significant amount of attention by the senior manager. (1) The goal is of course a steady flow of new products with competitive advantage that drive the revenue and earning “waves” in order for the firm to prosper over time (2).
The challenge today, especially since the financial crisis of 2008 (3), is that in many organizations, what the senior manager says about “innovation” and what he/she actually does to support the “innovation infrastructure” might be two different things. On the one hand, they harangue their functional managers, especially in R&D and Product Management/Marketing, about the company becoming more innovative, encourage employees to be more innovative, and insist that the marketing communication effort focus on educating customers about how innovative they already are. At the same time, however, their own daily priorities, actions and interactions send contradictory messages to the organization that they are more concerned with short term results. This is especially true in mid-sized and large public companies.
So where does that leave middle management and those on the “front lines” of innovation? For instance, the engineers, those in marketing/product management, R&D and others involved with NPD who are concerned about the health of their company long term and have a sinking feeling that there is too much short-term emphasis and a focus on using existing knowledge vs. generating new knowledge. If there is entrenched and widespread apathy in the organization, then the status quo will rule. However, if you believe that your company’s long term survival (and your job) is at stake, and you believe that our society benefits when companies become more innovative, then how can innovation be fostered from the “bottom up”? Ideally, change works best with both a top down combined with a bottom’s up approach, but in the absence of true leadership from the top, maybe it is up to the middle management and concerned employees to affect a change in culture. This is not unlike what happened with the agile movement and scrum in particular. These were “bottom’s up” approaches to find better ways to create innovative software products and were based on new processes and a different mindset compared to existing methodologies.
The purpose of this three-part article is to highlight specific ways that enlightened middle managers and key engineers/marketing/product management personnel can drive change in the culture at the grassroots level and enhance the organization’s ability to innovate new products and services by thinking more long term. That is a lofty goal and how and if it can be done will be very specific to the particular organization.
In Part I of this series, I will highlight a couple key assumptions pertinent to the discussion that follows as well a proposed goal for such an effort. In the second of the three part series, a basic concept for getting started and a roadmap is proposed. I will conclude in the final article with some suggested ideas to achieve the goal and comments on scaling the new mindset across the organization.
There are two key assumptions that pertain to the discussion. First, I am assuming that the company has some overall NPD process in place so that we are not starting from scratch. We are trying to inject a more long term focus not create an overall process. This also implies that we are focusing on an existing company, not a startup. In some aspects, however, we are trying to find ways for an existing organization to think more like a startup. Second, we will assume senior leadership will go along with your efforts and ultimately support them once presented with success. They may have even charged a team to come up with ideas to promote a new innovation mindset. If on the other hand the senior manager truly supports no change and believes your efforts are a waste of time, then tread carefully and understand what you are up against.
What’s The Goal?
Most organizations are set up in a hierarchical organization structure where ideas for new products or services flow down from on high via the NPD process then are handed off to the development teams. Individual engineers and those who work on new products often see themselves as simply being paid to perform a job; namely to engineer or develop a new product as defined by the organization. Project portfolios get filled with many on-going projects, some of more or less value to the company (4) and it is not uncommon for the system to become overloaded, with employees tasked across multiple projects. Over time, employees become disengaged and not truly vested in the organization’s new product success. Bad news for the company.
We are going to define the goal as follows: find ways for employees (primarily R&D and product management personnel) involved with NPD to spend a small fraction of their time (maybe 10%) working on either 1) new product ideas or technologies that are already defined in the product and technology roadmaps but not currently being investigated, or 2) developing and investigating ideas not currently in the queue but where an argument can be made that the new idea does support the overall business strategy. This is a tactical goal. From the company’s viewpoint, the strategic goal is creating new products of value, possibly even new knowledge vs. reliance on existing knowledge creating new sources of revenue/earnings that would not have otherwise been the case.
For this to happen, employees have to be engaged and motivated. The reality is that it might mean spending more time at their job, not less. Ideally, this is done in combination with reducing the natural tendency for all organizations to focus on high resource utilization rates that prevent free-form creative thinking. Existing projects have to move forward, however, so employees must be engaged and rewarded (not necessarily financial rewards!) to embrace a new mindset. They are not going to do it simply as a result of being told they need to be more “innovative”. In the words of Robert Sutton in his most recent book entitled Scaling Up Excellence (5), you want to instill a mindset that “I own the place and the place owns me”. You want innovation to be at the core of what every employee thinks about when they come to work.
But how can you do that? Part II and III of this series will provide additional thoughts on this important topic.
What are your thoughts about the challenge faced by companies today to become more “innovative”? Do you believe many senior managers say they want to foster more innovation but send contradictory messages by focusing on short term results? What’s your opinion on the goal as stated?
(1) See for example: New Product Development (NPD) as a Key Business Process
(2) For an excellent book that examines the concept of revenue waves and how to measure the impact of innovation, see Chapter 3: Marvin L. Patterson, Build an Industry Hot Rod. (Los Altos, CA: Dileab Group, 2008)
(3) See this article for a discussion on the propensity of companies to become more conservative: Are Companies Becoming More Risk Averse in New Product Development (NPD) Decisions?
(4) This article discusses the “disorder” that builds up on project portfolios over time and how to address it: Assessing Disorder in a New Product Development (NPD) Process
(5) Robert I. Sutton and Huggy Rao, Scaling Up Excellence. (New York, NY: Crown Business Publishing, 2014)
New Product Visions is a consulting company that helps organizations improve the effectiveness of their new product development processes. We specialize in small to mid-sized companies that manufacture highly engineered products. Contact us today about how we might help you!
Specialties: NPD consultants, new product development consulting, developing new products, new product development seminars, small business consulting, new product development expert, product development process, new product development strategies, integrating NPD for mergers & acquisitions, organizing for innovation, management role in NPD, project risk analysis, innovation management