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 (4) of this series, key assumptions pertinent to the discussion were discussed as well as a proposed goal for such an effort. In this 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.
Affecting this type of a culture change will not be successful in a reasonable time frame through the efforts of only one person. While there needs to be someone who will take the lead, you will need a team. In fact, you need more than a team. You need what Lipman-Blumen and Leavitt describe as a “hot group” (5): “A hot group is not a name for a new-fangled team, task force, or committee. Rather a hot group is defined by a distinctive state of mind coupled with a style of behavior that is intense and sharply focused on its ultimate goal. Stretching themselves beyond their own expectations, members of a hot group plunge into enterprises that have the potential to change, even ennoble, their own and other’s lives.” That is exactly the mentality we want to instill throughout the organization. The team has to believe deeply in what they are doing.
The team leader needs to be someone respected in the organization within management, across functional lines, and with individual contributors. It is the same attributes that a good project/program manager might have and he/she will likely come from either R&D or product management/marketing. Other members will vary based on the organization and the challenges, but like-minded individuals from R&D, product management, marketing, portfolio management, and manufacturing might be appropriate. Key individual contributors especially from R&D should be included. All should be recruited by the team leader and optimally volunteer for the effort. Team members should also have sufficient knowledge and authority to speak for their functional areas and able to secure support from their respective organization’s managers. Before attacking the problem, the team itself needs to coalesce and agree on how they will function as a team (6). The days ahead will be difficult as most people are not comfortable with change and some will actively resist. There will be corporate politics that stand in the way. The team will be walking a fine line between upper management concerns, including maintaining some minimum level of support, and resistance and skepticism at the individual contributor level.
A final key element might include a sponsor within upper management depending on the size of the organization. The sponsor will not participate in the day-to-day activities of the team but will be someone who has the ear of the senior manager. They will run interference for the team and protect the effort until some positive results become evident. He/she can help clear roadblocks and secure resources. It will likely be someone who has been in the organization many years and is well versed on the politics and the informal network.
A Basic Roadmap
While every situation is going to be different, and each team will have to decide how they will approach the problem, I propose the following three phase approach:
Phase 1: In this phase, you might need to put in place some supporting processes for sharing market information and employee training (see section in Part III to be published soon entitled Phase 1 Experiments). Second, you will be coming up with ideas and techniques that might work, but you need to start small and experiment. Remember, you are working on a problem with significant unforeseeable uncertainty, or “unknown unknowns” and you are dealing with a system (e.g. the organization and its processes) that is highly complex. That requires you to think like a start-up and manage the “project” just like you would any project with significant unk-unks and complexity: using fast iterate and learn cycles and parallel trials (7). Finally, and very importantly, you need to think about how you will keep all the activities tied to the overall business strategy and the technology and product roadmaps. That is why whoever currently is responsible for overseeing these NPD processes should be part of the team. While you want to encourage new ideas and engagement, you also need to be practical. You might want to develop what Sutton termed “guardrails”, or in this case a way to guide employee effort and link it to an overarching business strategy. While the tactical goal is to find ways for employees to spend more time on generating and working on new ideas, from the organization’s standpoint, the strategic goal is to generate new products that will provide competitive advantage. Happy and engaged employees are one thing. What will lead to success is turning that into revenue and earnings.
Phase 2: In this phase, the team will begin to coalesce around a set of techniques, processes, and ways to “market” the new mindset based on the Phase 1 experiments. You should strive for some early successes that help build momentum and support additional change.
Phase 3: In the final phase, the challenge is scaling. In other words, how to propagate the new mindset into every nook and cranny of the organization (see the section in Part III to be published soon entitled A Note about Scaling). How will the organization manage the new processes once the team disbands? From a process standpoint, much of what is put in place will likely be folded into the current portfolio processes. It will be important to keep overhead as simple as possible, but still deal with the complexity. If you do your job effectively the mindset will spread through a positive feedback loop but it will take time.
There will be significant overlap between the three phases, and at the outset it won’t be clear exactly how long it will take, especially Phase 1. I believe it is imperative, as previously pointed out, to achieve some early successes that helps build momentum both in upper management and at lower levels of the organization.
What are your thoughts about the challenge faced by companies today to become more “innovative”? Do you believe the effort is best supported by a team? What about the roadmap proposed? Are there other suggestions you have in achieving the goal as stated in Part I of this article?
(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?
(5) Jean Lipman-Blumen and Harold J. Leavitt, Hot Groups. (New York, NY: Oxford University Press, 1999)
(6) A good place to start might be to have the entire team read and discuss the following book, which reviews concepts, tools and techniques to inspire teamwork and motivation: Zachary Wong, Human Factors in Project Management. (San Francisco, CA: John Wiley & Sons, 2007)
(7) See this article that discusses the relationship of project risk to project management tools: How Project Risk Impacts Project Management in New Product Development (NPD) ; also see Eric Ries, The Lean Startup. (New York, NY: Crown Business Publishing, 2011)
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