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 Part II (5), a basic concept for getting started and a three-phase roadmap was proposed. I will conclude in this final installment with some suggested ideas to achieve the goal and comments on scaling the new mindset across the organization.
Phase 1 Experiments
In this section I will highlight multiple ideas to test in Phase 1. This is not meant to be an exhaustive list, but at least highlight a few places to start. The team will need to come up with additional ideas.
A key activity in Phase 1 will be to think about necessary conditions to support the culture change. A recent article in the Journal of Product Innovation Management reports research highlighting the need to have a robust “market information sharing system” in place (6). As the author’s state: “Information, or knowledge, is a critical source of competitive advantage. Market information sharing provides opportunities for employees to interact with one another and to share ideas, knowledge and perceptions related to market situations and organizational marketing events.” They go on to say: “Information exchange in the market information-sharing process can help to create a common understanding of the work that needs to be done and reduce task conflicts.” The authors conclude that having an “innovative culture” is not enough to lead to competitive advantage, and that you need a market information sharing system in place to realize competitive advantage. This also ties into the need to focus the effort on ideas and creating knowledge that supports the business strategy. Individuals and the organization will not benefit if after an employee spends significant effort on an idea, it is rejected out of hand because the idea does not fit the overall business strategy.
The opportunities for building this type of information sharing process is almost limitless given the IT and knowledge sharing technologies available today, but also might impact the layout of physical space. For instance, maybe there is some type of comfortable common space developed where engineers and marketing can interact, with periodic lunch-and-learns provided both by engineers on technologies being investigated or marketing/product management about activities, trends, competitive actions, etc. It might sound trite, but maybe this is called the “War Room”.
A second area to consider is employee training on innovation and the innovation process. I am not referring to the ongoing training for employees to stay current in their field, but specific training in the process of innovation. The basics of innovation were typically not taught in most science and technology curriculum until just recently, so many employees may not be versed in exactly what innovation is. There are many misconceptions, and you will want to make sure that everyone in the organization understands. There is a difference between a science experiment and innovation and it’s crucial that participants know how to sell ideas and garner widespread support.
The concept of “gamification” offers a unique way to engage employees in innovation. The term comes from the video/computer gaming industry. Game manufacturers learned long ago techniques to engage players and get them “hooked”. These techniques are now being applied in a variety of industries (7). Rite-Solutions based in Rhode Island is a software products company and developed a system called Mutual Fun (www.mutual-fun.com) that allows employees to engage in innovation. It encourages idea generation, and makes killing ideas fun. It creates a “marketplace” of ideas where employees can “invest” in ideas, and the originator of the idea can recruit others to work with them on flushing out new product concepts (8). It could offer a powerful way to engage a large organization in the innovation process. It will be important that when soliciting ideas from employees, that they know exactly where to go to submit ideas and that the system in place provides feedback, otherwise, employees will lose interest quickly.
A fourth area to consider is how to create what Sutton terms “crossroads”, or ways where informal and/or formal interactions and encounters can lead to the creation of new knowledge. Ideas are rarely birthed in a complete form. It requires many different skill sets and perspectives to move an idea from realm of conceptual to something that can be turned into actionable information. Innovation is as much a function of the informal networks within an organization vs. the formal organization structure. Much happens by chance encounter. How can an organization not only support this, but find ways to increase the odds it will happen? It will include specific formal pre-planned events and how the physical space encourages these interactions (9). It might include “job fairs” tied into the “Mutual Fun” concept described previously. A “job fair” might be a way for the creators of ideas to “recruit” others to help them advance a new product concept.
A very important topic that the team will need to address is how to foster employee engagement. As mentioned previously, the team needs to think hard and long about what motivates people, especially if they need to spend more time at their jobs, not less. Related to this will be the politics of the organization and how individual managers will or will not support the effort. At a minimum you want ways to reward and encourage the right mindset and behaviors, and ideally you also want employees to really believe that being engaged and invested is the right thing to do for themselves and the company. Rewards do not necessarily need to be financial. Everyone has the desire to be accepted and viewed in a positive light by their colleagues. You can use that to impact behaviors by a well thought out combination of rewards. Just remember that you need to resist a “one size fits all” system, as people are motivated and value many different things. Some like financial rewards, while others appreciate public recognition more than money.
The final thought is related to the use of visual cues to reinforce the new mindset. It is important to use a variety of senses. An example might be the “War Room” proposed earlier. A simple “cue” like calling a space dedicated to fostering innovation a “War Room” provides a powerful cue: we are in a war with the competition. A little paranoia, as Andrew Grove of Intel used to say, is not a bad thing. Maybe in this War Room, you also have pictures or other audiovisual content that highlight the history of the company, the present state, and a vision about the future.
This short list of ideas is merely a starting point. The possibilities are endless and the team will need to try out many different ideas and possibly go down many dead ends to find what resonates in their organizations. From that experimentation phase, you will then begin to transition to the second phase where the team will coalesce around ideas that seem to make sense.
A Note about Scaling
In the final phase, you are now faced with a scaling challenge. How can you propagate the new mindset throughout the entire organization? The Sutton work previously referenced is a good resource and based on research in many different industries. From this research, there are three things to keep in mind. First, most responsible for scaling believe that the new ideas or mindset will be easier to spread than the facts warrant. Second, managers tend to scale before the concepts are ready to scale, before the organization is ready, and before the team itself is ready. Finally, decision makers may lack the knowledge and skill to successfully scale the new mindset and otherwise competent people appear incompetent. A final thought from Sutton: “Scaling is akin to running a long race where you don’t know the right path, often what seems like the right path turns out to be the wrong one, and you don’t know how long the race will last, where or how it will end, or where the finish line is located.”
In summary, this three-part series discussed many aspects of fostering a new innovation mindset from the “bottom up” so to speak, rather than from the top down. We started with the goal and forming a high-performing team of like-minded volunteers to guide the process. A proposed three-phase roadmap was described, including the important concept of linking the effort to the business strategy. Ideas and concepts to try in Phase 1 where the team will be experimenting were discussed. The final phase is scaling the new mindset throughout the organization and some final thoughts on scaling based on research by Robert Sutton were reviewed.
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? Have you been involved with fostering a culture change related to innovation and what did you do that worked? What did not work?
(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?
(6)Wei, Yinghong, O’Neill, Hugh, Lee, Ruby P., and Zhou, Nan. 2013. The Impact of Innovative Culture on Individual Employees: The Moderating Role of Market Information Sharing. Journal of Product Innovation Management 30(5):1027-1041
(7)See this article for more information on gamification: What You Can Learn About Innovation From Unrelated Industries.
(8)Lavoie, Jim. 2009. The Innovation Engine at Rite-Solutions: Lessons From The CEO. The Journal of Prediction Markets (3):1-11
(9)An excellent reference on how communication networks work and the impact of physical space on innovation includes: Thomas J. Allen & Gunter W. Henn, The Organization and Architecture of Innovation. (Burlington, MA: Elsevier Inc., 2007)
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