Innovation is one of the biggest buzzwords in the corporate world at the moment. Everyone wants it or claims to be doing it. With the rise and power of new technologies that are (apparently) set to disrupt everyone’s business, it has never been more important to be “an innovative organisation” and to be seen to be “doing innovation”. We see this manifest in the establishment of innovation departments in many organisations, which also gave rise to the job role of “Head of Innovation.”
But what is really the purpose of these initiatives, how should they operate and what are they really trying to achieve? And why is innovation so important?
Innovation has the potential to be both exciting and transformational. The ability for large companies to effectively innovate has become incredibly important in a world where changes in technology occur faster and faster. In response to this, “building an innovation culture” was listed among the top 3 pressing concerns of 740 CEOs (The 2020 C-Suite Challenge Report).
At its simplest, the word ‘innovation’ is easy to define – it is simply the “use of a new idea or method”. However, simply “doing new things” in the name of innovation is often where things go wrong. Innovation is actually more about outcomes and results: staying relevant, remaining competitive, and ultimately growing the bottom line. At The Bakery we believe these outcomes are the most important metric to measure and we call this the Return On Innovation (ROI).
The lack of defining outcomes combined with the wrong methods of innovation leads to so much failure. If you understand the outcomes you want to achieve then it becomes possible to start designing the tools and processes to achieve those outcomes.
Defining outcomes is important, however it can be easy to look at innovation as a destination. In reality though, innovation comprises many different approaches with the ability to deliver many different outcomes – and in that way innovation may be better thought of as a spectrum. Understanding this spectrum of innovation will enable you to establish the right type of innovation approaches for your organisation and for the different opportunities you need to address.
There are 3 types of outcomes which map to the Mckinsey’s 3 Horizon model. These can be summarised as the following types of innovation:
The relevance of each growth horizon depends on if you are looking to achieve efficiency, incremental or transformative innovation. However, no matter which horizon or timeframe you are looking at as part of your growth strategy, it is important to think about starting now. Consider achieving these three different outcomes by tackling all the horizons at once and to expect that there are different time frames for pay-offs of each type of innovation.
There are various ways you can tackle each growth horizon and achieve innovation. In each of these horizons there are a variety of different methodologies that can be applied to get results. These methodologies include:
Choosing the right methodology will depend on your innovation journey, and which growth horizon you choose to tackle. Again, it is important to remember that when choosing your approach to innovation, to consider the outcomes and the return on innovation each approach can bring.
As mentioned earlier, CEOs reportedly agree that building a Culture of Innovation is important. But what does this entail and how can it be implemented?
For innovation to thrive, it’s clear that the right culture and environment within an organisation is imperative. Creating such a culture often requires a change in attitude and mindset across the whole business beyond the innovation department. This culture needs to be spread across the business and engage as many people as possible. To do this, the direction needs to be set from the top, but the environment and culture needs to be built from the bottom up.
We have learnt that creating the right culture entails embracing a more entrepreneurial or agile approach, in order to help reframe the traditional corporate mindset. Rather than always keeping innovation separate and outside the business, getting people engaged with this entrepreneurial mindset, change can start to be seen as a force for good: problems become opportunities, even failure becomes a tool for learning, and there is an overall belief in possibilities. Therefore, giving employees permission to operate and experiment in these ways is crucial to enabling innovation to thrive.
The word ‘innovation’ has never been so overused, but innovation as a range of outcomes (remember – we said innovation is a spectrum!) remains a critical component of any organisation’s long term growth strategy.
It’s an incredibly exciting time to be involved in innovation. Never before has it been possible to do so much, so quickly, by harnessing the power of new emerging technology and a global network of innovators, entrepreneurs and startups. And with all the possibilities out there, it may be difficult to establish a good starting point. So we’d like to leave you with a few things to consider.
Firstly, be introspective and try to understand what you and your organisation want/need to achieve. Secondly, understand the importance of innovation culture and how you can create a culture of innovation within your organisation (for more detail read our November blog post on innovation culture).
And as we’ve discussed, to profit from the outcomes of innovation you will need to harness the appropriate set of processes and methodologies that will help you achieve the results you want to see! Lastly, and perhaps most importantly… Start! There is no better time to take a leap and to kick start your innovation journey than the present. Even when times are difficult, it is important to be innovating and building for the future. And If you need further guidance, we’re here to help! So get in touch.