Reading time 10 minutes.
Questions you ask:
- How do I increase our innovation performance?
- How do I become more innovative?
- What do the best innovators do to succeed?
- What are the barriers to innovation?
PART 3: Delivering Innovation Improvement
The pathway to improvement must always start with a first step. This can be the decision to improve; a wish to see the bar raised on innovation outcomes or business results.
Building on the first two parts of this mini-series, this article covers how to create your plan for innovation improvement. The first part dealt with the roots of the innovation and technology planning problem, and why this so frequently fails to launch in technology-intensive companies. The second part covered how to measure innovation maturity and deploy improved practices in the innovator’s workshop.
Creating an upgrade plan
Innovation activity touches on many parts, to some extent, all parts of an organisation. So a holistic, systemic that is to say, acting on the system, approach is needed to move an organisation to a new position.
How can a company practically manage its roadmap to improvement?
A model has been developed by the Consulting Partnership for organizational transformation.
But it can be applied to technology and innovation improvement. It’s systemic because it operates on the system, and we use it to guide the production of an innovation improvement plan.
It’s dynamic in that the current situation is assessed and options for a future state decided. The result is a plan of action about the necessary improvement on priorities informed by good practice and industry dynamics.
On the left-hand side of the central box is the current situation of the firm across the range of factors comprising the innovation system. On the right is the future state.
Also, it’s organised somewhat like a roadmap so in the top layer is Business Strategy, vision and mission the customer experience and market-related points and the business targets.
In the next layer down are things that create value for the future such as products and service provisions and the key mechanisms to deliver those products or services.
At the bottom layer are the enablers. A significant range of issues relates to people and combines skills, experience, behaviours and mindsets as being very important for systemically strong delivery of innovation and technologies. Also, are the rewards, performance, roles and responsibility matters to deal with diversity inclusion and engagement.
Communication matters, culture and leadership style, purpose help to deal with softer people-related aspects. And also items related to the organisation such as its structure, locations and decision-making or governance infrastructure.
Increasingly in the digital age, the firm needs to support innovation with good Information Technologies. Such as ideas management systems, product portfolio management and analytics.
Finally, the last set of enablers come from management core support and external third party suppliers providers and partners.
And these are helped by performance modelling measures things Key Performance Measures key indicators and metrics.
We can inform our companies about What Good Looks Like by research from global good practices across sectors, and beyond if it’s relevant to our improvement mission.
And we’d also use the tool, innovation and technology management assessment audit supplemented with interviews from key stakeholders to get a rich and informed picture for debate and priority setting.
This is all underpinned by the foundational tools like landscaping, opportunity and feasibility assessment, make vs buy and technology intelligence; some of the tools mentioned earlier in the article.
So by applying this model, we can use that to inform and guide our thinking to move from a current state to a desired future state or a required future state to deliver higher performance innovation and in a systemic way.
The Mastery Equation
If you could write down the key elements of improvement, what would be the variables?
The “Mastery equation” is a function of,
- STRATEGY: The Business, Innovation and Technology Imperative encapsulated in Strategy.
- TOOLBOX: Approaches to T&IM – Tools, approaches and innovation workshops.
- CAPABILITY: Investment in aspects of the T&IM system that give leverage to results.
The Mastery approach allows businesses to provide Coordination through the levels of the organisation, Alignment between functions, and Synchronisation about activities in time.
Business Results from Mastery
The innovator’s workshop approach allows businesses to provide several critical pieces in the firm’s innovation engine.
- Coordination through the levels of the organisation: Being able to deliver the strategic objectives of the firm through multiple layers of the firm’s hierarchy.
- Alignment between functions: being able to bring potentially disparate but important parts of the organisation to work on the innovation problem.
- Synchronisation about activities in time: delivering the organisation’s innovations and enabling technologies on time.
And the business results for R&D managers and business leaders are encapsulated in three areas. These results speak to the different motives of the firm and the people in the organisation.
The first set of wins is around the finances of the firm. Although recent years have brought a broader appreciation of the purpose of the firm, making money for shareholders and to pay the salaries of the workforce remain very important outcomes. The financial improvements come from working at the top line (growth) and the bottom line (cost savings and profitability).
Studies have shown that firms adopting a mastery-type stance outperform the sector and peer companies. The most innovative companies enjoy three times the growth rate as the least innovative (PwC 2014). The best innovators enjoy an annualised 3-year Total Shareholder Return above peers of over 6% and higher operating margins compared with the average. High-Performance Innovators have developed and implemented sophisticated, modern innovation management approaches to support their success. They have all the elements of “doing the rights things” and “doing things right” in place and functioning effectively (Booz). And companies adopting more types of innovation generates twice the returns.
The second set of reasons for aspiring to Mastery relates to the impact a company has on its stakeholders. Apart from benefitting direct employees of the firm by being more successful, and customers by providing exciting new offerings, the company sits in wider society and environment.
It’s in the competitive interest of a firm to be able to respond to disruptive challenges without being taken over by them. Building mastery means the ability to, at will, create radical options for innovative solutions.
And the third set of reasons to choose mastery is the benefits to the workforce. At a basic level, staff retention improves as they sense the energy from the mission to mastery. They feel empowered to run with new ideas and draw energy from working at a great place allowing the company to attract higher quality people.
The business case for innovation improvement
You can work this out by asking yourselves the following questions. From the answers, you can estimate that our innovation “return on Investment” might potentially be,
- If as CTO, you could generate an uptick of a modest 20% in new products over 5 years, what does that mean for revenue?
- If you could increase the speed of new product launches by just 20% what would be the gain to profitability?
- If, as CEO, you could raise your sector position just a few positions, what would that do for your company reputation (and your own)? See the Most Admired Company lists each year.
- If, as head of R&D you could win investment for your research projects next year, what would that do for the company results, and your own?
- If you could become a Great Place to Work what would that do for your staff retention and the quality of applicants?
- What would a modest 20% rise in productivity do for your cash generation or a 10% reduction in operating costs through process innovation?
- If you could build and launch an entirely new and disruptive business venture how would the markets, shareholders and peer companies see you?
Revisiting the Innovation Heroes from Part 1, what are tangible results they created from improving the innovation capability in their firms?
Let me bring this concept to life for you through an example and how the tools map onto a process of technology and innovation strategy development.
The case example is for a $20bn multi-division global materials producer with operations in over 20 countries and with 50 000 employees. In other words and complex and technology-intensive corporate.
The request was: Can you help us in our journey to become a top company in our sector?
They already had a well-worked-out business strategy; where to play and how to play questions you might call them. But needed validation and to identify which technologies should it invest in for new high potential value opportunities.
Based on this task, we designed a tailored innovators workshop to help them identify and resolve the key technologies required to achieve higher levels, at least Leadership in technology.
This innovation PROCESS is based on its toolkit to design a set of 3-day workshops.
First; we didn’t start in isolation: With a business strategy, we developed a multi-level process to answer the key technology questions: Why, What, How, When.
In a complex organisation and world; we tested the strategy against scenarios that drive the world they operate within.
You’ll also appreciate why, what, how, can be asked on a series of levels. For instance, Why can exist at the Climate-Change-will-affect-us level and at the same time a different Why at the market level and so on. This alludes to the hierarchical or nested nature of technology and innovation strategy.
We used strategic roadmapping as a central tool to explore, create and communicate ideas about technology-led growth.
The results were a set of 10 verified application areas with highly attractive opportunities and feasibility including radical or breakthrough focus. A set of 15 technologies to Make; 10 to enter into collaborations with and 10 to buy in and a set of 20 Capabilities needed.
We asked them to produce business cases, investigate the Technology Intelligence questions need. And ultimately, we asked them to redesign the TM system including KPMs/Is.
Strategy for improvement
We know three parts to help hand for forms to move up the innovation maturity ladder. First, assess the strengths and understand the critical weaknesses of the firm’s approach to technology and innovation management. Consequently, the high-priority improvements can be identified and a management agenda set for improvement. This is somewhat akin to flying at 30 000ft; a high-level perspective. We now need to land on the ground; to show real value creation and create the first shift.
Second, deploy the innovator’s workshop approaches to identify high-potential innovation and a suite of decisions on the technologies and other enablers of the future. For the pragmatics, this is where the product of the innovator’s workshop delivers value.
The potential problem is that several threads are left running and unconnected. Third, is the need to handle the change; to work on building all the relevant aspects of the innovation and technology management system to work together in delivering value, repeatably.
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Rob Munro delivers strategic innovation services to companies, universities and government agencies giving business and innovation leaders the practices, tools and confidence to achieve best in class innovation results. Please contact me to discuss ways to bring greater effectiveness to your innovation processes. This article is partly drawn via his association with IfM Engage at the University of Cambridge
Read more about my service to organisations for innovation planning in improving innovation results.
- Roadmapping for Strategy and Innovation, Rob Phaal, Clare Farrukh, David Probert, University of Cambridge, 2011
- Cogitate, articulate, communicate: the psychosocial reality of technology roadmapping and roadmaps, Clive Kerr, Robert Phaal, David Probert, R&D Management, 2012
- Leinwand P, Mainardi C, Kleiner A (2015), Only 8% of Leaders and Good at Both Strategy and Execution, HBR Blog
- Cooper, R. G., & Edgett, S. J. (2010). Developing a product innovation and technology strategy for your business. Research-Technology Management, 53(3), 33-40.
- George B, Walker R M, Monster J, (2019), Does Strategic Planning Improve Organizational Performance? A Meta-Analysis, Public Administration Review, 79 (6) 810-819
- Dasgupta, M., Gupta, R., Sahay A. (2011). Linking Technological Innovation, Technology Strategy and Organizational Factors: A review. Global Business Review 12 (2) 257 – 277
- Kerr, C., Phaal, R., Thams, K. (2016). Customising and deploying roadmapping in an organisational setting: The LEGO Group experience, R&D Management Conference July 2016, Cambridge, UK
- Ilevbare, I. (2016). Business-aligned technology strategy – why, what and how? Report for Strategic Technology & Innovation Management Programme 2016.Centre for Technology Management, Institute for Manufacturing, Department of Engineering, University of Cambridge.