Proven Formula for Organizational Success in Innovation
Insights - 29.06.2023
Is your organisation ready to innovate? Innovate or die sounds attractive and combative, but a lot of companies struggle with putting it into practice.
How do you bring innovation in? How do you facilitate the processes that make it possible? And which people can you specifically select for innovation potential and then allocate without the day-to-day processes suffering?
The importance of innovation is now more widely recognized by companies than ever before. After all, the pandemic showed us how unpredictable crises are and how they can bring an entire social system to a standstill; the war in Ukraine proved and is proving that our dependence on raw materials and energy can pose a serious threat to the business model; and earlier, an innovative player like Uber showed that it could turn the entire taxi industry on its head without even owning or managing a single taxi itself. Challenges that can fall into (one or more of) four broad categories: unpredictability, global competition, rapid technological developments, and changes in consumer behavior.
Don't be too dependent on the cash cow
(Manufacturing) companies that want to remain competitive should not continue to rely on their so-called cash cow - an exploitative product or service solution that ensures constant and therefore reassuring sales - because at some point it will be fully milked or may even die. Because, and faster than ever, there will be better solutions on the market than your company's. In other words, it is a necessity not to focus (only) on the exploitative segment, but also to explore new services and products, new markets, new technology ... So, innovate or die. Or else: keep moving forward or fall and miss the race. Because some ideas may save your quarter, but others could save your business.
Too busy to innovate
On the positive side, most CEOs, as mentioned above, are convinced of the need to innovate, and often express it during board meetings. The difficulty, however, is to translate this enthusiasm and conviction top-down into concrete processes, which without exception clash with the day-to-day business – because:
- they take up time
- different stakeholders are involved
- the right innovation profiles are not found
- the war for talent demands all the attention
- short-term exploitation and long-term exploration do not get the right balance
- innovation does not fit in the current procedures and hierarchy ...
- and so many other reasons for being too busy to innovate
In the end, risk that companies let go of these processes or place them at the bottom of the priority ladder. But given the importance of innovation, there should be no such thing as ‘too busy to innovate’.
Innovation is a discipline in itself
Making innovation a success comes down to making innovation a discipline in itself. To be able to train employees to think and act more innovatively in a targeted way. To identify innovation skills alongside creativity and the talent to develop ideas. To decisively support innovation from the leadership. To allocate dedicated budget, manpower and time to innovation. And to remove resistance to change - which is inherent to innovation.
Who select for innovation?
The reason why so few companies succeed in this is (also) because innovation is a relatively new discipline, which only passed quality control as an academic research topic around 2005. As a result, innovation was tackled on the same top-down approach as other fields.
Here's the thing: for engineering we recruit engineers, for marketing we recruit marketers, for accounting we recruit accountants, and so on. And innovation? That's where we put reliable employees, with know-how and experience. But not necessarily people with the right innovation profile or innovative work behavior. Because being innovative is not a cognitive quality based on IQ or knowledge level. But how can you detect such a profile in your organisation?
Organisational success formula
The good news is that not only is it possible, but you can train innovation skills very concretely, build innovation dream teams and coach innovation itself. And that according to ... an organisational success formula that goes like this:
OSI + ICX => IWB2
Which comes down to Organisational Support for Innovation plus Innovation Coach Exchange enhances Innovative Work Behavior (we'll explain the squared in the end)
What is required to make the shift from individual ability to collective success for innovation?
Let's have a look at the various components within that equation.
- IWB (Innovative Work Behavior) or the Individual ability and motivation for innovation is the first factor in achieving collective innovative work behavior. It is indispensable in the formula, because it is people who come up with innovative ideas, turn those ideas into concepts and develop concepts into products and services. Therefore, it is extremely important to identify the most innovative people in the organisation.
- OSI (Organisational Support for Innovation and leadership buy-in) is the second factor to move from individual ability to collective success in innovation. Management must succeed in translating the corporate vision and mission into a stimulating innovation climate, as well as an innovation strategy and balanced project portfolio. An innovation climate, which can ultimately lead to an innovation culture, is fuelled by values and goals.
- ICX (Innovation Coach Exchange and introducing contextual ambidexterity as an overlay to the existing top-down structure is the third and ultimate factor of our formula for successful innovation. Innovation is a comprehensive and structured process, and much more than – the often intangible – creativity alone. Indispensable in all this is an innovation coach, who facilitates and guides the innovations and innovation teams.
What is contextual ambidexterity & why is it so important?
We have already mentioned that innovation has today been given a fixed place in board meetings, which is obviously a good thing. But to achieve optimal innovation in the organisation, accumulated knowledge is needed - i.e., not just that of management and C-level - which is then shared efficiently - i.e., across departments.
This means that bottom-up is as important as top-down since most of the hands-on knowledge from the shop floor is on that shop floor. What an organisation should strive for is contextual ambidexterity. Literally, ambidexterity means being able to work both left-handed and right-handed and often at the same time. When applied to organisations, contextual ambidexterity means engaging all individuals in the innovation journey, embracing bottom-up innovation initiatives, and integrating them into the innovation project portfolio alongside board-driven initiatives. This approach breaks down both horizontal and vertical silos. It is important to remember that the staff members outnumber board members, resulting in a multitude of ideas.
In short, contextual ambidexterity is finding a balance between top-down & bottom-up innovation within an organisation.
And how to make this contextual ambidexterity concrete? By facilitating connectedness or internal glue between departments, where managers from different departments meet and share their needs and challenges - without the presence of the board or the CEO, to freely spar around bottom-up ideas and possibly add them to the project portfolio. In addition, cross-departmental innovation teams can and should be formed, Supported by the presence of an innovation coach.
Let's get back to our equation and break it down one last time.
OSI or Organisational Support for Innovation requires real leadership buy-in, with management facilitating innovation by translating the corporate vision and mission into a stimulating innovation climate, as well as an innovation strategy and balanced project portfolio. The right values and goals are crucial here, as are sufficient resources to make it all possible.
Innovation Coach Exchange in turn comes down to identifying innovation profiles in the organisation, maximising them through contextual ambidexterity by forming complementary innovation teams and having them led by innovation coaches.
That sum will ultimately lead to collective Innovative Work Behavior. And why IWB2? Because we initially focus on Individual Innovative Work Behavior, which eventually - if everyone is on board with the story - can become Collective Innovative Work Behavior.
Few companies have the courage, beyond incremental adjustments and exploitation, to focus on radical steps and exploration to future-proof the organisation. But as the foregoing hopefully shows, not that much courage is needed: integrating innovation is a well-founded and feasible process, which does not rock the organisation or require full-time commitment from employees. It is mainly the will and hunger to stay ahead, excel and look beyond the first horizon.