PART 2: MANAGING INNOVATION!
Part 1 consists of the ‘Top-5 Innovation Killing Management Routines’:
- Indecisive Decision-making
- Unlucky Internal Timing
- Unfavorable Risk Perception
- Misused Market Research
- Uncreative Business Models
RECOMMENDATIONS to Manage Innovation Successfully
Innovation is often considered a relatively uncontrollable process in which random chance seems to be leading for success or failure. If you are lucky, you have a stroke of luck… Research shows however that innovation can indeed be managed. It is therefore most of all a management issue. Innovation can and should be managed! The end of the innovation cycle is ‘Learning and re-Innovating’. This is a new stimulus to restart the cycle. The most important condition for success is the willingness to learn from innovation projects. This is often neglected or found to be difficult (especially in case of ‘failed’ projects). Everyone likes to share best practices not near misses or even worst practices.
Looking at the earlier inhibiting (‘innovation killing’) management routines the chance of success can be significantly increased by the following management interventions:
- Idea Management
- Small-scale ‘Proof of Concept’
- Innovation Team with ‘Ability to Execute’
- Corporate venture
- Open innovation
If you randomly interview 5 to 10 employees of any organization you will discover at least 5 excellent ideas for innovation. Top management will be delighted by ‘your’ ideas (“Why don’t we come up with these great ideas?”). Although a lot of people have great ideas, unfortunately most of them are not able to present or pitch an idea in a way that appeals to (higher) management. Also they often lack a ‘sponsor’ (e.g. their own manager) to help them to explore the idea further and to pitch it successfully to management. Companies that excel in innovation are good in gathering and evaluating ideas. They are able to select the best ideas based and market attractiveness and feasibility. Idea management should certainly not be limited to employees: the key is to leverage creative ideas of employees, stakeholders, partners and customers. Improving and professionalizing your idea management has a positive impact on innovation.
Small-scale ‘Proof of Concept’
This is based on the credo ‘Think Big, Start Small & Scale Fast’. Being fast in calculating (rough business case), designing, prototyping and delivering the product or service is crucial. Define a timeframe, a budget and allocate people to the project to organize, test and introduce the innovation. Spending months on a business case, having endless decision making meetings and conducting excessive market research (without the actual product or service) is often more expensive than a small-scale pilot. Evaluate the pilot and if it’s continued or rolled-out, integrate it in your organization. Innovating this way will appeal to the entrepreneurial employees and have a positive impact on the culture. Technically, rapid prototyping and rapid manufacturing make it easier to test a concept on a small scale. An additional advantage is that a small test leads to more insight and fast and significant improvements (‘learning by doing’).
Innovation Team with ‘Ability to Execute’
Create an agile Innovation Team with talented people from different disciplines (approximately 5 people). Make sure that they can spend a substantial part of their time working for this team. The team consists of the most relevant disciplines that are required from development up to and including successful market introduction. The Innovation Team is responsible for the whole innovation process. The Team can include other colleagues when necessary (not expanding the core team size) and hire experts to help in specific parts of the process (if required). The management top is fully committed providing the Innovation Team with enough responsibilities, support and budget. ‘Ability to Execute’ is critical. Good ideas are useless without good execution. A high level of freedom and entrepreneurial spirit is essential for success.
Another management intervention is the development of a (temporary) separate entity with different structures, process and culture. Existing processes, rules, bureaucracy and overhead, do not impede this venture. The main goal is to develop new competences and skills. In order to transfer new skills it is to be recommended that (some of) the people involved return to the organization to put the learned skills into management practice. Again, as with all interventions a good feedback loop is fundamental.
Actively involving third parties at innovation is important to develop new markets, combine core competences, share development cost and for joint marketing, distribution and sales. Inviting potential partners from a co-creation perspective has many advantages. Focus is imperative: choosing one joint proposition helps to speed up joint decision making and development. Inspiration from the ‘outside world’ is often a good stimulus to generate new mindsets and innovations (e.g. online competitions, cooperation with universities). If innovation leads to changes in the value chain, collaboration with partners is often required to enable and speed up the change. Open Innovation enables value chain innovations.
Note: these two posts on innovation are based on daily practice with own innovations and consultancy. Help to break ‘innovation killing management routines’. Feedback, ideas and discussion are more than welcome!
Part 1: http://guidokerkhof.tumblr.com/post/11272546706/top-5-innovation-killing-management-routines
The original article (including a case) was published in Dutch on 30 March 2009 by Serge van Dam & Guido Kerkhof on ManagementSite: