Are we moving towards integrated software for innovation management?

Software innovationWhat is striking me recently is the upsurge in the software being specifically designed for managing innovation. The competition seems to be warming up in the more ‘standalone’ out-of-the box segment and the innovation tools being provided are certainly accelerating the innovation process.

The software being provided is going well beyond the simply mining and capturing of promising ideas. The solutions are moving into sound idea enrichment, evaluation processes and managing a portfolio of innovation in more holistic ways.

The providers here, namely Hype, Brightidea, Spigit, Imaginatik and a growing group of others have been significantly improving their ‘front end’ offerings to capture and develop concepts- They are increasingly turning their attentions to the ‘back end’ and support with greater focuses on governance, knowledge repositories, campaign cockpits, evaluation and dialogue exchange mechanisms. Mobility has also been a growing feature to capture innovation ‘on the go’.

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Alignment is needed everywhere

Alignment of Innovation to Organization's Strategic Goals

Alignment of Innovation to Organization’s Strategic Goals

Working in most organizations you spend a disproportional amount of time on looking to achieve alignment. This can range from aligning your meeting schedules to the bigger strategic issues by gaining agreement on the way forward.

 I would bet you that working on alignment is certainly one of the main tasks that is sucking up a large part of your working day. Interesting enough the higher up in the organization you go, the more you have to seek alignment. Gaining alignment is actually very hard.

In corporate life we are constantly attempting to also link organizational goals with our own personal goals. To make this alignment, it requires the difficult aspect of achieving common understanding of all the parties for the specific purpose you are requiring, so as to achieve a consistency between ‘agreed’ objectives and the implementation of these across those involved.

In pursuit of alignment

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Figuring out a different strategic alignment with innovation being central.

Strategy as we have previously known it is officially dead. Strategy is stuck! Competitive advantages have become transient. We are facing situations where advantages are copied quickly, technology is just one constant change, and our customers seek other alternatives and things move on faster and faster.

In a new book written by Rita Gunther McGrath, a professor at Columbia Business School in New York and one of the world’s leading experts on strategy, she has been exploring the changes rapidly taking place called  “ The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business

 “Strategy (in the past) was all about finding a favourable position in a well-defined industry and then exploiting a long-term competitive advantage. Innovation was about creating new businesses and was seen as something separate from the business’s core set of activities.” “Sustainable competitive is not just ineffective, it’s actually counter productive” says Professor McGrath.

She rightly states:“Think about it: the presumption of stability creates all the wrong reflexes. It allows for inertia and power to build up along the lines of an existing business model. It allows people to fall into routines and habits of mind. It creates the conditions for turf wars and organizational rigidity. It inhibits innovation.

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Seeking common cause through innovation

Although it is simple to state, creating a common language for innovation is very hard, demanding work. To begin to create it, then to gain a broader identification with its make-up and then to build upon it requires some dedicated time and effort, but above all, it needs recognition of its importance to obtaining a sustaining innovation entity.

Yet there is incredible sustaining value in achieving a common language. In the work that Jeffrey Phillips and I have been undertaking we see the Executive Innovation Work Mat  and its seven connected parts we really saw language, context and communications, as central to any innovation initiatives to work towards.

The Executive Innovation Work Mat

Languages unites us or divides us

Language can have the power to unite us or potentially divide us. Developing a language to unite us in our innovation efforts goes some way to reduce disagreements and egos, that can block success. To create an environment for innovation, to offer within a set of governance, process and functional structures, to build a culture responsive, we need this common cause, this central innovation language, our clear unifying context.

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Innovation struggles to integrate fully within the organization

In the past few weeks I have outlined the existing gaps at the leadership level on innovation engagement and innovations continued lack of being integrated into an organizations strategy. Time and time again there are new reports, surveys and different comments made on this serious disconnect still going on that needs clear resolution.

It is always pleasing to sometimes be on the same track as the Big Consultants, for working on and moving beyond the trends they are spotting and highlighting, into some clear tangible solutions, to help resolve these. Recently McKinsey Quarterly conducted an on-line survey of just under 3,000 executives on issues surrounding innovation. The report is entitled “Making innovation structures work”- see the link below.

They confirm much that I have seen or gained through my research and point very specifically to the key difficulties organizations are presently having around innovation.

This report feeds directly into the solution work I’m undertaking

The results feed directly into the work I have been undertaking on the leadership gap and the suggested framework of the integrated executive innovation work mat that has been discussed in considerable details in the past few weeks. These have been on this blog site of mine, as well as ovo innovation’s  my collaborating partners, and also on  innovation excellence’s web site, where we had a whole week of featured articles, discussing the work mat component parts, or as we entitled it, the essential seven domains of innovation that make up this work mat.

So what stands out in the McKinsey report?

The innovation structure is evolving; organizations rely on exploring various organizational models to ‘house’ and execute innovation. They work with multiple structural models to drive innovation efforts and often have separate innovation functions, located in multiple locations. It seems there has been an insurgence of structures in the last three years that are currently being worked through.

 Presently there is no uniformed view on innovation organizational design

According to the report, the innovation’s function has shifted in the functions location, in its financing and ownership and increasingly reporting into a C-Level, or even directly into the CEO.

The designs involved include innovation centres, a dedicated new-business development function, emerging business opportunities and technologies groups (often separate) and having advanced technologies institutes as part of the mix.

It still seems where it ‘sits’ partly depends on the time the innovation function was set up. The older structures, set up more than ten years ago 46% of those surveyed report that innovation “sits” at corporate headquarters compared with 65% at the organizations with younger functions. Younger functions also focus more on profit but presently have fewer market successes as they have had less time.

What is the innovation they are working upon?

These are with functional focus on identifying new business opportunities, such as blue-sky innovation and developing potentially disruptive technologies and those report directly into the CEO at around 44% of the functions at present. That maybe the wrong side of the 50% mark I’d like but we seem to be making progress of linking innovation directly to the leadership of our organizations, or are we? Read on.

The factors of success

This is the area of most interest to me. Although it is prefaced by a matter of maturity (whatever that means) there is a ongoing debate on how separate or aligned with corporate strategy an organizations approach to innovation should be. To quote from the report “What is affirmed that strategy (particularly one that is focused, clearly articulated and integrated) is key to successful outcomes. At companies where innovation is fully integrated into strategy, executives are SIX times as likely as those without an integrated strategy to say their separate functions meet their financial objectives effectively, actually very effectively or extremely effectively”

Equally where there is a successful integration there is a sharing of the organizational elements across the portfolio. This includes sharing strategic priorities and focus, knowledge and insights, research insights and analysis, leadership teams and approach to governance with lastly a good talent flow and exchange.

The challenge for innovation is still around strategy though

Only one-third of the executives report innovation is fully integrated in corporate-level strategies,  and nearly half say integrating the separate function’s strategic objectives with those of their core businesses is one of their functions most significant challenges.

Those that achieve effective outcomes have clear leadership support

Fifty-six per cent of all the executives surveyed identify C-level and leadership support as a driver of success (second only to strategic focus). There is a more than interesting effective outcome split within the report (exhibit 4) that the level of interact frequency with the C-level team makes a real difference.

Surprisingly but fitting with my own observations and research, is the frequency of interactions between the separate innovation functions and C-level leadership. From this report those deemed as “very frequent” is only at 40%. Can you image the wealth creation, new growth potential that innovation provides yet C-level engagement is only at 40% for very or extremely frequent in discussions? So is innovation that important to the C-level really?  Something is wrong here, badly wrong.  “Somewhat frequently” comes in at 17% and “rarely or not at all” is 22%. This is the leadership gap we have suggested needs addressing, urgently. Clearly innovation “sounds good, a good sound bite” but is not top of mind for C-level as they would like us to believe, it seems.

Then McKinsey outlines the involvement with separate innovation functions at the C-level as actively involved in the innovation process, from idea generation to commercialization, is only 38%. Those involved in the evaluation and feedback on major innovation decisions, about strategic decisions and priorities of investment makes up another 35%, yet only 26% serve on an innovation council or committee and 14% report that their leadership is not involved with innovation functions at all.

So we are still badly lacking that deep C-level engagement, although the line into them is improving. The need is to get the C-level strategically engaged at least and convince them to provide the innovation framework for others we are proposing, so they do become fully involved and those responsible to work within innovation can conduct their work through the framework we are suggesting to strengthen the C-level engagement and cohesiveness of strategy with innovation activity.

Divergence and philosophical tension in innovation

So the McKinsey report is more than helpful (and timely) on providing a snapshot of practices, successes and challenges but they do suggest there is a divergence and reflection on the struggle and philosophical tensions surrounding innovation. For instance, equal shares of those surveyed, state their function exist to turn a profit, or have no financial targets at all. Equally there are large splits on measuring individual performance with only 30% having the same performance metrics as the rest of the organization, while 32% have innovation-specific metrics and some (23%) seem to straddle the middle of the two. The lack of leaning to one form of measurement or the other needs resolution or is it evenly split due to the nature of the innovation activity the function is working upon?

The one aspect within the report I find really shocks and disappoints me

The concern lies in the number of dedicated employees on innovation, 35% of executives (out of 2,927) have ten or fewer full-time equivalents working within their function and 30% saying at least 51 full-time equivalents dedicated and working on innovation.

That is staggering low in my opinion for the area that is reportedly consistently within the top three priorities of the CEO. No wonder we have the slow innovation cycles, the poor success rates and the lack-lustre performances from innovation if these are the dedicated numbers working on innovation.  This is appalling. I just wonder how many efficiency and effectiveness people are employed across some sizeable organizations yet innovation seems grossly undeserved by these results. Putting your future into too few hands, to work on breakthroughs, those new disruptive areas means you must be forced to end up with incremental innovation for maintaining performance, and we all are seeing that clearly emerging time and time again, from most organizations not balancing their innovation activity in a well- structured and thoughtful way.

Risk, poor incentive, under-resourcing innovation and fear still dominate. When will stakeholders start asking more direct innovation questions to the boards of organizations?

The last part of the report deals with the difficulties aligning innovation.

The significant challenges in meeting strategic objectives are hampered by a range of difficulties, the highest as a % of respondents was 53% on the competition coming with short-term priorities from other parts of the business, 42% for difficulties in integrating functions strategic objective with those of the core business, 29% in difficulties in defining the functions business case or value proposition to company leaders, with 19% seeing the challenge of being separated from the rest of the company.

The conclusions  drawn from the report.

The report concludes many of these issues are cross-cutting and perennial challenges not just for innovation but for the organizations as a whole.

It reaffirms the absolute need for strategy to precede structure when organizations decide to create new innovation functions and the enabling effect an engaged C-level support brings in driving innovation success. Also it suggests that a real care to tailor the function to existing organization objectives and culture are important.

The report recommends the following:

1)      Organizations should not rely on a single innovation function, it must integrate with the entire organization

2)      There must be first a well-established and clear strategic focus

3)      A clear garnering-in from top management

4)      That C-level support is a key factor for innovation success

5)      The measures should focus more on the performance and success on the functions role in the innovation value chain, not necessarily financial targets as these can be an unreliable measure or guarantee of success.

This report is timely

After the last few weeks in laying out the business case for having an integrated framework for innovation through our executive innovation work mat, this McKinsey report reinforces that we are on the right track.

I feel even more confident that this framework we offer to bridge the innovation leadership gap can make a solid, maybe significant, contribution to reducing some of the issues and challenges that have been raised within this McKinsey report.

The McKinsey report can be found through this link.

Identification sits at the core of innovation

There are so many aspects to get right in innovation. These can be ensuring the culture, climate and environment for innovation are working well, it could mean setting up processes, well-designed procedures and structures, it can be providing innovation governance. Each part has a vital part to play in being combined for innovation, so it can function but these are not the core. Our identification with innovation is that core.

The core lies in the scope and definitions, the context that innovation is set and the identification with these. How often do organizations fail because they rushed into innovation, along those classic lines of: “let’s experiment and learn as we go” as their mentality.  We fail because we don’t take the necessary time to examine the significant differences in innovation terminology, in the different ways or types of innovation, in gaining from ‘evidence based’ research and experimentation. What we expect to see from our day-to-day work seems not to apply to our innovation selection criteria. We experiment indiscriminately, poking a stick around the opportunity haystack looking for that elusive ‘golden’ needle.

Random selection and discarding practices

Organizations have been randomly selecting, then discarding practices constantly, in a never-ending search of more of other organizations best practices, without understanding what these truly entail, or what this truly requires in commitment. No wonder innovation continues to receive a bad ‘rap’ when you often have the innovation blind, leading the blind. There are so many facets within innovation that need a much deeper, extensive understanding that is so often lacking. We love to collect or synthesise and then quickly dismiss what doesn’t work, dispensing with some valuable utility on the way, as we move onto the next ‘complete’ package. Then the cycle repeats itself, perhaps not immediately but in its quiet eroding way that throws innovation even more into question and doubt.

Lost identities, lost opportunities

We have lost our identification, yet this one word strikes at the core of innovation as the essential to have. Everything we do should have an overly binding context to it. If we don’t place innovation within its appropriate framework we fail to contextualize our activities, the intended fit, which offers the real relationship we need. We need to fit our work to the strategic goals.  If this is simply missing then innovation is likely misfiring, or not hitting the targets because it is scatter-gun in approach and its interpretation.

Innovation cries out for an integrated innovation framework.

Offering an integrated innovation framework is the place where we can gain the necessary identification. It is central to what we should be doing; it establishes the boundaries within which innovation should take place. This is the one essential place for leadership engagement. If innovation is never placed in its context, then how do we expect the results often asked for by the CEO? Innovation is adrift, it is actually unsupported, and we don’t achieve that precious identification.

If we don’t  have provided that innovation framework, we leap into innovation, often in good faith, as asked, so we become often hyper-active as we all find our own ways forward. Eventually we stumble along and finally work out our own language and understanding of what innovation means, different to even the persons sitting at the next desk. Just take a look at all the different definitions of innovation you will find, just in one large organization alone. This lack of a clear context is so harmful we add further unnecessary complexity and over time frustrate the organization and confuse the majority.

People disconnect because they lack what is needed to connect! They continue to work hard, often very hard, but sometimes never truly understanding how their tasks and roles contribute to the strategic direction. We need to make sure each person makes their specific connections to an integrated approach for themselves. To achieve these connections you need a shared understanding, a common framework and a common language, to reduce the mental traps and misunderstandings of what innovation is individually meaning. We need everyone to try to get onto the same page.

Educating formulates the understanding

Educating, informing, clarifying constantly simply helps formulate understanding and aids execution. We need to find ways to communicate a common language, a common way to frame the needs expected from innovation.  That needs to come from the top of organizations and then built up by a growing contribution from all as they become engaged. If you can achieve this, you can move to a growing consensus but this takes time. You can eventually achieve a common identity that begins to move ‘mountains’ through collective achievement, that is both distinctive and unique to your organization. A uniqueness that can never be copied, perhaps just admired or envied.

CEO’s that are seen to be successful achieve connections, what is often called that emotional connection through describing the context, setting the values and vision driven criteria and by often pushing the organization towards ‘impossible goals’. It is amazing how this brings alignment as long as it is consistent, constant in its messages and widely shared and understood. Then the leadership makes it their business to position individuals and the decisions over what, where, when and how in the context of this, to allow them to make their decisions, as individuals and within their teams. Innovation activity becomes ‘orchestrated’ not micro-managed.

The value of the middle makes for the new connectors we need.

Middle managers tasks should be increasingly become more those of connectors and facilitators, not the guardians and gatekeepers for the decision makers.  Their work should include the encouragement that everyone is engaged in innovation work, for each person to constantly go back and check against this integrated innovation framework to work out their place to relate to this and become aligned. The middle manager carries through connection and identification.

Through this new work they achieve this ‘shared understanding’ or set about correcting any areas of concern through their own dialogues with senior managers of where any shifts have taken place or seem in conflict with the understanding. This is identification again, for it lies at the core of innovation. Making sure everyone has a ‘sight-line’ and identification into this innovation framework so they stay well-connected. Communication and relationships becomes the key.

Today we are living in a world of knowledge-intensive innovation

To build distinctive competences for sustaining those often elusive competitive advantages, is very much context specific. We need to provide learning events as competence is actually firmly embedded in the specific context in which it is created. If an organization lacks that context of innovation then how can it acquire the appropriate knowledge to give it any advantage? If the CEO and his leadership team can’t articulate the context, then they can’t expect winning at the innovation game. It is not their people failing to deliver innovation, it is them, as leaders, failing to deliver this integrated innovation framework where context sits and identification is gained to seek out knowledge-specifics needed.

Until the CEO identifies with his core role in innovation, the organization remains rudderless.  If he can’t supply what is expected, then it is more than likely the corporate strategy will be ignored, as it has not been placed in its appropriate context.  It fails because it is not communicate in ways that can be understood, it lacks personal identification.

Without the appropriate identification of the opportunities seen for growth not communicated then how can the right innovation be applied? Innovation stays disconnected to strategy. It is arbitrary based on interpretation and choice designated down the organization hoping it aligns. Context set in a clear framework for innovation changes that. It gives innovation a real chance to contribute.

Boundaries and Freedom

How we harness our innovation activity does not need the advocating of tighter controls, it needs articulating the potential and releasing people by underpinning how that will be managed through innovations organization. Ideally this can come through having a clear governance structure and providing the right environment that is needed, so as to allow others to do the work that needs to get done and see how they contribute in meaningful ways. Management’s dictates or rules should not stand in the way, they should be swept aside.  What should be put in that critical space is a common set of agreed organization definitions, a real clarity made up of what connects and why and then ensuring the resources are made available to achieve the innovation ‘called for’. This calls for a focused yet adaptive and flexible leadership, that constantly looks to engage and provides the clarity necessary within a corporate  innovation framework that can cascade down the organization. Leaders need to actively ensure through clear designation that everything is in place for all the appropriate conversations, and is equally ready and listening to the new ‘pulse’ of innovation, they are generating from this new intensity of focus.

Identification becomes the core to innovation

Eventually with enough of this leadership engagement, constantly being articulated and framed for the challenges identified, there emerges a common consensus and organizational language around innovation and its intent. It connects and gains both organization and personal identification and this ‘identification’ sits at the core of innovation.

We get closer to achieving a consistent, more vibrant innovation as it becomes more routine and embedded, for it becomes increasingly linked to everyone’s goals, a certain oneness and because of this, it is sustaining. We identify as we understand what our contribution will be, then the leadership has done its primary job, its aligned innovation purpose to the goals, by laying out the parameters to achieve this.