Innovation often fails to align with strategic needs. It is a known, well-discussed fact. This is often not the fault of the innovator but the very people designing but not sharing the strategy or failing to recognize all the implications this might mean in shifting resources, investing money or simply under-appreciating the complexities that often lie with innovation to conceive, validate, contribute and deliver the contributions into that strategy.
Sadly many innovators are simply happily working away with no specific guidelines, apart from the general remit of “we need to be more innovative”, and this lack of coherence merging from the boardroom, failing to cascade down the organisation leaves this strategic part that innovation should plan as far to vague. They are not drawn into the need for change and its implications from an innovative perspective. Alignment should be a rigorous evaluation.
Building our capacity to innovate needs understanding and reflects the organization’s business activities. Innovators need to grasp the value creation aspects that will deliver the necessary capital-efficient and profitable growth and then ‘go in pursuit’ to achieve their contribution to these goals.
Even the basic questions often remain unclear: “How are we looking to grow revenue, save costs, reduce working capital or improve our fixed capital?” What is specifically being deployed or recognized needs to change and to get into the necessary detail becomes essential.
Managing our innovation activities thoughtfully and in alignment can help in all of these goals set in strategic direction or even mission purpose. Often the CFO is guilty as they want everything but are not prepared to reassess and reallocate the essential funds to unleash a new wave of innovation.
Shifting strategy always has significant implications, and the real need to understand whether it fits with what we have available generally makes deliberate questioning of the eventual role of innovation’s contribution and ability to deliver.
Then where equally does risk fit into the strategic equation for innovation?
Innovators often lack the clarity or governance guidelines to know if they can or can’t ‘push’ for groundbreaking innovation.
Risk is kept vague, often not as well articulated as it should be in guidelines or limitations deemed beyond the scope and areas to explore. Without real clarity, innovators, as with many other functions, often go beyond their imagination and explore the unknowns associated with any different innovation in the belief that this fits with the strategy. They are not deep into the strategic evaluations and are often ill-equipped when second-guessing.
Sometimes it even becomes ‘the art of avoidance’ by the person who wants innovation but not the associated risks, so the decision is “let’s not talk about it”.
Innovation is not the usual.
I recall a report some time back written by PA Consulting report called “Innovation as Unusual.” They were suggesting the innovation spend just in the UK alone is flushing some £65 billion down the drain each year, as nearly half the organizations waste good ideas, are far to risk-averse and fail to invest boldly around more ground-breaking ideas.
From my perspective, does the Strategy of Board guidelines clarify acceptable risk levels, or do they simply wait to see how the organization responds to a general idea?
So we are still seeing the majority of organizations struggling with innovation. In the process, they are losing out financially, forgoing huge opportunities in not achieve future competitive positions or foregoing the chances to alter their market position radically. It seems innovation remains incoherent within many organizations still.
PA Consulting suggested five innovation killers – fear, lack of focus, innovation engine failure, the wrong ROI and a natural reluctance to truly invest in building the right innovation capabilities. Pretty bad, I think? So we end up with costly failures.
So, where do we start in gaining Coherence?
Changes in Strategic direction or re-assessments of organizations’ goals always have significant implications. For me, a handy number of analytical or visualization tools applied to where and how the function and design of innovations fit help deepen the understanding and “bubble up” to the board the right questions they need to address in support of their decision for change.
Maybe we should all start visualizing first, all eventually arriving on the same page.
XPLANE, visualization thinkers who apply a design thinkers approach, produced brilliant visualizations of the organizations needs. They suggested visualizing the Cost of Confusion and the other as the Value of Clarity. Imagine having these as your starting point for establishing the innovation direction, resourcing and contribution directly in engagements with the board
Leveraging the power of the three-horizon methodology for innovation
I greatly favour the three-horizon methodology to work through to achieve this coherence in understanding. The three horizons offer an excellent framing technique to bring this ‘coherence’ that we need from our ‘here and know’ activities and future innovation efforts.
Dedicating time to knowing your innovation capability fitness
I have constantly been working away at what constitutes the dynamic capabilities for innovation that are needed for new innovation and those, shall we say, as more static and simply in place for the repetitive innovation renovation. It is identifying and seeing the difference and then knowing how to apply those that are dynamic and highly valuable to obtain against those that require a little dampening down. A significant resource calibrating can be taken by knowing the essential differences.
Take a look at www.innovationfitnessdynamics.wordpress.com. for some triggers
The question is, which are critical, which naturally occur when others begin to be put into place, which seems to have limited or no real effect on changing the dynamics of innovation?
The need to diverge and converge to reshape innovation activities
The alignment to the strategic direction (and importance) with any capabilities available needs to be understood. What present activities diverge away from the new strategic core and identify those that are converging?
The diverging ones need to have a real emphasis on improving performance or be “junked,” to question how they are managed for cash or releasing of precious investment capital to sell or be .disposed of eventually. Then those that are converging onto the new ‘known’ core of the business to grow and expand have potentially more capital and resource ready to be put to work on new concepts that fit.
So by recognizing these, and that is not easy in itself, you are beginning to know and identify the capabilities you need to have in place to fix today to make it as healthy as possible, alongside those new capabilities that will create a new winning set of growth and value propositions that give the ‘promise’ of what can come by applying different mindsets, resources and thinking.
Deciding that capabilities can be better leveraged requires separating exploitation and exploration.
Then we need to figure out the future core and start moving towards it. We should leverage the two dynamics of exploitation and exploration for our innovation and future growth.
Today we need to exploit and explore, and our capabilities need to be built fit for one of these two purposes.
Exploiting is today’s business need to leverage and improve on the existing business and simultaneously explore for tomorrow’s new business growth.
We certainly need bolder investments in knowledge and insights to begin inquiry that leads to the changes around the make-up of innovation capabilities and those shifts.
I certainly believe there is a real call for fresh and bolder investments in knowledge in infrastructure that focuses on activities that spur new approaches that lead to innovation. These are not just the traditional ones based on managing today’s core.
It is finding those innovations that provide the necessary new value. This new generation activity is occurring from recognizing how we can build, yes build for further exploitation (extending the life of valuable contributors that enable a better-financed transition) and exploration (new understanding) and manage each as separate risk evaluation exercises with different metrics of progress.
Identifying and finding new capabilities has potential hiring implications, the ability to fit with the existing, providing the tools and environment, and spelling out the future of where these capabilities fit.
We also need a deeper innovation grounding of internal workings and alignment.
What I feel we need is a deeper grounding in what is happening inside organizations within their innovation activities, how these align with the needs of strategy, and what is clearly missing. We start here as it gives us all this clarity and coherence, missing in much of our existing understanding.
Dialogue is essential
It is mastering this new ‘black box’ of actual innovation activities, exploring and exploiting the necessary innovation capabilities that are required to be ‘going on’ in organizations to achieve a closer coherence, one that can radically improve innovation performance.
We have a real opportunity today to find new ways to combine the four emerging forces of knowledge, technology, entrepreneurship and innovation, which will drive the growth models of tomorrow. It is these that are forming the new innovations ‘black box.’
I have plenty of ideas, frames and methods built up to help you make innovation fit and be more coherent in its contribution in times of strategic change.
I strongly advise not to carry on as usual, or innovation becomes the drag to strategic change and reinforcing the image that “our” innovation is a drain on capital, not the NEW source of growth, capital renewal and the key to changing strategic direction through supporting its delivery.