How to do innovation in a larger organization?
How to do innovation is a big question. There is no easy path to improve what we do or launch new products and services. The starting point is always finding the right balance between ‘capabilities’ and ‘execution’.
Capabilities include: having leaders who understand how innovation ‘works’; a clear vision and strategy to roll out innovation; the right type of funding (process); and education plus mentoring to support innovation teams.
Execution is where the rubber meets the road. This is where innovation teams generate ideas and start implementing them. To get here, we need to organize ideation (though hackathons, competitions, innovation boxes, etc). And we need to identify the right people to work dedicated on the innovation initiatives.
To find this balance, organizations need to run through what Ekipa calls ‘laps’ (they are not steps, because innovation isn’t a linear process and so is a change program to become more innovative).
In the first lap, we need to identify who in the leadership team will drive innovation and entrepreneurship as a core function. Who in the leadership team is supportive and who is skeptical. In this lap we also need to define the ‘why’ of innovation; why do we want to innovate, where do we want to go and what are the things that will help us or hold us back?
To get the entrepreneurial function embedded at all levels, there are three levels of leadership we identify:
We need to identify the right leaders at all three levels to start a long term innovation program.
Once we have identified leaders at all three levels and we have some higher level direction, the leaders need to learn the traits of an entrepreneurial innovator. Based on the high level direction, we also need to define what types of innovation we want and don’t want (our innovation thesis). If we are a telco, we may want to develop new IoT solutions, but not start selling cars. To develop the innovation thesis, we can look at the different types of innovation that McKinsey defined in their ‘three horizons’:
Once we know what type of innovation we want and we have the right leaders to support the innovation efforts as well as the innovation teams, we need to start pilots. The first question is how to source ideas. There are many well known formats that can be used, like hackathons, idea boxes, incubation spaces, idea competitions. Once we have identified some initial innovators or innovation teams along with ideas, we need to have the right incubation process to help them get started. This means we need to support the teams with the right knowledge (education) and mentoring (peers, leaders or external experts).
These initial pilots can serve as a starting point to develop an internal ‘framework’ or ‘incubator’ for innovation teams. Once we have such a framework in place, it can be used to scale across the organization. We run batches of innovation teams through our incubator, all spinning out improvements or new services.
This is also the phase in which we develop strong governance. The innovation teams need to be held accountable for outcomes. We need the right set of metrics at the team, program and enterprise level to monitor what works and how it’s contributing to the larger strategy of the organization. We also need an innovative way to fund the innovation efforts (as described elsewhere in this site, this is about moving from 50 page business plans and ‘entitlement funding’ to a stage gate approach where teams get funded based on their achievement, called ‘metered funding’). The investment decisions are made by a committee or a board; senior leaders who monitor the team and its outcomes and decide whether they will go to the next ‘funding round’.
If an enterprise becomes able to replicate the success of these innovation teams, it can start to transform the whole organization towards entrepreneurship.
Some of the 5 building blocks have already been outlined in previous laps. The key in this lap is to architect all the element in a balanced effort. And to keep re-inventing them, for an enterprise transformation should be eternal. In the past, innovation could be done by a lap, isolated from the rest of the organization. Today, we want everybody at all levels to continuously look outside at threats, opportunities and new product ideas. And we want them to look inside for improvements (radical or incremental). The enterprise continuously reinvents the way it funds innovation and how people are engaged in innovation teams. It should stimulate entrepreneurial leadership at all 3 levels continuously.
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