Issuing a vague call for more digital innovation without thinking how your people are likely to respond to it, could do more harm than good.
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Recently I was advising the COO of a major organisation, on innovation management. The organisation had tried a few times in the past, but the results were disappointing. This is common. Sustained innovation is hard to do in large enterprises. However, this time the executive sensed that the initiative really must succeed – or they might irrevocably lose a leadership opportunity to others.
We often meet CIOs who have been tasked by a CEO or COO (though rarely by a CFO) to “do more innovation.” In this era that request is usually associated with the keyword digital. Eager to please, and with a bias for action the CIO just gets something started in the hope that it will evolve and blossom. Initial results seem good but within a few months or a year it fizzles out. That happens simply because the business executive neglected to set course, speed and mission.
A new innovation management initiative will fail unless you can agree, and very simply articulate 3 things:
1) Why must we innovate?
2) Where must we innovate?
3) How much must we innovate?
If you can’t say why, in a very clear and repeatable way then your people will lack a foundation and clear motivation. People are always more thoughtful and committed if they understand why they are being asked to do something. In a business a generic answer might be “because the customer is never satisfied and needs more from us every year just to pay the same price.” This simple fact is obvious to your sales people, but may not be part of the everyday experience of people in support functions. In a cancer research non-profit, the reason for innovation might be obvious but in a government administration department it might not. In large operations – “if it ain’t broke don’t fix it” is often a tacit default behavior code – you have to give a reason to deviate from that.
The second key question is: where to innovate? It is very unlikely you need more innovation equally across all parts of the enterprise. However, without guidance a scattergun response is common. People come up with ideas all over the place, some are valuable, most are not and precious resources get squandered. Sometimes innovation is focused in the “usual places” but this time around, that might not be where it matters most. There is less point innovating in product, if regulatory compliance drag is your critical business strategy problem. Innovating more in customer service might be a waste if your fastest rising business problem is theft and fraud loss. Digital innovation can be relevant anywhere – internally or customer facing. You have to say where it should be most vigorously applied.
The third question is how much innovation you are seeking; breakthrough or incremental? Do you want ideas that could change your business model or only things that will lead to 5% improvements to existing business processes? Do you want to develop whole new services that exploit untapped digital business moments? Or do you just want to reduce shopping basket abandonment on your website? You need to set the right tone or your ideas inbox will be filled with offerings of every kind. Don’t think that you can afford to waste such energy and goodwill. If you ask for the wrong kind of thing and then do nothing with what you are offered, your people will quickly become cynical about contributing. Then you undermine the cultural capacity of the organisation to innovate. Repeat the same mistake a few times and the reputation of “innovation” itself will be tarnished.
Think hard about the 3 questions before starting out. They can be surprisingly difficult to answer clearly and concisely. You might use a whole day of an executive team offsite to come to an agreement. Do not ask someone to lead an innovation initiative until you can boil down the answers to these questions, so they fit on a single sheet of paper.
Our view is that in the end, every industry will be digitally remastered as digital change penetrates right inside and becomes part of all products and services – not just the way they are marketed and sold. So in the end, you are likely to need a lot more digital business innovation than you might think. That’s the subject of our new book Digital to the Core, which we hope you will find helpful as a guide to the momentous changes ahead.
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