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A Guide to Organizing Innovation

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A Guide to Organizing Innovation

GUEST POST from Jesse Nieminen

I recently read a couple of excellent articles by Nick Skillicorn, and Prof. Rita McGrath where both discuss the challenges and intricacies involved in structuring and governing innovation within a large organization.

This is a classic topic that every corporate innovator has without a doubt come across, and it’s also one where “the right approach” is often quite elusive.

Inspired by those articles, we’ll present the most common archetypes and then dig a little deeper on the topic and share our thoughts and experiences to help you figure out how innovation should be structured within your organization.

Why organizing innovation is challenging

Before we dive into the different models for governing and organizing innovation, it’s important to understand why this is such a challenging topic to begin with.

That’s of course quite a lengthy and nuanced topic, but in short, there is no such thing as a perfect organizational structure or governance model. The bottom line is that a large organization is simply such a complex entity that structuring everything perfectly so that there aren’t any kind of bottlenecks, misaligned incentives, or any duplication of work just isn’t very realistic. If you’ve ever worked in large organization, you’ve certainly come across some of these challenges.

Now, most of these challenges are likely to be worse with innovation than with “business as usual” as, by definition, innovation means introducing changes. And most organizations simply aren’t designed for constant change.

What’s more, businesses are naturally very different from one another. A structure that works for a single product software company probably isn’t ideal for a CPG manufacturer or a house of brands because not only are their industries different, so are the innovations they are going after. So, what works well for some organization probably won’t be ideal for you.

This means that benchmarking and then applying “best practices” likely won’t work too well. Unfortunately, there just isn’t a single correct way to organize innovation.

Exploring the organizational archetypes for innovation

Having said that, there are a handful of common approaches, which we like to call archetypes, that most organizations use as the foundation for their efforts to organize and govern innovation.

Both McGrath and Skillicorn have done an excellent job in presenting many of these approaches, so a lot of credit for the following descriptions goes to them and I’d warmly recommend you read their takes too. Regardless, we’ve summarized their main points and combined them with our own experiences to create the following archetypes.

We’ll next explain each of these briefly, along with a quick summary of the key strengths and weaknesses for each.

External Innovation Organizational Model

No in-house innovation

The first and simplest way to organize innovation is to not do it, or to completely outsource it. Perhaps the most common method here is to simply keep tabs on promising startups and then acquire them, or to have tight collaboration with universities and other research institutions.

While this obviously keeps things simple organization-wise and minimizes fixed costs, it also means that you no longer have control over your own destiny, and are instead reliant on third parties, which puts you in a very vulnerable position long term. Furthermore, in the last decade, we’ve seen a huge inflow of capital to fund startups, which means that valuations for promising startups have skyrocketed and acquiring them on the cheap is simply no longer a very feasible strategy.

Suffice to say, if you want to build an organization that thrives in the long run, I wouldn’t recommend this approach.

Pros

  • Low fixed costs
  • Structurally simple


Cons

  • Lack of strategic control and ability to build the future of the organization
  • Lack of differentiation
  • Reliance on third parties for both execution and especially exploration
  • Acquisition of promising innovations has become expensive

Centralized Innovation Organizational Model

Centralized

Perhaps the most common way large organizations set up innovation is by creating a centralized department that serves the innovation needs of the entire organization including each business unit and support functions, such as IT or HR. This can be a subdivision within R&D, but these days it’s typically a separate cross-departmental unit serving the innovation needs of business units.

Either way, such a unit is quick and easy to set up, and the approach has some other obvious advantages too, such as innovation expertise being built and managed centrally, which speeds up learning, as well as management and reporting being easy to organize.

It’s these advantages that make centralization the obvious choice for many who are just starting out with innovation. This is also an especially common approach for large industrial companies that typically have a strong R&D tradition.

If all of the innovation has to go through a single team, that team will inevitably become a bottleneck for innovation, no matter how skilled or large it is.

However, in the long run, this approach is also one that is likely to significantly limit your innovation potential. The reason is simple: if all of the innovation has to go through a single team, that team will inevitably become a bottleneck for innovation. No matter how large or skilled the team, they’ll never have enough resources. What’s more, this will also disincentivize everyone else in the organization from innovating and that prevents you from creating a true culture of innovation.

Pros

  • Quick, easy, and cheap to set up
  • Dedicated resources for working on innovation
  • Easy to govern, manage, and report on the overall innovation portfolio
  • Centralization can speed up learning


Cons

  • Poor scalability as centralized team will inevitably become a bottleneck for innovation
  • Likely to be pulled into too many projects, which leads to poor execution
  • High risk of degenerating into a support function serving business unit requests instead of strategically building the future of the organization
  • Likely to disincentivize others in the organization from innovating
  • Conflicting interests between business units can make prioritization difficult
  • Typically lack authority to make important, hard decisions

Dedicated Innovation Organizational Model

Dedicated

Popularized by Clayton Christensen as a solution to the Innovators’s Dilemma, dedicated business units for innovation have become increasingly popular in large organizations that are looking for the next stage of their growth. Sometimes these units have proper P&L responsibility, and they might even report directly to the CEO or others in senior management, but at times they can also be innovation labs responsible primarily for testing and piloting new ideas before they are to be integrated into the core business.

Regardless of the particularities, these approaches have some specific strengths, but also clear weaknesses. The good thing is that because the unit is independent, it can usually avoid being held back by the restrictions of the business as usual and can build their talent and approaches from scratch.

If innovation is the job of a select few, it will be incredibly hard to build a pro-innovation culture.

The downside is that they also don’t necessarily play to the strengths that the organization has already built. Without strong and clear leadership, these kinds of innovation efforts are likely to have an equally poor success rate as your average startup – but without the asymmetric upside.

The reason is simple: if you already have hundreds of millions or billions in revenue, most new businesses just don’t move the needle enough – unless they can quickly grow to a massive size or be combined with the strengths and competitive advantages of the core business.

And just like with the centralized model, this model again limits innovation to one part of the organization. As before, that will likely prevent you from creating a true culture of innovation, and thus lead to the unit becoming a bottleneck down the road.

Pros

  • Freedom to operate independently from processes of existing business units, which is essential for trying new things and creating disruptive innovations
  • Ability to hire and organize specifically for innovation
  • If led well, ability to focus on the long-term instead of short-term performance
  • High profile innovation unit can also be used for marketing and employer branding purposes


Cons

  • Conflicts of interest and lack of cooperation between core business and innovation unit likely to lead to politics, tension, and other challenges in integrating innovations into core business
  • Independence and lack of communication between business units might hurt strategic alignment and prevent the innovation unit from benefiting from the existing strengths of the organization
  • Can easily degenerate into a cost center performing innovation theaterwithout a clear strategic focus, strong leadership, and evidence-based processes
  • Likely to disincentivize innovation in other parts of the organization and thus prevent the creation of an innovation culture
  • High initial investment with lots of uncertainty can make the business case for investing in innovation look bad

Embedded Innovation Organizational Model

Embedded

Many organizations have relatively independent business units or product and brand teams, and for them it can often make sense for innovation to be embedded within these units.

Traditional examples of such an approach are companies like P&G and other CPG companies with strong brands. These companies are working hard to keep up to date with evolving trends and consumer needs to innovate and create new products for the consumer. However, the same can also be true for many other kinds of businesses, such as software companies with multiple products.

Depending on the industry and organization, these units might have varying levels of control over their innovations once they are on the market. For example, in CPG companies manufacturing, logistics and many other functions would likely be managed by core business operations instead of this unit.

Pros

  • Better able to focus innovation on things that matter for each business, be they strategic projects or emerging customer needs
  • More control over innovation resources and ability to get talent that meets specific needs
  • Parallelization over different units can increase innovation throughput of the organization overall
  • Easier to align innovation with business needs and plans within the unit
  • The business case for investing in innovation is typically easy to make as you can start from low-hanging fruits that provide immediate value


Cons

  • Innovation likely to be biased towards more applied and incremental projects due to focus on immediate business needs
  • Some efforts may be duplicated between teams, especially if more long-term R&D work is being done
  • Can lead to a silo-effect, extra need to focus on facilitating knowledge transfer between units

Ambidextrous Innovation Organizational Model

Ambidextrous

Our fifth approach is usually referred to as the ambidextrous organization. We’ve  also seen it be referred to as the Hybrid model, and it’s quite a natural evolution from the previous archetypes as it seeks to combine the best of both worlds.

In a nutshell, the idea is that innovation should happen across the organization with existing business units focused on exploiting their current position through incremental innovation, and a separate dedicated unit being responsible for exploring and building the future of the organization through more radical or disruptive innovation.

In the ambidextrous model, existing units use incremental innovation to exploit the current position and new units are set up to explore and build future.

In practice, a new P&L responsible division will be setup for new non-core businesses, and the more incremental innovation will then be organised either as Embedded or Centralized.

If an organization does successfully implement such an approach, it can lead to exceptional long-term performance, but that’s of course easier said than done. For most organizations, this is likely to require a significant transformation, and it can be challenging to get everyone onboard, build the right processes, as well as to align goals and incentives the right way across the organization.

Pros

  • Easier to build a balanced innovation portfolio with both strong short and long-term performance
  • Enables building an innovation-oriented culture across the organization
  • Enough resources for key projects across the organization
  • Makes it easier to communicate the innovation strategy with clear roles and responsibilities for each part of the organization
  • Can customize governance models to meet the needs of different types of innovation in different parts of the organization


Cons

  • Expensive and difficult to build, as well as to maintain
  • Requires clear leadership and a commitment to a transformation from the top
  • Can demotivate innovation-oriented employees that are in the core business
  • Usually requires extensive changes to processes and the re-skilling of managers and employees across the organization
  • While easier than with most other models on paper, prioritization and division of responsibilities can still be challenging in practice

Decentralized Innovation Organization

Decentralized

Our final model is the decentralized approach. If you look at any of the best innovators in the world, be it Apple, Tesla, SpaceX, or Amazon, this is closest to the model they use. None of these organizations has a centralized or dedicated team responsible for all innovation in the organization.

Instead, the organization decentralizes the responsibility for innovation to happen in individual teams (which are typically cross-functional and relatively small) across the organization. Each team is focused on figuring out how they could help the organization better reach their strategic goals, and innovation is just one of the key tools in that process.

If a team (or an individual leader or employee) comes across a big idea that shows promise but would require significant additional investments, they’ll apply for additional resources from management via a quick and streamlined process. If approved, that typically leads to another team being set up to pursue that idea.

This approach is sometimes called the permissionless model due to the significant freedom each team possesses to make decisions affecting their own work. The obvious advantages are that they usually know the problems intimately and have the resources, incentive, and know-how to solve them, and have fewer dependencies to other parts of the organization. That leads to an extremely high pace of innovation and innovation throughput for the organization, which together create a tremendous competitive advantage.

Loosely Coupled vs Tightly Coupled Organization

Having said that, this too isn’t exactly an easy model to implement for most organizations. Typically, this would require a fundamentally different mindset, leadership philosophy, and a significantly higher talent density. For the average organization, that means a full-blown transformation where most fundamentals in the organization would need to change, which of course isn’t feasible for many.

Pros

  • Extremely high throughput and pace of innovation
  • Ability to adapt, re-organize and meet changing demands quickly
  • Strong focus on execution and value creation
  • Clear roles and responsibilities


Cons

  • Would require a fundamental transformation for most organizations
  • Requires strong communication and strategic clarity from management
  • Active management involvement required to remove barriers and to organize teams so that the portfolio remains balanced
  • Requires high talent density across the organization, which can be very challenging to achieve in practice
  • Continuously evolving and rapidly changing landscape might be too intensive for some employees
  • Some work often initially duplicated across teams, but can be managed by creating horizontal support teams

Choosing the right approach for your organization

As you can see, every approach has their benefits, but also their disadvantages.

In our experience, the Hybrid and especially Decentralized are the likeliest approaches to lead to sustained levels of high innovation performance in the 21stcentury but implementing either isn’t exactly a walk in the park for a large organization. If you have the luxury of meeting (or are close to meeting) the prerequisites, these are the models I’d personally go for.

However, for many, that just isn’t the reality. Even if you’re like most organizations and don’t quite have the talent, leadership, or other prerequisites needed for these approaches, I’d keep either the Hybrid or Decentralized approach as your eventual goal to build towards.

Move control and decision-making down in the organization to be able to move faster, make more informed decisions, respond to changes quicker, and to simply innovate more.

However, instead of a major overnight transformation, you should be prepared for a set of smaller, gradual steps that build your capabilities and culture towards that future while solving the current problems with your processes and structures.

Centralization vs Innovation Maturity

While not ideal in theory, in practice the journey towards becoming a mature top innovator typically first leads towards centralization for most incumbent organizations. They need to build their innovation strategy, knowledge and capabilities before they can successfully decentralize and move control and decision-making down in the organization to be able to move faster, make more informed decisions, respond to changes quicker, and to simply innovate more.

With that background, if such an approach is used, it’s crucial that this centralized innovation function understands and embraces their temporary role so that they are willing to relinquish control and power over innovation to others. All too often we see these leaders clinging on to the team, budget and power they’ve built long after it would’ve been in the organizations’ best interest to re-organize.

Best practices for organizing innovation

As we’ve discussed, if you’re planning to make changes to the way you organize innovation, most decisions will depend on your context. Still, there are a few things that are good to keep in mind regardless of the approach you end up choosing. Here’s my top three:

The best innovators continuously evolve

The first, and perhaps the most important point to remember is that the best innovators continuously evolve and improve the way they work. They don’t just pick one organizational structure and go with that forever. Instead, they are constantly looking for ways to re-organize their efforts so that they work on whatever is likely to best help them reach their goals. This is of course one of the fundamental strengths of the Decentralized model but applies to other approaches too.

This is also in line with how the most successful organizations approach re-organizations in general. They don’t just wait until the old structure is burning, they act proactively to position themselves for the future they want to create.

Clear roles and decision-making structures

It’s pretty obvious, but if people don’t know who can make a decision on an idea that they may have, or even who’s responsibility it would fall under, odds are that not a lot of innovation will happen.

The reality is that there will always be some ambiguity and overlap, especially in fast moving environments, but clear roles and decision-making structures are regardless important for an organization that wants to innovate.

If projects or decisions seem to get stuck, or turf battles seem to consistently pop up in your organization, unclear roles and ambiguous decision-making are likely to be the main culprits.

Organize according to strategy and plan for the execution

Again, it might sound obvious, but especially with innovation, the differences can be dramatic. Organization is the link between your strategy and your execution, so make sure it isn’t detached from the realities of what it will take to reach your goals with innovation.

To use a bit of a simplified example, if your strategy is focused on creating new business from emerging disruptive technologies, then the Embedded model probably won’t cut it as your innovators will be kept busy by the priorities from the core business.

How to organize innovation

Plan for the execution, on the other hand means that each team should have the resources and the freedom needed to reach your goals. If, using our previous example, you allocate just a few engineers to the team and then hope that sales will magically turn those technologies into booming businesses, odds are very much against you.

In other words, try to allocate resources so that the team has everything they need to reach their goals. While this sounds super basic, we still see these mistakes frequently when innovation is a bit of an afterthought for management.

Conclusion

As is probably evident by now, no structure or approach to governing innovation is ever going to be perfect, at least for long. As your goals change or your business and industry keep evolving, you will need to change and evolve too.

Even though organizing innovation doesn’t seem to get the same kind of attention as innovation strategy or culture, it’s extremely important, nevertheless. Get it wrong, and it will be almost impossible for your organization to succeed at innovation. Get it right, and you’ll at the very least have a realistic shot at that.

Hopefully this article has provided you with more thoughts on the topic, and some views on what to do and not-to-do.

This article was originally published in Viima’s blog.

Image credits: Unsplash, Viima, Nick Skillicorn

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Discipline Has a Role in Innovation

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Discipline Has a Role in Innovation

GUEST POST from Jesse Nieminen

Innovation is, without a doubt, a creative endeavor. However, many people still think it’s all about creativity. There’s a magical a-ha moment, and the rest is history.

Well, as we’ve explained before, that’s just not true. Those that have really been trying to innovate know that there is much more hard work than there is fun and games in the process of creating and scaling an innovation.

Thus, discipline plays a huge role in innovation. In fact, I’d argue that discipline is one of the least spoken about, yet most important factors determining whether individuals and organizations succeed at creating innovations.

So, in this article, we’ll dive deeper into the topic and discuss the role discipline plays in innovation to hopefully help you and your organization do a better job at it.

What is discipline?

As a term, discipline is commonly used to just refer to being strong-willed enough to put in a lot of hard work. In other words, self-discipline.

However, if we look at a dictionary, there are a few distinct but connected uses for the word. One refers to it as a branch of science, skill or type of work, another as the practice of regulating the behavior of people in a system, and the third as a synonym for punishing people for undesirable behavior in that system.

Well, innovation is certainly a discipline in the first meaning of the word, but it’s also one that takes a lot of discipline to succeed at, in the second meaning of the word.

“Innovation is a discipline that takes a lot of discipline to succeed at.”

Let’s dive a bit deeper on that second meaning for the word. For our purposes, we can further divide that it into two categories:

  • Self-discipline
  • Organizational discipline

There’s obviously a lot these have in common, but for an organization to succeed at innovation, you need both.

In a nutshell, you need self-disciplined individual willing to put their head down and persist. But you also need organizational discipline to focus on what matters, and to create the incentive structures needed to reinforce all of that.

Why is discipline so important for innovation?

So, with that covered, we can dive deeper into why discipline is so important for innovation and how that happens in practice.

We’ll next cover each of the main points briefly.

Viima Art of Discipline

It takes hard work, persistence, and focus to create an innovation

Because our software is centerer around ideas, we often have to explain that while every innovation starts from an idea, an idea is maybe 1% of the way there towards a real innovation. It still needs development, refinement, implementation, scaling, and so on.

Going through that whole process takes a lot of hard work for pretty much every idea, even if the idea might seem trivial at first. The fact is that by the time you get an idea, hundreds, thousands or maybe even millions of people have probably had the same idea before. Most have just never bothered to implement it, or at least haven’t succeeded at it.

“Every innovator will face plenty of challenges on the way, and there will be plenty of times when things look dire, and you could give up.”

Every innovator will face plenty of challenges on the way, and there will be plenty of times when things look dire, and you could give up. Most do. But to succeed, you need to persevere and persist through these hardships.

To do that, you’re going to need a lot of discipline to avoid potential distractions, keep your head down and focus on what matter.

Trust the process and keep going

If you’ve ever been following a challenging fitness program, you know the feeling when it looks like you’re working your butt off and not making any progress.

The weights feel even heavier than they did the last time. That’s because you’ve been accumulating stress on your body, and it hasn’t yet had the opportunity to respond. Once you get some rest and recover from that stress caused by the exercise, the body will react to the stress and make you stronger.

Innovation takes hard work and trust in the process

Well, the journey is the same with innovation: facing those stressors will feel challenging, but if you don’t give up, that’s what will make both you and the innovation better.

To keep using the same metaphor, if you’d like to run a 3-hour marathon, your fitness program will obviously look very different from if you instead wanted to squat 500 pounds. Similarly, if your strategy calls for incremental innovation, your innovation processes will look very different from those aiming for disruptive innovation, but more on that here.

Regardless, the key in each of these situations is to just trust the process and keep going. Even when things don’t look great. The challenges you face will shape your innovation for the better, and the results will follow – or you’ll run out of money. Regardless, you just need the discipline to persist and stay on track.

While following the process is what will eventually get you there, you of course need to make sure you’re on the right path in the first place, and that is where disciplined thinking comes into play. 

It’s easy to fool yourself without disciplined thinking

Our brain has a natural tendency to take mental shortcuts. We have an ability to recognize patterns and use those to make quick decisions efficiently and thus save energy. In most everyday situations, that ability is obviously very beneficial.

However, with innovation, this is often problematic. It’s these mental shortcuts that lead to many of the root causes behind issues that prevent organizations from innovating. This is perhaps easiest captured in common sayings like “This is how we’ve always done it” and “There’s no way that could work”.

“Our brain has a natural tendency to take mental shortcuts, which is the root cause behind many obstacles for innovation. Disciplined thinking is how you combat that.”

What’s more, if you’re an optimistic person, as most people working on innovation usually are, it’s easy to fool yourself to think that you have created something valuable even when you really haven’t. We often prematurely fall in love with that solution, instead of the problem.

Remaining highly analytical and rational in your decision-making while still being creative and aspirational is a tough combination for any person, or even for a team, to have.

Achieving that balance takes a lot of disciplined thinking. You need to stay grounded in reality, be willing to question yourself, and go back to first principleswhile still relentlessly moving forward. It’s a mindset anyone can learn, but that requires constant discipline to maintain.

Most organizations lack discipline

However, even if you are a good innovator, and have a great team that ticks all the boxes we’ve talked about above, it doesn’t mean that you’re automatically going to succeed.

One of the big barriers for that is the lack of organizational discipline. This is common for both startups and large organizations alike.

The idea is simple to understand. Just like an individual must remain focused to become great at something, so does an organization.

You need to make tough choices to have a clear strategy. That means saying no to a lot of things, so that you can focus on the things that will truly make a difference.

Clear focus and disciplined execution are necessary for innovation

Sometimes you might have to keep investing in these truly strategically important areas, even if there’s no quantifiable ROI in the near term. Again, at the same time, the organization needs the discipline to not think about sunk costs and ruthlessly kill innovation projects that have proven to not be able to live up to their potential to free up resources for the ones that have the best odds of success.

That might sound like a paradoxical combination, and to a certain extent, it is. But that’s what makes it interesting.

On the execution side, you need a lot of discipline to have clear roles and set clear goals so that people have the prerequisites for succeeding, but also leave innovators with enough freedom to explore the best way to reach those goals. Again, that is a difficult combination to achieve. It requires a lot of discipline at all levels of the organization.

In our experience, most organizations just aren’t there yet, even if many individuals within the organization would be, and that is a big barrier for innovation.

As a result, corporate innovators often end up burning out or losing their motivation just trying to navigate the maze of organizational hierarchy for one permission and approval after another before they even get to start working on an innovation. That is a clear sign of an organization that isn’t disciplined – or alternatively has chosen to not innovate.

Discipline in practice

We’ve covered a lot of ground, and most of that has been pretty abstract, so before we wrap up, I’ll share a more practical example with you.

It’s a cliché to use Steve Jobs and Apple as an example for innovation, so I don’t usually like to do that. However, for this specific topic, I think it’s the perfect illustration because people usually see Jobs as this creative visionary and the ultimate ideas guy who couldn’t care less about processes or discipline.

But in fact, the first thing he did when coming back to Apple in 1997 wasn’t to come up with cool new products. It was to introduce a ton of discipline in everything they did and ruthlessly cut back on anything that didn’t truly help them innovate and create better products going forward.

First, he cut 70% of the products the company offered, and as a result, had to lay off 3,000 employees.

Apple's innovations came from following a disciplined process

Jim Collins does a great job summarizing some of the other actions in his book Great by Choice:

“They cut perks, stopped funding the corporate sabbatical program, improved operating efficiency, lowered overall cost structure, and got people focused on the intense ‘work all day and all of the night’ ethos that’d characterized Apple in its early years. Overhead costs fell. The cash-to-current-liabilities doubled, and then tripled.”

That provided Apple with the financial stability needed to invest in innovation and allowed them to focus their leadership and top talent purely on creating new innovations that ended up shaping the future of the company.

Also, from the Walter Isaacson biography of Jobs (which I highly recommend), it becomes obvious how diligent and disciplined Jobs and the rest of the team at Apple were in perfecting every little detail of their products, processes, and even the look of their stores (sometimes to a fault).

Conclusion

To conclude, it takes a lot of discipline to succeed at innovation. That discipline is at least as important as the creativity we usually associate with the term innovation. And, because it’s so underrated, I’d argue it’s the part most of us need to focus on.

After all, it is that disciplined execution of an idea that usually makes the difference between those that succeed and fail.

Thomas Edison did a great job in summarizing discipline when asked about his failed attempts at a lightbulb:

“I have not failed. I have successfully found 10,000 ways that will not work.”

Discipline is, without a doubt, about putting in the work, but there’s a bit more to it than that. It’s also about staying focused and grounded in reality, both of which are well displayed in that quote.

“Being disciplined, both as an individual as well as an organization can be very challenging. The good thing is that it is a muscle that you can develop.”

Even if it might not be immediately obvious, lack of discipline either as an individual or as an organization, is the root cause behind a significant portion of challenges organizations face when trying to innovate.

To be frank, being disciplined, both as an individual as well as an organization, for extended periods of time can be very challenging. The good thing is that it is, figuratively speaking, a muscle that you can develop. Most would-be innovators and leaders just aren’t quite there yet.

If you recognize yourself or your organization from this article, there’s no need to hide that – and there’s nothing to be ashamed of. We’ve all been there. Each of us has areas in our life where we lack discipline, or at the very least, times when we’ve failed to keep that up.

In fact, as an individual or organization, you need to be honest and admit that this is a problem for you. Once you do, you can take steps to address that, and you’ll be much closer to becoming a successful innovator.

This article was originally published in Viima’s blog.

Image credits: Unsplash, Viima

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Scaling Innovation – The What, Why, and How

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Scaling Innovation – The What, Why, and How

GUEST POST from Jesse Nieminen

Given that innovation is responsible for roughly 85% of economic growth, it’s without a doubt a pretty big deal for the success of both individual organizations, as well as for the society at large.

However, to achieve the level of impact that many are looking for from innovation, you can’t simply “create something new”, and then just hope the results will come. You will need to commit to systematically pursuing those results by scaling viable ideas into products or businesses that create value – at scale.

That is of course easier said than done. If you think it’s hard to come up with innovations, just try scaling one up. In this article, we’ll explore the topic in more detail and provide you with actionable tips on how to actually scale an innovation.

What does it mean to scale an innovation?

To explain what it means to scale an innovation, let’s first take a step back and look at the lifecycle of an innovation.

To begin, every innovation starts from a rough idea or concept. Often you may have a specific goal in mind, or a problem to be solved, but sometimes it can just be a cool idea that you think could really make an impact. From there, you first need to validate that the idea makes sense, and then build a product or a service that meets a real need in the market.

With these steps taken care of, the next part is to scale the innovation. At this point, we have all the pieces in place to create value, but we haven’t yet unlocked that value for the vast majority of the available market.

Lifecycle of an Innovation

So, as you may see from the chart above, scaling is the part where most of the value creation and impact comes from. With that said, we can define scaling an innovation as the process of expanding the presence and the use of the innovation to be as widespread as possible to maximize that impact.

Scaling innovation is the process of expanding the presence and the use of the innovation to be as widespread as possible to maximize the impact the innovation can have.

While on paper that sounds straightforward enough, it’s extremely important to first clarify the vision of what successful scaling looks like for your innovation, and what metrics you will use to measure your success here. For some, it might just be revenue or profit, for others it could be the number of customers or users, the impact you’ve delivered, and so on.

Most of these metrics are of course related, but when you start with the end in mind and gradually work backwards from there, you are much more likely to succeed because everyone in the organization will know what it actually is that you’re aiming for.

With that goal in mind, you can start narrowing in on the methods required to get there, which is what we’ll be focusing on next.

Dimensions of scaling an innovation

Traditionally, scaling innovation is seen as a matter of advancing the adoption, or the diffusion, of innovation. This is best visualized with a chart depicting the adoption curve, which you’ll find below.

Technology Adoption Lifecycle

The idea is that to scale an innovation, you need to cross that chasm and go from a few early adopters to the mainstream market where the volumes are significantly higher.

While that is certainly true, we can dig a bit deeper to understand scaling in a more nuanced, and more practical, way.

In reality, there are three dimensions to scaling an innovation.

Dimensions of Scaling Innovation

Let’s look at each of them a little closer.

Scaling Up

First, scaling up is about creating the preconditions for scaling effectively.

Before we start talking about scaling up, we’ll assume that the basic prerequisites for scaling are in place, namely that there’s a clear vision and a product-market fit for your innovation, and that the market potential is large enough for there to be something to scale to, even if the market isn’t there today.

Assuming those prerequisites are there, you need to ensure that:

  1. you can produce enough of the innovation to scale
  2. you can do that efficiently enough to be financially and operationally viable

For some products, such as software and other immaterial goods, that first part is pretty straightforward. For others, such as most complex manufactured goods, even the first one will be a real challenge.

Having said that, the second part of being efficient enough will prove to be a challenge for virtually every innovation. Even for a software product, acquiring, serving, and retaining customers profitably at scale is often more difficult than people realize. For other, fundamentally less scalable goods and services, this is often excruciating.

In addition to these two more practical aspects, there’s a third and more ambiguous component to scaling up, and that is the social and institutional adoption of the innovation.

How well you scale up affects how large of a scale you can ultimately reach.

For example, with an innovation as mundane as the modern umbrella, men who used it were initially ridiculed. So, before the umbrella could really take off as an innovation, societal norms needed to change. In other cases, there may be regulatory hurdles or other institutional considerations that might need to be addressed before an innovation can ultimately scale.

Regardless of the specifics, scaling up is necessary for every innovation that wants to reach significant scale.

However, what many people don’t pay enough attention to is that how well you scale up affects how large of a scale you can ultimately reach. If you can’t produce the goods at volume, and at low enough of a price while still being profitable at a unit economics level, there’s an obvious limit to your potential to scale.

Scaling Out

Scaling out is what most people think of when it comes to scaling an innovation. It’s the geographical or demographical expansion of the innovation to a larger audience.

In its simplest form, scaling out simply means getting a wider market share and audience for the innovation within an existing market. As we covered earlier, this typically means moving from those early adopter market segments towards the mainstream.

Scaling out is what most people think of when it comes to scaling innovation as it’s where you expand the innovation to a larger audience.

However, it doesn’t have to be limited to just that. Sometimes the same products or services can be sold and used in other geographical areas, or even in other industries or entirely different use cases, both of which unlock new markets and additional demand, and thus lead to a larger impact for the innovation. A well-known example of this is Tesla using their experience and innovations in electric car batteries to expand to stationary energy storage.

Paths for Scaling Out

Regardless of which path you choose, often these efforts to scale out to new segments or industries do require additional work to adapt the innovation or its positioning to the differing characteristics of these new segments, markets, and audiences.

Scaling out to new market segments can increase complexity a lot, so be mindful of the operational implications of your strategic decisions here.

This naturally adds complexity, which makes the scaling up part we covered earlier more challenging. So, be mindful of how you scale out and what the operational implications of your strategic decisions here will be.

Scaling Deep

The third, and the least well-known method for scaling innovation is scaling deep. This essentially means that you unlock more impact for your innovation by expanding and maximizing the use of it, typically for the people who already have access to it.

This usually requires you to either change people’s behavior to increase usage, or alternatively come up with innovative means for improving the utilization rate by enabling more people to make use of the same assets. Scaling deep is partly a matter of culture and mindset, and partly a more practical matter of having the right components in place for enabling and encouraging active use of the innovation.

Social Media

A classic, albeit somewhat controversial example of the first type would be social media algorithms. They are designed to provide users with engaging content to keep them entertained and thus stay in the service for longer, which leads to more revenue from the same number of users.

An example of the second type would be cloud computing. By adding network, virtualization, and software layers on top of the computing hardware, cloud providers can get more use out of the same hardware, which unlocks value for both the service provider and the customers.

This is how Amazon not just significantly reduced costs in one of their major cost centers, IT infrastructure, but actually turned that into Amazon Web Services (AWS), an additional growth business that now accounts for the majority of the profits for the entire organization.

Scaling deep is about unlocking more impact for your innovation by expanding and maximizing the use of it. This can help reduce the need to scale up or out, or alternatively maximize the impact from doing so.

Scaling Deep can reduce the need to scale up or out, or alternatively, maximize the impact from doing so. As such, it’s an excellent compliment for most innovations. However, it’s just that: a compliment. Your primary method of scaling should always be either to Scale Up or Scale Out depending on whether your bottleneck is more on the supply or demand side.

Even in the case of AWS, which has created entirely new vectors for scaling out and has dramatically subsidized their costs for scaling up, it obviously wouldn’t have been possible without Amazon already being at significant scale.

What’s the takeaway? These dimensions are distinct but very much intertwined.

If you can scale on all three of these dimensions in a coordinated way, you will not only be much more likely to achieve significant scale with your innovation in the first place, but also maximize the potential for scale and impact from those efforts. If you build momentum on one of the dimensions, some of that momentum will carry over to the other dimensions, which again helps you accelerate change going forward.

As such, pay attention to each of these dimensions and try to consider all of them in your plans to scale innovation. That doesn’t mean you should focus on all three from the get-go, on the contrary, but planning with the big picture in mind can allow you to make much more educated decisions.

Scaling innovation in practice

As we’ve established above, there unfortunately isn’t a one-size fits all solution to scaling innovation.

Achieving breakthrough success with an innovation, which is the goal of scaling innovation, always requires many related and adjacent (usually more incremental) innovations.

This is an extremely common pattern that you will see happening over and over again if you just start paying attention to it. Square co-founder Jim McKelvey has done a great job in describing that in more detail in his recent book called the Innovation Stack.

A well-known example is the lightbulb. Edison patented his famous design back in 1879, but most households didn’t yet have access to electricity, so it wasn’t something they could benefit from. It took countless other innovations and another 45 years before even half of US homes had one, even though the benefits were obvious.

In practice, scaling an innovation is simply an iterative and exploratory process where you focus on eliminating whatever bottleneck is preventing you from scaling, one by one. And, as we saw in the example of the lightbulb, sometimes these can be much bigger and more fundamental than you may think at first.

Process of Scaling an Innovation

Often you can just copy solutions other people have already used for the same or a similar problem (which you should always go for if you can), but many times you will also need to innovate something completely new and occasionally even go beyond your core product.

With that said, there are some common patterns that can be helpful for structuring your thinking when faced with some of these bottlenecks. However, as each innovation is ultimately new, and thus unique, these won’t necessarily fit every case.

Having said that, we’ll share one framework for each dimension of scaling below. We’ve also created a toolkit that includes the frameworks as editable templates, along with some examples and other supporting material, which you can download here.

Overview of Scaling in Practice

Demand side

For most organizations and innovations, the demand side is likely the source of most bottlenecks.

The way we see it, this is not just about drumming up interest and demand for your product, but also about making sure that it fits the needs and budgets of the buyers in your market. And of course, you need to make sure you’re in a market, or at least one that has the potential to become, large enough to accommodate your scaling efforts.

Unlike what people often think, product-market fit isn’t enough for a business to be scalable. You also need to have the right business and operating models, as well as use the right channels.

In other words, scaling out isn’t just about product-market fit, as people often mistakenly think. You also need to have the right business and operating models and use the right channels. Brian Balfour has written an excellent five-part series about this, which I highly recommend you read.

Product-Market-Model-Channel Framework

The basic idea is pretty simple: your business needs to align all of these aspects in a cohesive manner to be able to scale. If even one of them is wrong, growth will feel like, as Balfour puts it, “pushing a boulder uphill”. It will take way too much capital, effort, and time. However, get the four elements right together, and the growth will come naturally.

What’s important to understand here is that the model isn’t a static picture you just do once. If the market changes, or you run into challenges that force you to change one of these elements, you’ll need to review each element and make sure the big picture still works.

Supply side

For some products and businesses, especially those with physical products, the supply side often becomes a key consideration.

Here, the bottlenecks can be extremely varied, and dependences on external suppliers can lead to challenges that are hard to overcome.

In general, what top innovators do differently from the rest of the companies is that they almost always vertically integrate their value chain as they are working towards scaling up.

There are many benefits to this approach, such as reduced overhead, but the key differences are in increased quality, and most importantly, the company’s ability to control their own destiny and innovate more freely because they’re not being constrained by their supply chain.

Top innovators vertically integrate their value chain to address bottlenecks and turn cost centers into additional sources of growth and profit.

The classic example is Apple, and the way that they control both the hardware and software of their products. In recent years, they’ve been increasing that integration in both directions. They’re moving upstream to offer more services on top of their operating systems, as well as downstream by designing their own processors, which has provided them with a big performance advantage.

Apple vertical integration

However, there are many others. Amazon, Microsoft, Tesla, Google, Netflix, Nvidia, and pretty much every innovative company is trying to do the same in the scope of their own business.

The basic idea is again simple: if a part of your supply chain becomes a major bottleneck, or is a major cost center, you should try to take control of those parts to address the bottlenecks and turn cost centers into additional sources of growth and profit, just like Amazon has done with AWS, but also warehousing and shipping.

That isn’t to say that vertical integration wouldn’t be challenging or have downsides. It certainly is and does. Because of these limitations, it’s generally advisable to only vertically integrate to the parts of your supply chain that either are a clear bottleneck or could become a key competitive advantage for you. However, top innovators often have little choice but to take these steps if they want to move fast enough and have enough control to be able to scale their innovation to its full potential.

Vertical Integration

Another key consideration on the supply side is simply the architecture of your products and services, and the process you have for delivering them. It’s obviously much easier to have a scalable architecture and automated processes for purely software or content focused businesses, but how you craft these does  play a huge role for complex physical products too.

This is again a very extensive topic on its own, but the goal should be to try to make the manufacturing, delivery, and service of your products as seamless and scalable as possible. As with everything else we’ve discussed so far, this too is an iterative process.

However, to provide you with a slightly more practical framework to get started, here’s Elon Musk explaining how he’s learned to approach this topic after his early struggles of trying to do that with the extremely complex products at SpaceX and Tesla.

While Musk specifically talks about the process in the scope of engineering for scale, these same principles also apply to your organization and internal processes too.

And, as Musk explained in the video, it’s easy to get tempted by the promises of optimizing for efficiency and automation, but if you haven’t addressed the big picture first, these will often end up just being a big waste of time and money.

So, make sure to start by first eliminating those unnecessary requirements and parts or tasks, and try to simplify the design before you focus too much on optimizing for efficiency and automating.

Process of Engineering for Scale

Utilization

In addition to supply and demand, we still have the third dimension of utilization to cover. The idea with this “scaling deep” part is to find creative ways to make the most out of existing supply to either unlock new demand, maximize the utilization of those assets, or simply to increase your customer retention by finding ways to get more value for them from your products.

As you may have guessed by now, the specifics vary quite a lot on a case-by-case basis, but the flowchart below can hopefully serve as a starting point for your efforts in this area.

Pathways for Scaling Deep

To summarize, there are three common paths you may take here.

The first is to find ways to increase the usage of assets that are only being used a fraction of the time through practices such as asset sharing and virtualization.

The second is to move from one-off purchases to a subscription to eliminate friction and increase the usage of the services.

The third is to find additional ways to expand the use of the product. This is usually done either by finding new value-adding uses for the same product, or simply by activating usage through means such as improved quality, usability, better communication etc.

However, sometimes it might even be necessary to work around tougher and more pervasive issues, such as regulatory considerations or even the changing of societal norms.

While increased utilization isn’t often that glamorous or exciting, it can really make a difference in making your business and operating models efficient enough to allow you to scale volume faster and more sustainably.

Conclusion

Scaling an innovation won’t be easy. It will always take years, and an endless amount of hard work with an extreme focus on solving each and every bottleneck standing in your way.

Hopefully you’ll find some of the frameworks and playbooks we’ve introduced in this article useful for shaping your thinking, and for building your organization and processes, but you’ll inevitably come across plenty of challenges where you’ll just need to figure out the solutions yourself. Still, if you want to truly succeed with innovation, that’s what you’re in for.

So, be prepared for those challenges, and be realistic with your expectations and timelines. For example, the “growth gap” can easily sneak up on your organization if top management has unrealistic expectations for the financial returns of innovation.

In general, large organizations have some disadvantages, but they also have huge advantages when it comes to scaling an innovation, so look for ways to leverage those advantages to your benefit.

And finally, make sure to surround yourself with top talent that’s prepared for the ride. Scaling innovation is teamwork, and it takes a special kind of a team to pull it off. You need people that are used to constant change, have a growth mindset, and the skills needed to solve whatever problems your domain may have.

As mentioned, scaling innovation is a journey that happens in small increments, and at times, it will feel frustrating. But if your team persists, keeps on learning and solving problems, you can eventually close in on whatever the full potential of your innovation is.

Image credits: Pexels, Viima

This article was originally published in Viima’s blog.

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Lead Innovation, Don’t Manage It

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Lead Innovation, Don't Manage It

GUEST POST from Arlen Meyers

Chief Innovation Officers are growing like weeds. Some think their job is to manage innovation.

Some even go so far as to define their desirable traits.

Here is yet another article on how to manage innovation.

Here are some ideas on what it takes to be an innovation manager.

You can tell the CHINOs (Chief Healthcare Innovation Officer) in your office by the chinos and polo shirts they wear. But, just because they wear the same uniforms doesn’t mean they think and work the same. You see, there is no CHINO school.

They might as well quit since managing innovation will take them in the wrong direction. Instead, they should be leading innovators. Here’s why:

1. Everyone seems to have a different definition of innovation. Be sure you are leading people who have the same understanding and objectives.

2. Managing innovation implies that the core competence of an innovative enterprise is their system or culture. While that is important, successful innovation comes from living, breathing humans who innovate or try to repeatedly despite big obstacles.

3. Managing is about optimizing the efficacy and efficiency or resources. Entrepreneurs or intrapreneurs, some of whom are innovators, pursue opportunity with limited resources with the goal of creating user defined value through the deployment of innovation.

4. Leaderpreneurs are different than managers and have a different role. They provide vision, direction and inspiration. Unfortunately, most “leaders” provide motivation, not inspiration. Here are the differences:

  1. External vs. Internal: The first key difference is while motivation is typically accomplished through external factors, inspiration is an internal force. Wayne Dyer puts it this way: “If motivation is when you get hold of an idea and carry it through to its conclusion, inspiration is the reverse. An idea gets hold of you and carries you where you are intended to go.”
  2. Duration and Effectiveness: Since inspiration is an internal force, it lasts longer and is more effective. Motivation, particularly when connected to a system of external rewards, is only effective as long as you are able to keep the system of rewards consistent. Inspiration has deeper roots; its influence sticks with you and propels you further than mere motivation can.
  3. People’s Responses: People respond to inspirational leadership exponentially better than they do to compensation or coercion. People are always more eager to do something when it is an idea they feel connected to and invested in. While external forces can be a key motivator, people will react far better to a personal investment.

The goal is to release the innerpreneur, not use carrots and sticks.

5. Managing is about preserving or building the status quo. Innovating is about making the status quo obsolete.

6. Managers rarely assume the roles of intrapreneurial sponsors. Leaderpreneurs have to to be successful.

7. Managers get in the way by controlling. Leaderpreneurs get out of the way by inspiring.

8. Leaderpreneurs create innovation management systems that can be scaled with the goal of making themselves obsolete as quickly as possible. Managers create systems to protect their jobs.

9. Leaderpreneurs organize chaos and serendipity. Managers strive to standardize.

10. Managers think short term costs. Innovation leaderpreneurs measure things as longer term investments.

A recently released Conference Board report showed a strong link between leadership and innovation. The authors identified nine behaviors that are key to getting results:

  1. Leaders jointly created a vision with their colleagues.Some have thought leadership to be about coming up with a grand strategy, and then enticing the troops to follow you up the hill. But our data showed leaders creating a vision collaboratively, not in a directive manner.
  2. They build trust. We interviewed leaders who were in the top 1% of their organization on creativity. One quality stood out. These leaders trusted their people and in turn their colleagues had an enormous trust in them. One person noted, “To take a risk demands that you feel really safe.” “She always has our back,” said another.
  3. Innovation champions were characterized by a willingness to constantly challenge the status quo.People described innovative leaders as fearless and doing what’s right versus what may be politically correct. Some highly effective leaders of innovation were characterized as being “inverse to the environment.”
  4. Leaders who fostered innovation were noted for their deep expertise.Colleagues noted that it was this “T” quality that defined these leaders. These leaders had a wide range of intellectual curiosity on a horizontal axis, while at the same time were grounded deeply in their knowledge of the technology at the center of what their group did.
  5. They set high goals. Leaders who created innovative teams were noted for setting the bar extremely high, and giving their colleagues the challenge and opportunity to achieve what they believed would be beyond their reach.
  6. Innovative leaders gravitate toward speed. These leaders move at a quick pace. They believe things can be accomplished sooner, not later. They gravitate toward the quick prototype that is put together with duct tape and paper clips in one day over a more perfect result they could create in six months. The graph below shows 360 results for 57,113 leaders who were rated on their speed of execution and their ability to innovate. Note that leaders who move slowly are on average rated at the 12th percentile on their ability to innovate while those who are in the top 10 percent are at the 89th percentile.
  7. They crave information. Innovative leaders keep the team on the same page by flooding them with relevant facts. They excel at asking good question and then being exceedingly good listeners. The combination of “catch and pitch” helps the team to excel at innovation.
  8. They excel at teamwork. The next characteristic of the most innovative leaders was excelling at teamwork and collaboration. It was never about “me.” It was always about the team creating something of value.
  9. They value diversity and inclusion. The most innovative leaders recognize that the creative process feeds on bringing people together who possess sharply differing views and experience. It is the blending of these elements that creates highly innovative solutions.

Here are five strengths of innovative leaders.

Here are some other thoughts on what it takes to lead innovators.

In general,  successful innovators primarily focus on four areas: creating a vision, building an organization that can achieve that vision, leading and empowering their team to succeed in that, as well as ultimately adapting their approach based on what they’ve learned along the way.

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Here are 10 tips on how to create a lead successful innovation teams.

One author noted that “the first step in creating meaningful, long-term, sustainable innovation in any organization is to recognize that cultures cause outcomes.  And if this is true, bad cultures will cause bad outcomes. And if this is true, it further follows that bad leadership causes bad cultures, which in turn cause bad outcomes.”

Harvard Business School Professor Gary Pisano reminds us , though, that the innovation culture must balance easy to like behaviors with some that are less fun and designed to address the main dysfunctions of teams: an intolerance for incompetence, rigorous discipline, brutal candor, a high level of individual accountability and strong leadership.

There are many myths about organizational innovation cultures and how to create them. The truth is that cultures are the result of innovation strategy, structure, processes and people, not the cause. They are created by organizational leaders.

Another problem is that traditional approaches to leadership development no longer meet the needs of organizations or individuals and personal learning clouds are filling the gaps.

Innovation is not a nebulous concept tucked some where in a strategic plan. Like any combat team, it has a face, a heart and a soul and needs to nurtured and led, not managed. In the end, it’s the people, stupid.

Image credit: Pexels

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The Integration of Lean Startup Principles in Innovation Management

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The Integration of Lean Startup Principles in Innovation Management

GUEST POST from Art Inteligencia

In today’s rapidly evolving business environment, the integration of Lean Startup principles into innovation management is no longer optional – it’s essential. This approach equips companies with the flexibility and responsiveness required to manage uncertainty and drive sustainable growth. Lean Startup principles, characterized by build-measure-learn feedback loops, minimum viable products (MVP), and pivoting, align seamlessly with the objectives of innovation management. They enable organizations to validate ideas quickly, minimize waste, and focus on delivering customer value. Let’s delve into how these principles can revolutionize innovation management, supported by a couple of compelling case studies.

Case Study 1: Eric Ries and the Birth of IMVU

Eric Ries, the author of The Lean Startup, not only coined the term but also successfully applied these principles to co-found IMVU, a social entertainment company. Here’s how IMVU illustrates the power of Lean Startup principles in innovation management:

  • MVP Development: IMVU started with a basic version of their product that allowed users to create avatars and chat with each other. This MVP tested the market without heavy investment in unnecessary features.
  • Build-Measure-Learn: The team continually iterated on their product based on customer feedback, measuring user engagement metrics, and learning what truly resonated with their audience.
  • Pivoting: IMVU initially targeted instant messaging users but discovered through experimentation that their product had more potential as a social network. This pivot allowed them to realign their strategy to better meet market demands.

By embedding Lean Startup principles into their innovation management process, IMVU was able to conserve resources, rapidly adapt, and achieve market success.

Case Study 2: General Electric’s FastWorks

Transitioning from a startup to a well-established organization, General Electric (GE) offers another compelling case of integrating Lean Startup principles. Through their FastWorks program, GE revolutionized its approach to innovation.

  • Cross-Functional Teams: GE formed dedicated FastWorks teams comprising members from diverse functions. These teams were empowered to rapidly experiment and iterate.
  • Customer Validation: GE encouraged direct interaction with customers early in the development process. One notable success was the development of the energy-efficient industrial dishwasher. By involving customers from the outset, GE identified and addressed key pain points effectively.
  • Metrics for Learning: Instead of focusing on conventional financial metrics, GE emphasized validated learning and customer feedback to guide product development.

GE’s FastWorks initiative underscored the potential of Lean Startup principles in large enterprises, promoting agility, customer focus, and continuous improvement.

Best Practices for Integrating Lean Startup Principles

  • Embrace Uncertainty: Foster a mindset that views uncertainty as an opportunity for learning rather than a risk.
  • Create Cross-Functional Teams: Ensure diverse perspectives and skills are represented to enhance creativity and problem-solving.
  • Prioritize Customer Feedback: Implement mechanisms to gather and act on customer feedback continuously.
  • Iterate Continuously: Develop a culture that encourages rapid experimentation and learning from both successes and failures.
  • Measure What Matters: Focus on metrics that indicate customer value and learning rather than just financial performance.

Conclusion

The integration of Lean Startup principles in innovation management is transformative, enabling companies to navigate uncertainty, respond to customer needs rapidly, and drive sustainable growth. Whether you are a startup or a large enterprise, these principles provide a robust framework for fostering innovation and achieving long-term success. By learning from the successes of IMVU and General Electric, organizations can better equip themselves to meet the dynamic challenges of today’s business environment.

Bottom line: Futurology is not fortune telling. Futurists use a scientific approach to create their deliverables, but a methodology and tools like those in FutureHacking™ can empower anyone to engage in futurology themselves.

Image credit: Pixabay

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Scaling-up, the next frontier for innovation organization

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Guest Post from Nicolas Bry

How to transform innovative bottom-up initiatives into a movement spread across the company? How to scale your innovation program widely? Here are a few lessons learned from creating innovation programs in Europe, and tweaking them to Africa and Middle-East contexts.

Leveraging local and global innovation

Supplementing wisely central techno-pushed innovation with local innovation, closer to the fields and to the user needs, opening new windows of opportunities, is the goal of the open and local innovation approach developed for Orange Africa.

The purpose is to balance the technical expertise from a central innovation division, with the possibility of bottom-up initiatives, experimenting locally up to 100 innovative solutions every semester with the circa 20 countries where Orange operates in Africa and Middles-East.

The local innovation focus is on agility, pragmatism, and value created for the users and for Orange business, while leveraging a key technological asset that Orange can bring to the innovative service.

Smartphone Noir

One emblematic story is the birth of Orange Money, a mobile money service solving the problem of money transfer and payment for unbanked people. The idea was born in Kenya, and it clearly could not have emerged in Europe where everyone is banked, even kids! Orange developed centrally a platform capable of supporting all African countries in their progressive roll-out over 18 countries: ten years later, 50 millions users signed in for Orange Money. Furthermore, the central Orange Money platform enables local developments blossom, tailored to each country needs, and being picked-up, and replicated from one country to another over the region.

This is probably the most brilliant innovation of Orange over the decade, still no cutting-edge tech embedded: it’s low tech (SMS). As it solves a real user problem, it transforms people’s life, and got a massive adoption rate.

Orange Money map

Conducting short experiments in connection with business units

I created Orange intrapreneurship program 5 years ago, with a view to help innovative ideas transition more fluently into business, with the help of a sponsoring business unit, and to open the innovation doors to every Orange employee, letting them benefit from a tunnel of goodwill around their idea. The program acted like an innovation center of expertise or incubator. It clearly involved the business units very upstream: I’m a strong believer in co-developing innovations that create opportunities for business units, giving them a competitive advantage or solving one of their problems. “Find out the business unit problem that your innovation is solving”, I kept saying to the innovators I mentored!

Now we are adapting the process for the 20 countries of Orange Africa taking into account contextual particularities. We keep the employees participation and the business unit ownership aspects, but we also try to test refinements on the exploration stage. The key here is to conduct innovation exploration with short experiments in connection with business units:

  • achieving quick business wins with innovative process improvement, impacting internal organization, and not only new product and services: for instance, streamlining the authentification process for new customers;
  • mixing employees and business representatives with startups that help experimenting quickly; this has been pioneered by Orange Belgium, and these teams are called innovation squads like in the Spotify vocabulary;
  • keeping the process nimble, in a stretched time frame of a few weeks, so as to conduct a high number of experiments, confronting mock-ups to users, and collecting a maximum of users’ feedback, finding The Right IT before any product development.

Our target is to build proximity with our target users, rather than falling in love with our product, to explore and conduct short experiments, and pave the way to exploitation capitalizing on users’ feedback.

Personne Pointant Sur Un Appareil Photo Noir Et Gris Près De Macbook Pro

Designing innovation program, boosting innovation community

I’ve been through 10 steps to design an corporate entrepreneur program in my book The Intrapreneurs’ Factory. These 10 milestones are also an appropriate framework to design the innovation process with the countries of Orange Africa.

10 steps

It’s important first of all to define the reason why you start the program, what problem you’re trying to solve, what goals and KPIs will make the management team satisfied if they are reached. Then, some delicate gates are:

  1. Finding out the right sponsor, both visible and accessible; sometimes a deputy sponsor can compensate a lack of avaibility!
  2. Involving the business side soon enough in the process to trigger ownership, and  further facilitate the exit, aka the transition from exploration to exploitation;
  3. Closely coaching the process along the way, sharing the innovation tools from design thinking and lean start-up, bespoke tools to design mock-ups, and conduct experiment, but also the very peculiar mindset of the successful innovator: flexible and stubborn at the same time as says Jeff Bezos, as the key relies in the management of iteration in short cycles.

To operate this innovation process, we move together with a community of 20 staggering innovation champions, representing the countries of Orange Africa. Not only we discuss the innovation process to test locally, but we share view on innovation organization, and share success stories during a weekly Radio Innovation.

Radio Innovation

Weekly Radio Innovation also puts forward tremendous testimonials to inspire the innovation community:

  • from innovation managers and communities connected to Africa:  Seedstars startups competition and programs for African entrepreneurs; Make Sense Africa incubator and the Dakar Citylab; Norrsken Kigali innovation hub, the startups gateway to East Africa; YUX Design Agency from Senegal, validating innovation ideas with users; innovation in the informal sector in Africa with GoodPoint/Archipel-co.com; Total Africa open innovation in Chad; Entrepreneurship Communities for innovation in Africa, with Archipel&Co and Africa Farmers Club; Liferay digital platform, and an Africa’s approach to tech and innovation; Innovation in Africa with Vodafone;
  • from startups growing their business in Africa: cloud telephony for SMEs, with Mteja from Kenya, and AfricaTalks; South-African MFS Africa: moving money across countries with one API that makes Africa look like one country; Kenya Pezesha loan marketplace for small African businesses; Chari.ma from Morocco, market place for local businesses; African startups investment report by Briter Bridges;
  • from Orange collaborators illustrating the group assets: Orange Ventures Africa seeds challenge; Social listening with Orange Data Studio in Guinea; Orange Fab Belgium innovation squads; Orange Senegal design thinking toolbox; Orange Slovakia  open innovation; Orange Amman innovation team; First 100% digital mobile offer Flex by Orange Polska; Orange Romania innovation ecosystem, and cooperation with startups;
  • from broader innovation experts: innovation community management at Gefco; Booster incubation studio at Total; innovation in the energy industry, Innovation Vesta Wind Systems; collaborating with startups through the Venture Client Model, by 27pilots.

For these innovation champions in charge of setting-up an organization for innovation in their country, the challenge is to seek for integration (integrating seamlessly innovation with the business) before seeking for success. These mind-boggling testimonials feed them, upgrade their skills, and consolidate their innovation culture.

Scaling-up innovation oragnization

Once the innovation program gets traction, the next step is about scaling-up the approach, engaging progressively all participants. If all Orange countries commit to the innovation process in Africa, that will lead to the tremendous portfolio of 100 creative solutions experimented per semester, 200 on a yearly basis on the regional footprint: what a eye-catching achievement!

At the innovation project level, one can use the scale-up canvas to check whether the project is ready to grow, and move from a start-up to a scale-up stage.

At the program level, Is your innovation organization resilient? is the topic of a short assessment I have designed to know how your innovation organization fare across 10 key areas, and cements its resilience. Whether you are leading open innovation, internal innovation, participative innovation and intrapreneurship, digital factory or disruptive labs, you will learn from this tool which works like an innovation calculator, it’s actually quite fun to run it! To start, click here, see how you rank, and get pieces of advice for improvement.

Image credits: Pexels.com 1, Pexels.com 2

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How can I create continuous innovation in my organization? – EPISODE TWO – Ask the Consultant

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Live from the Innovation Studio comes EPISODE TWO of a new ‘Ask the Consultant’ series of short form videos. EPISODE TWO tackles the second most commonly asked question of me:

“How can I create continuous innovation in my organization?”

Hint: It starts with getting a copy of Stoking Your Innovation Bonfire because I detail in the book how to overcome the key barriers to innovation.

Together in this episode we’ll explore how to create continuous innovation in your organization, why I wrote Stoking Your Innovation Bonfire, and how it can make a great course book for innovation courses at universities, executive education, and corporate training programs.

“Innovation is never easy — and not always welcome. This book is dedicated to the men and women who dedicate their lives to pushing our organizations to make more efficient use of our human capital and natural resources and to make the world a better place.”

Grab a great deal on Stoking Your Innovation Bonfire on Amazon while they last!

What question should I tackle in the next video episode of “Ask the Consultant” live from my innovation studio?

Contact me with your question

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Below are the previous episodes of ‘Ask the Consultant’:

  1. EPISODE ONE – What is innovation?
  2. All other episodes of Ask the Consultant


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Get Social with Your Innovation

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Get Social with Your InnovationIf your organization is struggling to sustain its innovation efforts, then I hope you will do the following things.

  • Find the purpose and passion that everyone can rally around.

  • Create the flexibility necessary to deal with the constant change that a focus on innovation requires for both customers and the organization.

  • Make innovation the social activity it truly must be for you to become successful.

If your organization has lost the courage to move innovation to its center and has gotten stuck in a project – focused, reactive innovation approach, then now is your chance to regain the higher ground and to refocus, not on having an innovation success but on building an innovation capability. Are you up to the challenge?

There is a great article “ Passion versus Obsession ” by John Hagel that explores the differences between passion and obsession. This is an important distinction to understand in order to make sure you are hiring people to power your innovation efforts who are passionate and not obsessive. Here are a few key quotes from the article:

“The first significant difference between passion and obsession is the role free will plays in each disposition: passionate people fight their way willingly to the edge to find places where they can pursue their passions more freely, while obsessive people (at best) passively drift there or (at worst) are exiled there.”

“It’s not an accident that we speak of an “object of obsession,” but the “subject of passion.” That’s because obsession tends towards highly specific focal points or goals, whereas passion is oriented toward networked, diversified spaces.”

More quotes from the John Hagel article:

“The subjects of passion invite and even demand connections with others who share the passion.”

“Because passionate people are driven to create as a way to grow and achieve their potential, they are constantly seeking out others who share their passion in a quest for collaboration, friction and inspiration . . . . The key difference between passion and obsession is fundamentally social: passion helps build relationships and obsession inhibits them.”

“It has been a long journey and it is far from over, but it has taught me that obsession confines while passion liberates.”

These quotes from John Hagel’s article are important because they reinforce the notion that innovation is a social activity. While many people give Thomas Edison, Alexander Graham Bell, and the modern-day equivalent, Dean Kamen, credit for being lone inventors, the fact is that the lone inventor myth is just that — a myth, one which caused me to create The Nine Innovation Roles.

The fact is that all of these gentlemen had labs full of people who shared their passion for creative pursuits. Innovation requires collaboration, either publicly or privately, and is realized as an outcome of three social activities.

1. Social Inputs

From the very beginning when an organization is seeking to identify key insights to base an innovation strategy or project on, organizations often use ethnographic research, focus groups, or other very social methods to get at the insights. Great innovators also make connections to other industries and other disciplines to help create the great in sights that inspire great solutions.

2. Social Evolution

We usually have innovation teams in organizations, not sole inventors, and so the activity of transforming the seeds of useful invention into a solution valued above every existing alternative is very social. It takes a village of passionate villagers to transform an idea into an innovation in the marketplace. Great innovators make connections inside the organization to the people who can ask the right questions, uncover the most important weaknesses, help solve the most difficult challenges, and help break down internal barriers within the organization — all in support of creating a better solution.

3. Social Execution

The same customer group that you may have spent time with, seeking to understand, now requires education to show them that they really need the solution that all of their actions and behaviors indicated they needed at the beginning of the process. This social execution includes social outputs like trials, beta programs, trade show booths, and more. Great innovators have the patience to allow a new market space to mature, and they know how to grow the demand while also identifying the key shortcomings with customers who are holding the solution back from mass acceptance.

Conclusion

When it comes to insights, these three activities are not completely discrete. Insights do not expose themselves only in the social inputs phase, but can also expose themselves in other phases — if you’re paying attention.

Flickr famously started out as a company producing a video game in the social inputs phase, but was astute enough during the social execution phase to recognize that the most used feature was one that allowed people to share photos. Recognizing that there was an unmet market need amongst customers for easy sharing of photos, Flickr reoriented its market solution from video game to photo sharing site and reaped millions of dollars in the process when they ultimately sold their site to Yahoo!.

Ultimately, action is more important than intent, and so as an innovator you must always be listening and watching to see what people do and not just what they say. Build your solution on the wrong insight and nobody will be beating a path to your door.

NOTE: This article is an adaptation of some of the great content in my five-star book Stoking Your Innovation Bonfire (available in many local libraries and fine booksellers everywhere).

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Most Companies Fail at Innovation Because…

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Most Companies Fail at Innovation Because...Most companies fail at innovation because they fail at change.

There you go, there is the entire article in a single sentence. Please click the like button or leave a comment on your way out, and I’ll turn out the lights.

I’m actually serious, but I didn’t come to this single sentence overnight, but through decades of research and experience. It coalesced however this morning in an interview with Chad McAllister that will air next month.

This sentence also highlights the reason why after writing the popular Stoking Your Innovation Bonfire (a book about innovation) and traveling the world delivering innovation keynotes and workshops, that my next book for Palgrave Macmillan (@PalgraveBiz) will be about change, not innovation.

Because after all, my life’s work is to help others change the world for the better by creating and sharing valuable tools and insights that hopefully serve to accelerate innovation and change in communities around the world.

I will continue on to say though that if you want to be successful at innovation you need to get better at planning, leading, managing, and maintaining change.

If you doubt the linkage, please check out my other article Managing Innovation is About Managing Change. This will give you a great example of how innovation inflicts change on the organization.

And if you’d like to learn more about making your organization more change capable, then I encourage you to check out my article Change the World – Step One, which is the first in a series of articles I will be publishing here in the run up to the launch of my book in January 2016 to help organizations build a stronger, more sustainable approach to change. This first article outlines the Four Keys to Successful Change, with much more content and a whole Change Planning Toolkit™ being released over the next few months.


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Webinar – Winning the War for Innovation – September 12th

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Webinar - Winning the War for InnovationTomorrow, September 12, 2012 at 11am EDT (GMT -5:00) I will be presenting a webinar in cooperation with Imaginatik, a leader in the idea management software category.

The webinar is titled ‘Winning the War for Innovation‘ and we’ll be helping you take a look at whether or not you’re ready to accept that innovation has become a top priority.

Innovation has become a key source of competitive advantage, and the companies that thrive are those that innovate on a consistent basis – like Amazon and General Electric. Failing to innovate will put you on a straight, but treacherous path to extinction.

I will explain why innovation is so crucial today, and investigate the importance of building a continuous innovation capacity.

  1. How product cycles have fundamentally changed
  2. How global competition affects innovation
  3. How to build an innovation vision
  4. How to ‘make time’ for innovation

The world’s leading companies commit to embedding innovation deeply into their organizations. It becomes part of their DNA. Developing a consistent ability to innovate distinguishes today’s winners from losers.

Which group do you want your company to be a part of?

So, join me for this exclusive webinar Tomorrow, Wednesday, September 12, 2012.

Click to Register for FREE

Register for the Winning the War for Innovation Webinar

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