I wanted to write this article after observing in many of the companies how innovation is managed, which is still not the methodical, disciplined and resolved that it should. As I mentioned in previous articles, companies can better capitalize on the ideas that come from their own collaborators and face the uncertainty that could be found in the route to the implementation of each of the innovative initiatives, if they can understand which is The primary objective of innovation.
The numbers do not fail
According to a report on innovation made by McKinsey in 2007 and based on a survey of more than 1,400 executives around the world, efforts to manage innovation properly in companies were not giving the expected results. Although the boards and managers of companies thought that it was an important factor of impulse of the growth of the company, few managed to reach it. At this point, the feeling of disappointment with the attempts to launch projects was widespread.
Another more recent report, prepared by Boston Consulting Group in 2015, revealed some improvement, but the level of frustration remained high: 45% of the executives and almost 64% of the employees surveyed were dissatisfied with their innovative management.
The companies in this case, instead of wasting their budget on projects that only serve to sow discontent, should stop and analyze what is failing.
How is it innovated? How much R & D should be invested? What processes are necessary in the organization to manage innovation? How should innovation be measured? These are necessary questions for companies that prepare the way to innovate in an increasingly competitive market in which they seek to position themselves as differentiating companies.
Regarding innovation, ignorance continues to prevail among senior executives, managers and employees of large and small companies. Experts, academics and consultants have written many books on the subject, but still many myths persist, such as those that refer to INNOVATION as:
- Invention
- R & D
- Technology
- The products
- Valuable in very few sectors
- Difficult in certain countries
- Face
- Question of luck
All these statements are the result of ignorance that in these times is already the time to overcome.
Innovation as a discipline
Our understanding of the discipline of innovation is like what we had about quality twenty or thirty years ago. As it emerged in Japan and the USA the concepts of Total Quality in the 70’s and 80’s. In this sense, there are relatively few managers trained in them. The responsibility for innovation remains fully functional and is limited to a few people. Further; its implementation is neglected and its practices are unsuccessful.
Many of the difficulties for the development of innovation as a discipline respond to the fact that it is a social science, such as psychology or marketing. Accounting, finance and IT are formal sciences, controlled by logic and a series of rules. Even Total Quality Management and Six Sigma have methodologies and systems. In this sense, the social sciences lack such rigid rules or laws. As it happens for example with the leadership, what there are basically principles, concepts and general models.
Unfortunately, many have taken innovation as if it were a physical or formal science. Worse, some define it rigidly, such as R & D, which leads companies to adopt a structured approach that dispenses with the pure and humanistic creativity so important in innovation.
Precisely; There are so many companies that continue to use tools, techniques and inadequate resources to manage innovation, it is not surprising that they reap poor results and great frustration.
Objective of innovation
The main objective of innovation is growth, through which value is created for society and competitive advantage for companies and, in certain situations, allows for survival and evolution.
Being able to manage the same language allows its members to organize, develop and share skills, take care of themselves, reinforce themselves as a team, defend themselves and achieve success. A community organized around its common social values and needs. But the fundamental basis of this is the use of a common language.
The first step in creating a community of innovators is to teach them this language, that is, the principles, methodologies and tools of innovation. From there they can understand each other, practice what they have learned and perform with greater efficiency. They will start to develop a culture of innovation together. Hence, all innovation will be the result of culture.
The practice of innovation
Innovation consists of searching for opportunities in an indefatigable way, identifying them, giving them shape and conceptualizing them. The core of these processes is a “funnel” full of failures. And that is precisely the directive challenge.
Managers should be very clear about what is NOT innovation. If the opportunity does not change the competitive dynamics of the company over a period of time, it is not innovation. If it’s new for the company but not for the sector, either, it’s just a copy to catch up on the market. Many corporations abuse this basic definition. Everything that is new to them, even if it is small, they call innovation, and that is the reason why the term is losing its true meaning.
What strategy companies should adopt
Innovators tend to monopolize the resources available to them. They may even launch several innovative projects simultaneously. They focus on the development of prototypes and thus check what works in reality and what does not. They then perform concept tests using feedback loops with customers, technology and the supply chain. They minimize losses with quick and cheap failures and learn from them. They discover the unknown variables as the project progresses. When reality belies the assumptions, they change the course of the project immediately. They only request resources and goods to produce at scale when the proof of concept is positive and the success of the project is assured.
This approach is called “creative logic” and the method, “emerging strategy”. Nevertheless; When managing innovation projects, or for any change initiative, most companies opt for analytical strategies, not emerging ones. The difference is that the first consists of analyzing before acting, while in the second they do the opposite.
But a pure analytical strategy would be to throw away money when there are many unknowns, as is the case with most radical and platform innovation. The necessary methodology for this type of project is improvement, but continuous experimentation, since it discovers and responds to the unknowns. Nevertheless; Companies are suspicious because they open the door to failure, so they usually limit it to specific areas, such as R & D, for example.
Is the climate of your company propitious?
Through what has been lived, many companies manage innovation projects announcing the arrival of their great objective with “drums and cymbals”. They perform many analyzes and predict results. They appoint leaders and members in the work teams, usually against their will, and give them key performance indicators. In this way, the headquarters follow an almost religious fervor, during which they are told that this projected future is created or removed from the environment.
When that future is not crystallized and the company loses millions, it looks for a few scapegoats among the subordinates and they hide the garbage under the carpet.
This disastrous end is precisely the reason why executives are distrustful and exaggeratedly afraid to embark again on another innovation initiative, quite rightly of course.
For this reason; is that emerging strategies give a better result. In this sense, think big, and start at least. Launch several projects, develop a prototype right away. If it fails, do it smartly, quickly and cheaply. Spend little, learn a lot. Discover unknown variables and change your strategy based on the data obtained. Use production at scale when the proof of concept is positive. Celebrate success and failure equally.
Unfortunately, emerging strategies are not attractive in most corporate cultures, because they require a favorable climate that allows them to experiment without fear of failure and without repercussions. A special culture that values curiosity in the search for the unknown, stimulates the desire to create and encourages failure and learning. This type of culture in the organizations that we know is not the norm.
I hope you have recognized some mistakes that your company makes and that are not attributable but to ignorance.
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