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How Can You Get Great Innovation Results?

As business leaders and innovation specialists, we’ve all asked ourselves this question at least a few times a year. Even those of us that are getting reasonable results out of our innovation machine want more. Our leaders and shareholders demand more growth, and in a world with contracting economies, more and more weight is put against our innovation muscles. How do we lift more? While answers of course vary, we can look at this question in the context of an organizational business model framework for the purpose of evaluation.

To begin, it’s worthwhile to consider that this question is a bit like asking “why don’t we get better business results? More profits? Better margins? Higher prices in the marketplace? At a high level, all this questions have a fundamental connection… one that we have all heard before. There’s a simple truth that all organizations are perfectly designed to achieve the results they deliver. If this is the first time you’ve heard that, read the previous sentence again. So, we’re not getting great innovation results because our organizations are not perfectly designed to get great innovation results in the markets and segments where we compete. But how does this realization help us improve our innovation results? Great question.

To achieve great results, any organization needs good strategy, skills, management systems and processes, structure and rewards. Most importantly, all five attributes must be working in harmony to deliver the same results across all functions. Most Organizational Development professionals will tell you that it’s a very rare organization or team where all these things are well aligned across all functions to achieve the same results. As business leaders, many of us work diligently to ensure we’re cross-functionally aligned on the top strategic priorities. We realize that if we’re not aligned, we won’t get there together, and no one function can get there alone. Innovation is no different. We need solid answers to the following questions:

  1. What is our innovation strategy?
  2. What skills and capabilities do we need to deliver against that strategy? Do we know where to find them?
  3. What structure best allows us to work cross-functionally to deliver against that strategy?
  4. What management systems and processes work best with our structure to help us drive week to week execution and manage exceptions to deliver against the strategy?
  5. What reward and recognition systems and policies will best motivate our employees across all functions to deliver against our innovation strategy? How do we implement these in the context of our existing reward systems and policies?

These are not easy questions, and each of them take some time to answer well within the context of our dynamic business environment. This is hard work… and we have yet to add the real complexity.

As innovation professionals, our reality demands that we answer these questions within the business environment and strategic operating model that already exist to deliver against the broader business strategy and objectives. In other words, our organization already has answers to all of the questions above to deliver business results for the current core business. The structure we have is designed to deliver results building and selling what we build and sell today. We don’t usually have the freedom to break off parts of the organization and redesign the strategy, structure and incentive programs as we would like to drive a separate innovation strategy. How then can we best develop our organization and goals to simultaneously drive results against the business strategy and the innovation strategy? Are these strategies really different? These two questions are perhaps the most important to consider. If we can align our innovation strategies very clearly with our broader business strategies, AND develop clear mechanisms to align the structure, incentives, and management processes against this set of strategies, then we have a chance. All we need now are all the skills and capabilities needed to execute (That’s quite a challenge in and of itself.)

Many of us have tried and a few have succeeded to varying degrees. Modifications along the way are both inevitable and healthy, and nearly all of us need a custom solution. We can, however, learn from each other, and there are a few basic principles that can help:

  1. Ensure our innovation goals are a subset of the broader business goals. If we have a five year goal to increase revenue by $500M USD, what portion of that will come from growth in the core? From geographic expansion? From adjacencies? From our traditional customer driving incremental product development? And from innovation? A clear revenue bridge helps not only with communication but also clear alignment.
  2. Use both portfolio and project management tools with excellence. Most of us drive project management and hold project reviews, as those results are what we’re most often rewarded for delivering. However, portfolio management tools allow us to set and align upon appropriate risk and revenue adjusted targets. To deliver $100 USD in actual new product revenue, most businesses will need at least $1.5MM in potential projects going into a Gate One (Define) gate review meeting. Each business can look back on it’s own history to determine it’s actually hurdle and success rates. The key is to use this data well in setting goals and understanding the task at hand.
  3. Make clear decisions about the integration of resources to work against “core” and “non-core” projects and platforms. Each organization will have a slightly different approach to this integration, ranging from complete segregation and co-location of multi-functional teams, to complete integration and dual responsibility for core growth and integration at junior manager level. Many books on this have been published in the last decade, and I can only say that I’ve seen nearly everything work in the right context. It’s simply vital that we ensure our structure is aligned with our processes and incentives to deliver the innovation results we expect.

These are some simple guidelines that can make what is clearly a difficult task a slight bit easier to manage. For more details and some specific examples, please see our case study on aligning the organization against the innovation challenge.