The eight essentials of innovation

Strategic and organizational factors are what separate successful innovator companies from the rest of the field.

Innovation is difficult for well-established companies. They are better executors and mostly succeed through optimizing existing business than through creativity.

However many big companies are succeeding and what can other companies learn from them? A detailed study found eight essential attributes that are present in every successful company in product, process, or business-model innovation.

Innovation is a company-wide effort and requires a set of interdisciplinary processes and practices to structure and encourage it. There is no proven rule for success with regards to innovation. If the companies assimilate and apply these eight essentials in their way, it will improve and rekindle the spark of innovation. In the digital age, companies must get these organizational factors right to innovate successfully.

ASPIRE

A far-reaching vision can be a compelling catalyst, provided it is realistic enough to stimulate action today. In a corporate setting, it is helpful to combine high-level aspirations with estimates of the value that innovation will generate to drive finance-growth objectives. Quantifying an innovation target and making it explicit helps to solidify its importance for innovation. The target must be large enough for the managers to include innovation investments in their business plans. 

Establishing innovation aspirations are not enough. The target value needs to be apportioned to the relevant business owners and cascade down in the form of performance targets and timelines. Anything less would encourage inaction or belief that it is someone else's job.

This may seem painful to managers who are used to traditional methods. 

CHOOSE

Fresh, creative insights are invaluable, but many companies find it difficult to determine which ideas to support and scale. Innovations are inherently risky and getting most from the innovative initiatives is more about managing risk than eliminating it. Since no one knows where the valuable innovations will emerge executives must create some boundary conditions for the opportunity spaces they want to explore. This may be intuitive or carefully analyzed. Prioritizing these spaces allows companies to assess if they have sufficient investment behind their most valuable opportunities.

During this process, companies should set in motion more projects than they will ultimately finance, which makes it easier to eliminate those that prove less promising. 

Once the opportunities are identified, companies need transparency into what people are working on and a process that assesses the expected value, timing, risk. Most companies overload their innovation pipeline with safe, short-term, innovation projects that have little chance of realizing their growth targets. Some spread themselves, thinly across too many projects instead of focusing on those with the highest potential for success.

DISCOVER

Innovation requires actionable insights that excite customers and bring new categories and markets into being. Look for insights by methodically examining three areas - valuable problem to solve, technology to find the solution, and a business model that generates revenues. The discovery is iterative, and the active use of prototypes can help companies learn as they develop, test, validate, and refine the innovations. 

EVOLVE

Business model innovation has always been a vital part of the innovation portfolio. As smartphones and mobile apps make inroads, innovations have become all the more urgent. Established companies must reinvent themselves before technology startups do. Most innovations emphasize new products, as the companies are reluctant to tamper with the existing business model. 

Leading companies counter this in many ways. They improve their business intelligence, establish funding vehicles for new business, constantly evaluate their position in the value chain, carefully considering business models that might deliver value to priority groups of new customers. They sponsor pilot projects and experiments to help combat the conception of what they are and do. 

ACCELERATE

Multiple hurdles undermine innovation in many companies. Cautious governance process, legal, It, and other functions find reasons to slow or halt approvals. Bureaucracy must be held in check and at the same time rushing into the market should not undermine cross-functional collaboration, continuous learning cycles, and clear pathways to help enable innovation. Are the managers making crucial decisions promptly, so that innovation moves through the company in a way that creates and maintains the competitive advantage.?

Companies thrive by testing their ideas with customers early in the process. To end up with the innovation planned initially, it's necessary to breakdown barriers that stand in the way. Companies need a well-connected manager who can get things done. Project teams need to be cross-functional in reality. This can help ensure end-user involvement throughout the development process. The more quickly and frequently the project team gets and used feedback, the more quickly it gets a great result.

SCALE

Some ideas like luxury goods, mobile apps are meant for niche markets but others like social media work on a global scale. Consider the magnitude and reach of the given idea are important in ensuring reight resources and risks are involved in pursuing it. The safer option of scaling up gradually may be a death sentence. Resources and capabilities must be made available to ensure the product can be delivered quickly and required volume and quality. other facilities like manufacture, suppliers, vendors must be prepared to execute a rapid rollout.

EXTEND

Innovation requires external collaborators. talent and knowledge transcend the boundaries of the company. Innovation can be accelerated and discover new ways of creating value for customers by accessing the skills and talents of others. 

Smart collaboration with external partners goes beyond sourcing new ideas and insights.; it can involve sharing costs and finding faster routes to market. 

Innovators work to develop ecosystems that help deliver these benefits. they strive t become partners of choice, increasing the likelihood of best ideas and people coming their way. This requires a systematic approach. First, find out which partners they are already working with. Then they decide which network, they ideally need to support their innovation strategies. This helps them to narrow and focus their collaboration efforts and to manage the flow of ideas from outside the company. 

Innovators regularly review the networks, extending and pruning them as appropriate, and using strong incentives and contracts to motivate partners. Becoming a partner of choice is about what can be offered - brand, reach or access, and being fair and transparent in business dealings. Also, companies that make most of the external networks have a good idea of what's most useful at what stage of innovation. In early stages they cast a wide net and as they closer to commercializing they become more specific in their sourcing.

MOBILIZE

How do leading companies stimulate, encourage, support, and reward innovative behavior among right groups of people? They find ways to embed innovation into the fibers of their culture. They start with aspirations that forge tight connections. they set financial targets which helps everyone to focus. The leaders clarify the responsibilities using appropriate incentives and rewards.

Organizational changes may be necessary to promote collaboration., learning, and experimentation. Companies must help people share ideas and knowledge freely, reviewing the structure of teams to make sure they have new blood, ensuring the lessons learned from success and failure are captured and assimilated. 

Internal collaboration can take years to establish and so mature companies set up innovation garages where small groups work on projects unconstrained by the normal working environment. 

Big companies do not reinvent themselves as leading innovators. Any company making this journey will succeed by studying and assimilating the leading practices of high-performing innovators. These form an essential operating system for innovation within a company's organizational structure and culture.

The eight essentials of innovation

Marc de Jong, Nathan Marston, and Erik Roth McK Apr 2016