BrazilSeven success factors for delivering innovation in the digital age
If history has taught us one thing, it is that companies need to continuously innovate in order to survive. Realising innovation ambitions is however notorious for its challenges – Benjamin Quinlan and Evan Schnidman from Quinlan & Associates share seven success factors for how corporates can successfully deliver their (digital) innovation agenda.
1. Develop a firm-wide strategy
Before embarking on an innovation makeover, it is critical for organisations to develop a firmwide innovation strategy. To do this properly, the company’s Board, with the advice and support of the business, should identify problems that may require innovative solutions.
This will naturally involve detailed industry and competitor analysis to identify key technological trends, including gaps to existing competitors, innovative practices being deployed in other industries, or promising new ideas that are yet to be unearthed. It also necessitates a comprehensive internal review of the company’s existing resources and capabilities (e.g. budget, talent, internal processes), including an honest evaluation of its core strengths and weakness.
Once this exercise is complete, realistic strategic goals can be set, after which preliminary budgets and milestones can be mapped out.
2. Centralise efforts with the right team
While we see several fundamental flaws with today’s Innovation Labs, we do believe that a company’s innovation efforts should be centrally coordinated through innovation leads. However, unlike Innovation Labs, we believe these individuals need to possess a strong mix of business and technological expertise, or that digital innovation efforts be jointly led by senior technologists and business personnel with an in-depth understanding of the business.
We see this as absolutely critical for management and organisational buy-in.
3. Empower innovation leads
Rather than acting as mere influencers that straddle multiple business lines, innovation leads should form part of the firm’s most senior management team and be a key stakeholder within the company’s executive committees at both the business unit and group level. In addition, innovation leads should be given specific decision-making powers, including independent budgets to address specific issues that are critical to achieving the Board’s overall innovation objectives.
Without such power, difficult – albeit necessary – change is unlikely to occur.
4. Strengthen alignment
To ensure ideas from the front-line are properly explored, innovation leads should work directly with the business when identifying problems (or exploring “blue sky” ideas) in order for efforts to be centrally coordinated. This is particularly important for larger organisations, where cross-business collaboration – and alignment – is vital.
To enhance this alignment even further, innovation leads can be embedded within individual business units, allowing for a deeper understanding of specific functional problems and, in turn, a more precise identification of potential solutions.
5. Start with business problems
While technology forms a core part of modern corporate innovation efforts (given the ongoing digitalisation of the global economy), companies should never lead their efforts with technology – after all, it is simply an enabler. Rather, businesses should be responsible for identifying key pain points where innovation and / or technology may be required.
Moreover, every individual within the business needs to be empowered (and incentivised) to drive innovation initiatives, which will require active encouragement and promotion of idea sharing by employees on the front lines.
To facilitate this, incentive structures must be redesigned to augment ownership and accountability across the ranks. This should include recognising – and rewarding – successful ideas, while ensuring employees are not reprimanded for innovation “failures”, given that failure is an essential part of innovation.
6. Institute a robust innovation process
Perhaps the most important part of getting innovation right is the development of a robust innovation process – yet this is exactly where we see most organisations falling painfully short.
For a digital innovation process to be truly effective, a comprehensive and dynamic approach needs to be driven by a cross-functional team: from problem identification through to solution review. Most importantly, companies should look to adopt a design thinking approach and agile delivery methodology, centred around the adoption of flexible, adaptive planning focused on continuous improvement and rapid (and accommodative) responses to change.
Core to this process is putting the customer / user at heart through a design-led approach.
The trialling, implementation, and review of new technology solutions should be jointly conducted by the innovation and business teams in close coordination. Employing an agile methodology, this would involve engaging in a continuous “test and pivot” process with both internal and external customers to continually improve and evaluate the prototype.
For solutions that simply “don’t work”, irrespective of subsequent pivots, the team may need to go back to the “explore” phase of the process in order to re-define their technology requirements. Once a trial is successful and a solution can be implemented, companies need to build an effective go-to-market strategy.
However, this is by no means the end of the process; continuous engagement with key stakeholders is required to identify areas for improvement or further refinement on next-generation products.
7. Create appropriate success metrics
Many companies have no clear success metrics around their innovation efforts. We believe, first and foremost, that the success of digital innovation efforts – particularly with respect to open innovation – needs to be based on the commercial adoption rates of technology solutions; in short, are these new technologies actively being used and to what extent? This provides the clearest indication as to whether a company’s innovation process is hitting the mark.
The fact is, many solutions being trialled by Innovation Labs (or being showcased as Innovation Days) are not being adopted, suggesting companies need to go back to the strategic drawing board.
Another key problem with the adoption of new technology is the inability to attach a clear ROI to investments, given many solutions do not have a direct / tangible impact on a company’s top or bottom line (for example a new CRM tool). This is compounded by the fact that most listed companies remain relatively short-sighted in their approach, given they typically focus on quarterly earnings targets.
However, digital innovation efforts may take years to yield tangible results due to high upfront investment costs and the need for a staged rollout.
To address this ROI dilemma, companies need to design customised KPIs / success metrics that are tailored to each solution in question and the specific problem(s) the new technology has been designed to solve.
An integrated approach
In addition to the recommendations outlined above, there are a number of overarching considerations that every company needs to examine when it comes to developing an effective digital innovation strategy. These include both internal and external factors centred around a company’s resources people, processes, and systems.
While each of the above factors should be carefully examined, we see a weak innovation culture, poor data strategy, and haphazard implementation processes as critical stumbling blocks for most large companies. Much of this stems from a pervasive resistance to change, especially when engaging with third-party vendors that disrupt the status quo.
For innovation to be truly successful, companies must accompany their strategy by a fundamental shift in organisational DNA; in essence, moving from a corporate culture that focuses on stability, success, and short-term financial targets to one that openly embraces change, failure, and long-term goals. While this is no doubt easier said than done, this change in mindset cannot be ignored to reap the potential of digital innovation.
