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Desperately Seeking Innovation

Tuesday, October 29, 2013
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Recently, I had a very interesting day of consulting with a client who is in the midst of a massive go-to-market transformation project. At the onset of our day, he laid out brilliant logic as to why the organization’s sales process needed to innovate itself—if not fully transform.

He cited complex industry dynamics, a highly competitive landscape due to new players coming out of the emerging markets, and massive shifts in technology that challenged the long-term viability of the company’s core business model. The case for change could not be more compelling. He then spent the remainder of the day sharing frustration after frustration as to why the organization continued to leverage old models of designing, developing, and bringing product to market (even when they knew these approaches were ineffective, if not obsolete) rather than leaning into that which it would take to innovate – and transform – in order to bring new forms of value to market.

My colleague is not alone. Many leaders attempt to invent, reinvent, and transform in order to make necessary business and organizational shifts. They embark on change management efforts in the service of building a culture of innovation that often fail. And at the end of the day, these courageous leaders become frustrated that their efforts to create the future seem to fall away from—rather than gain—the traction needed to stay at pace with market forces. 

This dynamic has me wondering: If bringing innovative ideas successfully to market will determine global competitiveness of businesses, even nations, over the coming decade, why is it so difficult for organizations to adapt their organizational systems and leadership models in order to embed innovation into the rhythm of the business?

What do companies like Google, Amazon, Apple, and P&G—which are considerably better than others at converting investments in innovation into products and revenue growth—have that other companies can learn from? How do these companies achieve such transformational success when other companies struggle quarter over quarter?

More importantly, as change management professionals, what can we do to build the organization and leadership systems necessary to enable our leaders to be effective toward building an organization that rapidly adapts to an innovation economy?

Start (and end) with leadership

I love Scott Anthony’s point of view on innovation starting (and ending) with leadership. Building a culture of innovation begins with visionary leadership that knows what direction to go and is willing to make hard decisions to change the course of the company. It requires a senior team powered by a sense of purpose to create something uniquely valuable for the company, the industry and the world.

Make innovation integral to strategy

What companies like Apple and other formidable innovators such as Google, P&G, and Amazon have in common is that they continually differentiate themselves from the competition in the markets they serve by making innovation integral to their strategy. Innovation is not an afterthought.

Make space for the future

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As I write about in Leading from the Edge (ASTD Press), one of the core competencies of leaders, especially at the global level, is the ability to focus on multiple, and often seemingly conflicting, priorities. When it comes to innovation, this is particularly important. Successful leaders must sustain value through innovations at the core that sustain today’s business model(s) while at the same time creating new (and often disruptive forms of) value for the future by innovating at the edge.

Starbucks is a great example to illustrate this concept. While the company continues to make inroads into new markets (both in terms of products and geographies), it must still be very good at buying coffee, fresh dairy, paper products, and other merchandise and distributing them to stores around the world, to ensure that the Starbucks’ experience in Moscow or New Delhi is as equally delightful as it is at the company’s original stores in Seattle. But Starbucks simultaneously spends time innovating at the edge, which, for example, led to the creation of the Starbucks Entertainment division and the Hear Music brand that is now marketing books, music, and film.

Seek to experiment

Innovation is enhanced by a deep-rooted desire to create something new and different, as well as a passion to change the world for the better. Organizations that stand out encourage idea generation and a continual reinvention process. They establish systems for vetting innovation funnels and determining which ideas are worthy of incubation and investment. And they rigorously monitor the competitive landscape and foster the best-of-the-best in terms of concept generation.

A good example is Google, which encourages engineers to spend 20 percent of their time working on company projects that they find personally meaningful. Many of Google’s most innovative technologies, including Gmail and Google News, have their origins in what is known as 20 percent time.

Pay very close attention to organization and leadership systems

Countless companies contend that innovation is among their core values, but few actually take the time to design the organization’s structure and deliberately create the culture required to foster innovation. This is not about tinkering, but rather about taking a systematic approach to creating the right framework, processes, and rewards.

Is your company effectively structured for innovation? The answer will depend on your business strategy and where your organization is in its life cycle. It’s easier for startups to innovate. They either innovate or die. But as companies become larger and mature, they must put more controls in place to replicate and scale processes, which can put stress on the more innovative aspects of their organizations.

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Some companies solve this dilemma by creating innovation labs or separate R&D functions; smaller companies often rely on joint ventures to keep innovation alive on the side. Here are some things to consider that will help make innovation a core competency for your organization.

Make culture matter

While many companies still see culture as secondary to success, the wrong culture can kill the best strategy. It is the responsibility of leadership to forge a culture that accepts and rewards open-ended, messy problem solving, a topic we will explore further in the next chapter. It begins by fostering innovator-focused values, such as visioning, experimentation, freedom to fail, tolerance for differences of opinion, and collaboration.

Leverage collaboration

Open collaboration is a critical component to creating a culture of innovation. If you are going to achieve different outcomes, you must do things differently—sometimes very differently. And that can require different people with very different perspectives collaborating, often on a global scale.

Align the stars

You must have the right people in the right work, in the right environment, and with the right incentives. Multitasking is great for some jobs, but those organizations that set the stage for successful innovation appreciate the fact that transformational innovation requires undivided attention.

Give your innovators the opportunity to wake up every day and focus on creating and delivering new forms of value. Performance and reward systems must deliberately recognize those behaviors that drive new ways of doing things, that position innovators and corporate catalysts as symbolic heroes of the company.

About the Author

Annmarie Neal, former chief talent officer at Cisco Systems and First Data Corporation, is the chief talent officer of Hellman and Friedman, a San Francisco–based private equity firm. She also it founder of the Center of Leadership Innovation—a worldwide consulting firm that specializes in business innovation and transformation through leadership and organizational excellence. She brings more than 20 years of global experience consulting with business executives and senior leaders across a range of industries to her writing, speaking engagements, business management, and consultation. She has provided expert commentary for many publications, including  The Wall Street Journal. She has contributed to books and magazines on executive leadership, including The Executive Guide to Integrated Talent Management, Talent Management: Strategies for Success, and T D magazine. She wrote the Infoline "Developing a Leadership Strategy," as well as articles for the Organization Development journal and Conference Board.  Learn more about her new book Leading from the Edge: Global Executives Share Strategies for Success (ASTD Press) and follow her on Twitter.

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