September 2012 OVO Newsletter

Innovation Newsletter from OVO

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Conversations about Innovation
September 2012- Vol 6, Issue 5

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Greetings!

OVO logoThis issue of the OVO newsletter is focused specifically on defining an innovation leadership gap and providing a framework to close the gap. Sustained innovation requires executive commitment and strategic frameworks.In this newsletter we’ll examine the reasons for the innovation gap, propose a framework to eliminate the gap and identify how to use the framework effectively.

The Leadership/Alignment Gap

We’ll discuss why we (and many innovation analysts and consultants) believe there is an important leadership and alignment gap for innovation.

Introduce the Innovation Workmat

We’ll identify seven key “domains” that must be developed for consistent innovation success, and place them within a framework we call the Executive Workmat. We introduced the workmat on Innovation Excellence in early September.

Benefits

We’ll examine why innovation seems so difficult without a consistent strategic framework, and the benefits once a framework is in place.

How to implement this approach

We outline the services we offer to help implement this approach effectively.

As always, feel free to contact us to exchange ideas, ask for innovation help or suggest topics you’d like to see discussed in the next issue.

 

Innovation Leadership / Alignment Gap

VIP – Very Innovative Person

Which individual or team in your organization is most important for innovation success? Many people will argue it is the most creative person in the company, the individual with the best ideas. Others will argue that it is the person who can make the idea a reality. Others will suggest the head of R&D, or individuals responsible for marketing or product development. Perhaps these answers are true in entrepreneurial companies or very small firms, but not in larger organizations. In larger organizations we believe the CEO or another empowered senior executive is the most important person for innovation success.

Why do we believe this is true?

The CEO or the senior executive team has the power to:

  • link innovation to strategic goals
  • create focus, engagement and passion for innovation
  • direct funds and resources to innovation programs
  • speed good ideas to market
  • ensure defined innovation programs and metrics exist

Not only do CEOs and executives want innovation, they demand it to drive organic growth and profits and to create differentiation. We know this because you’ve made it clear. In survey after survey approximately 70% of CEOs report that innovation is one of their top three priorities. Yet the gap between “saying and doing” indicates a gap between vision and implementation.

Whose Opinion?The statement above is fairly definitive. You may ask yourself, who believes this is true? Do other firms believe the CEO or senior executive is so vital to innovation?Research research from DDI indicates that CEOs and executives have an important role to play. In their recent survey entitled “Creating the conditions for Sustainable Innovation” they highlight the role of the CEO or senior executives. This survey is but one data point, but is representative of other research. Other authors and consultants have noticed the same gap.
Robert Tucker, for instance, who wrote an article for Innovation Excellence entitled Innovation CEO and Gregerson and Dyer, the authors of The Innovator’s DNA both note the importance of an engaged senior team.

There’s a clear consensus emerging – CEOs and executives must be involved and engaged for innovation to flourish, and they must develop the conditions or establish a framework for innovation to succeed.

Mind the GapDoes an innovation gap emerge when executives don’t provide enough leadership or build enough alignment? Is there evidence of a gap? We think so, when:
  • there is poor execution of innovation goals
  • innovation doesn’t support corporate goals
  • there’s little organization structure or design to sustain innovation
  • innovation is shortchanged for the urgent, current issues
  • cynicism grows when opportunities for innovation are missed

Further, research from the National Science Foundation suggests that less than 20% of manufacturing firms and less than 8% of services firms report creating a new innovative product or service in the last three years. While 70% of CEOs say innovation is important, less than 20% of firms are producing vital new products and services. Sounds like a “saying-doing” gap to us.

More Structure, More AlignmentIt’s not enough for executives simply to demand more innovation – senior executives must demonstrate links between corporate strategy and the work of innovation, provide deeper insights into its contribution to the company’s goals, between their vision and the activities necessary to create new products and services and finally, between their expectations and the actual culture of the organization. This brings together all the necessary alignment points, so it can deeply integrate within the strategic goals required to achieve the necessary growth. What causes the gap to occur?
  • Executives are unaware their vision must be framed in a compelling message
  • Executives don’t understand the importance of communications about innovation
  • Executives fail to articulate the importance of innovation
  • Executives don’t win the hearts and minds of the organization for innovation
  • Executives fail to define a framework for innovation
  • Executives delegate these roles to others with less power
  • Executives are forced into tradeoffs due to time pressure or competing initiatives
Filling the gap is criticalFor innovation to succeed broadly in any company, executives must sponsor and embrace innovation as a core discipline, built with a deep and evolving set of competencies, not as an ad hoc set of initiatives. Executives must help people within the organization understand why it is important and what benefits innovation holds for each contributor, for the organization and for the customer. They must seek ways to free up their people so they can ‘self-organize’ around a clear, compelling innovation story.Good innovators are leaders and champions that are good storytellers to engage and motivate others to become involved. The senior executives need to place innovation within a context for their teams that provides a strong foundation and validation. Those stories must link to defined innovation processes and goals, and must convey “what’s in it for me” as well as “what is in it for us together” to every individual in the company, to customers and each of stakeholders and prospects as well. Much of the success is predicated on good communication, and good communication is made up of constant messaging and a complete, comprehensive and compelling story that engages both the hearts and minds of all involved.

Building a frameworkFortunately, there are tools and frameworks that can help. No executive needs to define an innovation strategy from scratch. In the next section we discuss the seven “domains” that comprise a strategic innovation framework.

Seven Innovation Domains
Seven DomainsRecognizing that executives needed help defining and building a strategic innovation framework, Paul Hobcraft of Agility Innovation and we at OVO Innovation defined a set of domains that we know are important for innovation success. We’ve called this set of domains the Innovation Workmat. Let’s examine the seven domains and then consider the workmat as a whole.
Strategic AlignmentThe most important role or activity for executives is strategic alignment, ensuring the best resources are directed at the most important opportunities. Yet, innovation often identifies gaps in alignment or communication. Innovators frequently create interesting ideas that aren’t aligned to strategic goals. Further, it’s not unusual to find unclear or indistinct strategic goals, or poorly communicated goals. If innovation is important, innovation activities and initiatives should be tightly linked to key strategic goals – growth, disruption or differentiation are three consistent examples. The CEO and/or senior executive team must align innovation activities to strategic goals.
Formal domainsOf the seven domains we identified, two are easily implemented and relatively formal. They are innovation teams and processes and innovation governance. Executives must make clear decisions about the identity and structure of innovation teams, reporting structures and what processes the teams should follow. Innovation is difficult even in the presence of defined teams and processes. It is almost impossible when the work is unformed and adhoc. Developing innovation governance – resourcing, funding, planning, budgeting and measuring results – demonstrates that innovation is as important, vital and consistent as any other corporate program.
Informal domainsSimilarly, we think there are two intangible or informal domains. They are corporate culture and innovation environment. Corporate culture is an invisible but powerful force, either an enabler or inhibitor for innovation. Attitudes, beliefs and expectations matter, and influence people’s actions. Executives must help build a corporate culture that accelerates innovation. The “environment” matters as well – both the physical environment and the intangible set of internal and external innovation partners. Defining the appropriate internal and external partners, and building creative innovation spaces is vital.
Language, Context and CommunicationsCentral to the framework is a domain we’ve entitled language, context and communications. Good innovators have a common innovation language, which they use to communicate their actions and goals more effectively. Further, the rationale for innovation is aligned to strategic goals and incorporated in constant communication. The context for innovation is obvious, consistent and constantly reinforced. Without these powerful but intangible factors innovation creates confusion and discord rather than generating new value.
Motivations and MeasuresThe seventh domain has to do with how we motivate people and how we measure their work and their results. Too often people are called on to do innovative work but their motivations and measures remained tied to their “day jobs”. This creates a violent conflict – innovate and risk compensation and rewards or stick to the everyday knitting where I am regularly compensated and measured? Any firm pursuing an innovation agenda needs to rethink motivations, metrics and measurements.
PeopleAs you’ve probably noted, we’ve introduced seven domains for innovation. These domains reflect actions, structures, processes and metrics. These domains also have in common their impact and influence on the way people work.Innovation is the only important, strategic process in a business that relies completely on people. People to spot opportunities, people to generate ideas, people to evaluate and select ideas. Innovation demands that your best people are actively involved for the best outcomes. Who can decide which people are involved in innovation activities? Only the CEO or a senior executive team can pick the “best people” and place them on an innovation task.

So the strategic framework examines the characteristics and attributes of the organization, and instructs and guides the people who will make innovation happen.

Executive Innovation Workmat

Combining the DomainsPreviously we examined seven domains that are critical for sustained innovation success. Those domains are:
  • Strategic Alignment
  • Innovation Structure and Process
  • Innovation Governance
  • Innovation Culture
  • Innovation Environment
  • Language, Context and Communications
  • Motivations and Measures

Each of these domains supports innovation in its own way, but when these domains are combined into one consistent innovation framework, innovation opportunities and outcomes flourish. We present the combined domains in a framework we call the innovation workmat.

Innovation WorkmatThe workmat is meant to help executives consider each vital domain in the strategic framework and the role each domain plays in sustaining innovation. Once each domain is understood and its relationship and interaction with other domains is identified, executives can then explore each domain more deeply, to identify challenges, gaps or uncertainties within each domain. For example – does the existing culture support innovation or block innovation? Do innovation activities need better innovation governance?Note that we aren’t concerning ourselves here with one innovation project or initiative, but with a sustaining innovation framework meant to align corporate goals, objectives, resources and language to further innovation success. Organizations that adopt the framework will find that it is much easier to begin an innovation activity, easier to sustain individual innovation projects and easier to find resources and management support.

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