How to Build Innovation Capability Inside your Organisation.
How much money has your organisation spent over the last year on R&D? How much money has it spent on initiatives such as hackathons, innovation sprints or platforms designed to help generate new ideas? For many organisations, private and public sector, the answer will be millions. Corporate innovation too often equates to ploughing money into the front end of the innovation pipeline and expecting a miracle to pop out the other end. Unfortunately, a high number of these initiatives and the ideas themselves fail to get traction or achieve the desired impact on the company’s business.
Whilst most established companies invest heavily in idea generation and R&D, few invest in developing their innovation capability. In other words, they haven’t learned how to turn those ideas and insights into scalable and sustainable value propositions. I think of innovation capability as an organisation’s ‘innovation muscles’ - it’s the ability to systematically and repeatedly foster innovation and create new, sustainable value and growth.
Maturing innovation capability and creating an environment that systematically fosters innovation requires us to be intentional. We need to understand how developed our innovation muscles currently are and have a strategy for how we’re going to make them stronger. And we need to invest time, money and people in maturing them. If we don’t, we’ll throw good money after bad as we continue to invest in random ideas that never stand a chance of making it into the business. We need to know, are we getting better at innovation?
Maturing our Innovation Muscles
I’m a swimmer, so I’ll use a swimming analogy. When a child learns to swim, you don’t just chuck them in, tell them to flap their arms, kick their legs and hope for the best - they will almost certainly drown. They have new physical and memory muscles they need to develop. They need to learn about motion and coordination. They need to develop their confidence. Innovation is no different. Simply building an innovation lab or telling people to be creative doesn’t work. You have to show people how and you have to create the conditions for them to succeed. When teaching a child to swim, if you don’t support, enable and nurture, they may never learn and may even develop a fear of the water. Similarly, trying to innovate without any innovation muscles may do more harm than good.
So, what does a mature innovation capability look like? It enables us to identify strategic growth opportunities and redeploy appropriate resources quickly and easily into developing them. It ensures compliance and ethics are built in. It enables a company to have greater confidence (but not certainty) in the outcome and the return they can expect to see on their investment. It helps make the process of innovation enjoyable. Importantly, it engages staff and enables them to contribute to the future success of their organisation. This promotes organisational commitment and staff retention, particularly of your brightest and most creative talent.
And all of this is systemic, it’s built in - that’s what makes it an enduring capability. It’s not just what happens one time because you got an external innovation partner to run a sprint for you.
In contrast, a weak or immature innovation capability will see innovators working as underground heroes in fear of potential damage to their careers. Alternatively, the more maverick pursue innovation and change at the expense of their careers because the best innovation talent is seen as too disruptive and is prevented from rising to positions of power. Bureaucracy, designed for old ways and incentivised to maintain the status quo, makes the process of innovation frustrating and slow. Funding and skilled resources are either non-existent or a battle to obtain. Opportunities that were within reach dissipate in front of your eyes because the system can’t move fast enough to exploit them. This environment stifles innovation and creativity, leaves employees disgruntled and inhibits the creation of new value and growth for the company.
Yet, it is often within this precise context that we continue to plough money into sourcing new ideas and continue to be disappointed by the results.
The Six Key Innovation Muscles
Based on my experience building innovation capability inside possibly the most innovation-hostile environments imaginable - established, risk-averse, hierarchical government agencies - I have identified six key muscles that are essential to enabling innovation to thrive. Like musculoskeletal systems in the body, each component is interdependent and any imbalance can lead to pain and dysfunction.
1. Ideas
In corporate innovation, we want to both generate and harness ideas. Although this is the bit where most investment goes, it can often be misunderstood and misplaced. Ask yourself, is there somewhere staff can submit their ideas? Are ideas random or aligned to strategic challenges we’re facing? Where else are ideas coming from besides employees? What about inspiration from external sources (partners, academia, customers)? How many ideas are submitted each month? How radical are they? What proportion of those ideas are taken forwards? At this point, we’re looking for volume, diversity and creativity.
2. People
Money is important but ideas can’t be generated or developed by money alone. They need people. Questions to ask: Do we have dedicated and protected people whose job is to focus on innovation? Do our staff have the skills they need and are innovation teams diverse and multi-disciplinary? Is it easy for innovators to connect and network so they can inspire each other and find support? How are we incentivizing our people to innovate? Do they know that we value their creativity?
3. Innovation Strategy
Innovation investment and efforts need to align to your organisation’s strategy. How often are you looking at the environment and context in which your organisation operates? Do you know what’s changing in that context and how you might adapt to any changes? Take a look at your strategy and ask yourself, does our strategy provide clear direction and focus for investment and effort? How often are we reviewing our strategy? When did we last adapt our strategy in light of new information and changing circumstances?
4. Entrepreneurial Governance
This is the management of your innovation pipeline and how decisions about what you do and do not invest in are made. Do you increase investment incrementally in ideas as they gain traction or do you have a culture of big bets on unproven and untested ideas? Figure out, who is making decisions about which ideas get funded and which do not? Ask yourself, are we making those decisions based on evidence or opinion? How good are we at implementing the decisions we make or are our decision-making boards toothless? Does our innovation governance help or hinder innovators?
5. Entrepreneurial Leadership
The entrepreneurial leader understands the difference between a world where they have a high degree of certainty and delivery is relatively straight-forward, and a world where there is a lot of uncertainty, complexity and change. Ask, what proportion of our leadership can adapt their leadership style to foster innovation and creativity? Are our leaders led by the evidence of disciplined innovation teams or are they more interested in their own opinions? How much time does our leadership devote to innovation? Do our leaders promote a culture of creativity and exploration? To what extent do our leaders demonstrate curiosity themselves and encourage curiosity in others?
6. Frictionless Systems
What Eric Ries called ‘Deep Systems’ - things like HR, legal, commercial, compliance - help or hinder innovation efforts. In my experience, they are responsible for much of the friction corporate innovators encounter. Were your company’s policies and processes designed to support innovation or were they designed for the core business? Ask yourself, what impact does this have on the pace at which we can test new business ideas? How easy is it for us to create new policies and processes or adapt existing ones? Are our innovators repeatedly finding ways to circumvent existing processes because they are not fit for purpose?
Education in innovation methodologies and approaches, as well as an awareness of what is required to be an innovative, future-focussed organisation, wraps around and underpins these six innovation muscles, much like our body’s skin and skeleton. Tools, processes and mindsets like design thinking, customer journeys, Jobs to be Done, business model thinking, experimentation, customer development, traction modelling, lean startup, agile etc. give us a foundation to draw upon and strengthen the muscles. Now we need a personal trainer to help us develop them…
Whose Job is it to Build your Organisation’s Innovation Capability?
If it is not explicitly someone’s job to develop your innovation capability, as is often the case, everyone and therefore no one is accountable. It could be the job of your CEO or Chief Strategy Officer. It might be your Director for Digital Transformation if you have one. Or a Director/VP/Head of Innovation. And often it will be with the support of external expertise in innovation methodology and capability building. The point is, it needs to be someone’s job and it needs to be someone with sufficient authority to get the traction necessary from every corner of the company.
Because, whilst one person must have clear accountability for this, it’s impossible for one person to develop an organisation’s innovation maturity single-handedly. Within those six areas I describe above, there are many stakeholders who impact the success or failure of innovation initiatives. I have used the framework above to engage stakeholders in innovation and help them understand the important role and contribution they play. It helps if there is a shared vision amongst the company’s leadership for a future-focussed, agile and creative organisation, as well as a sense of joint responsibility and commitment to reaching that vision. Back to the swimming analogy, swimming is an all-body exercise; similarly innovation is a whole organisation effort and commitment.
A Long-Term Investment in Your Organisation’s Future
One question you need to ask yourself is just how innovative do you want your organisation to be? Learning to swim is one thing; getting really good at it requires years of training and commitment. I’ve never swam competitively, but I swim regularly and I make a conscious effort to improve. I’ve taken lessons as an adult to improve my technique. I run to increase my aerobic capacity. I do yoga to help me with my breathing. I do pilates to improve my core and upper body strength. When I get into the pool, all these things come together to propel me faster, longer and more smoothly through the water. Yet, I’m still just an average swimmer. And actually, that’s ok. But if I had wanted to swim competitively, I’d have been swimming twice a day every day since I was 10 years old. If you’re not familiar with Malcolm Gladwell’s book Outliers, read it. 10,000 hours of practice is what is needed for anyone to be exceptional at anything.
Let’s be under no illusions, building innovation muscles is really hard. It requires patience and persistence. In our increasing need for instant gratification and short-term results, many companies and company executives haven’t got the stamina for this because they’re looking for instant results within their tenure. Building innovation capability means cultural and systemic change. It means new skills, mindsets and behaviours. It means a new approach to strategy and decision-making. These things do not happen quickly.
Throwing money at the problem, at the front end of the innovation pipeline, is the easy part. Even in government, money for innovation was never a problem. Nor was there a lack of ideas. But if even a fraction of the investment that is spent on R&D and idea generation was instead spent on intentionally developing innovation capability… now that would make an impact.
Summary
Innovation capability is an organisation’s ability to systematically and repeatedly foster innovation and create new, sustainable value and growth. There are six key innovation muscles that we need to develop to mature our innovation capability:
Ideas
People
Innovation Strategy
Innovation Governance
Entrepreneurial Leadership
Frictionless Systems
I have used this framework, and supported others to use it, to engage stakeholders, successfully focus initiatives and mature innovation capability. Understanding and maturing each of these distinct but interconnected innovation muscles helps us improve our overall capability to innovate. Instead of focusing exclusively on ROI and other lagging indicators, there are better leading indicators (the questions above are just some examples) that tell us if we’re getting better at innovation or not. Selecting and tracking even just a couple of leading indicators initially will give you a clearer sense of whether the initiatives you’re putting in place are having any impact on developing your innovation capability.
If you would like a free PDF of the ‘Six Muscles' Innovation Capability Framework, click here.
Susie and the Yellow Cat team work with corporate clients to develop their innovation capability. If you want us to help you work on your innovation muscles, please get in touch - we’d love to hear your story and help you take your next steps.