Innovation and Building a Next Generation Organisation

All over the world, organisations are emerging from hibernation, once again stretching their limbs and flexing their corporate muscles ready for a post-recession drive for the future. But whilst hibernating, hunkering down and minimising risk in an effort to survive, the world and customers continued to move on at an ever-increasing pace.

With 72% of major company leaders now admitting their businesses rely too heavily on fading revenue streams; successfully driving growth through innovation is no longer as simple as launching new products and services or trying to gain a bigger share of the existing market. In fact 48% of senior executives cite changing external environment as a key driver of innovation. 44% cite changing customer preferences and 43% cite the need to enter new markets with 37% outlining a lack of growth as the key driver. The game has changed and the true winners, the ‘Innovation Leaders’ will be those that master strategic innovation in order to deliver new business models, experiences and differentiation in order to enhance business performance and disrupt at a continuously competitive pace.

With that in mind, research shows that 61% of corporates are preparing to change their strategy from concentrating on ‘recession surviving efficiency’ to a focus on growth. That means new thinking, approaches and behaviour has never been more crucial to the survival and future of every organisation. The worrying statistic is despite the importance of innovation-led growth now being firmly on the strategic agenda it’s still a challenge for many organisations with 53% of executives saying their boards talk about innovation, but nobody seams clear what it really means. 56% of executives also said that thinking about innovation strategically was a significant challenge along with 41% unclear about how to define the outcomes of innovation.

So with 69% of corporates now naming innovation within their top three priorities and 18% putting it at the head of the list, the need for CEO and senior team strategic advice on innovation has never been more crucial.

Why man, he doth bestride the narrow world
Like a Colossus, and we petty men
Walk under his huge legs and peep about
To find ourselves dishonourable graves

So spoke Shakespeare’s Cassius of Julius Caesar but these words can equally apply to any who stand out from their chosen fields. Amazingly people & customer focused businesses like Zappos and Amazon, or world-renowned individuals such as Richard Branson, the late Steve Jobs and innovators of the moment like Elon Musk. We all have the potential to be great but some have that something special, which turns them into world-bestriding innovation leaders whilst the rest of us follow in their shadow.

But what has this to do with business and with creating the future? Surely, in business we deal with cold hard facts and cash, the movement of goods and efficiency right? As the Monty Python sketch (The Audit) goes “there’s no place for sentiment in big business.” Well not anymore! The post-recession organisations, which will stride the world of the future like a Colossus will be those that endeavour to become what I call a ‘Next Generation Organisation’, creating inspiring innovation cultures, game changing business models and delivering amazing customer experiences. The challenge; 68% of directors think their leadership team is better at delivering efficiency than growth and in the banking sector that figure rises to a staggering 83%.

Driving forward in the post-recession world we now operate in will require a significant shift from the old game to the new game and for most organisations it will mean reinventing themselves in order to become relevant and stay relevant. Continuing to play the old game is no longer an option and recent survey results confirm the sentiment with only 22% of senior executives citing ‘responding to competitors’ and 21% citing price pressures, as drivers of innovation. Changing the game is now the new strategic challenge, not trying to compete at the old one!

Building a ‘Next Generation Organisation’ is based on my latest thinking and working with some of the worlds most successful organisations and it boils down to three core attributes – Intelligence, Collaboration and Adaptability. The first challenge for organisations is ‘Intelligence’ and moving away from traditional approaches to data and insight. The second challenge is around ‘Collaboration’ and the re-design of cultures, networks, strategic partnerships and increasing co-creation. And the final challenge ‘Adaptability’ focuses on speeding up the commercialisation of innovation in order to bring bigger ideas to market faster.

For this change to be successful not only do processes and procedures have to be changed, mindsets have to alter as well. Isolationist, my job only, silos have to give way to creativity, collaboration and teamwork. Being chained to your desk with your head down to the task needs to be replaced with creating the space for interaction. The ‘water cooler’ moment may be a cliché but it has a vital role to play in drawing together employees from varied disciplines in a shared drive to co-create innovative solutions and exceptional customer experiences.

Transforming an organisational culture into one of openness and innovation won’t happen overnight. And it certainly won’t come about unless considerable thought is put into designing the new culture, developing innovation leaders and training every employee in a new way of thinking and behaving. Sadly, for many, the recent surveys used to write this blog; ‘Why Low Risk Innovation is Costly’ Accenture 2012, ‘State of Global Innovation’ imaginatik 2013 and ‘Eyes Wide Shut – Leading for innovation in post-recession Britain’ ?What If! 2014, indicate there is some way to go on the road to becoming a Next Generation Organisation and driving innovation-led growth.

• Intelligence – 60% of major UK company directors admit their leadership teams fail to understand their customers.
• Collaboration – 66% of major UK business leaders claim their current organisational structure makes it difficult to share knowledge and understanding.
• Adaptability – 68% of UK corporates take just as long to innovate and get solutions to market now as they did five years ago.

Intelligence, Collaboration, Adaptability; all of these require something far more than facts and rulebooks. Put bluntly if you think that sentiment or soft skills have no place in business then innovation is never going to get beyond a note in your annual report or a marketing strapline. But why should you bother? If the old way served well for decades why change? Quite simply, because the world has changed and continues to do so at an ever-increasing pace and that means staying relevant is the new challenge. To put that into context, Facebook didn’t exist 10 years ago, the iPhone disrupted the mobile phone market within two years of launching, yet global icons like Blockbuster and Kodak are no more! Businesses large and small can all now access the same technology, manufacturing techniques, processes and materials; meaning traditional forms of competitive advantage are now obsolete. Look at smart phones for example. They all take pictures, access the internet, enable you to play games… and you can even use them as phones if you want to. So why choose one over another? Yes you might stay with one brand out of loyalty but it’s a fair bet that you are also looking at service, added extras, customer care, reputation and experience. And back to Apple again with the iPhone, it even comes down to how owning the products and your connection with the brand make you feel!

The Next Generation Organisations understand this. They know that innovation is the way to stand out, but they also know that innovation is not just coming up with new products. True innovation infuses the entire organisation from CEO to back office to customer facing employees. True innovation creates exceptional customer experiences and connections with customers and consumers and to do this, true innovation needs to embrace skills such as empathy, understanding and anticipation. And harking back to the Monty Python sketch, true innovation also understands that failure is not necessarily a reason for sacking but rather an opportunity to learn and grow. Unfortunately, 58% of business leaders admit their management teams are failing to effectively lead for innovation however that’s likely to be driven by the fact that 33% are unclear about innovation leadership responsibilities.

For some a strategic and cultural transformation towards innovation will come as naturally as breathing. Others will need time and patience and understanding. But there really is no alternative. Organisations with formal, well defined and communicated innovation strategies, aligned to their corporate growth strategies. With supportive CEOs, senior teams and collaborative cultures are less likely to have an ‘incremental innovation’ capability and are more likely to have what I call a ‘differentiated innovation’ capability i.e. what they do isn’t just re-badged continuous improvement with no discernable benefit to both the top line or the customer, it’s an innovation-led growth curve, a differentiated position and the reputation for delivering amazing products, services and experiences.

Compared to organisations without a formal, structured approach to innovation, organisations who ‘innovate with purpose’ and align it strategically are 50% more likely to define that strategy as delivering a competitive advantage, are 100% more likely to transform their business in the next 3-5 years through innovation and are 20% more likely to be first to market!

Everyone says they want or need to drive innovation-led growth but few actually do.

Image Credit: StephanieKunes.com

Wait! Before you go…

Choose how you want the latest innovation content delivered to you:

• Daily — RSS Feed — Email — Twitter — Facebook — Linkedin Today
• Weekly — Email Newsletter — Free Magazine — Linkedin Group

Cris Beswick is a strategic advisor on innovation and author. He is also the author of The Road to Innovation, and featured on BBC radio and TV. He is also a contributor for The Times, Financial Times, The Independent, CEO Magazine, Director Magazine, HR Magazine and The Sunday Telegraph. @CrisBeswick