Transformation through Strategy and Innovation

One of the most frequently asked questions we get from clients is how we can help them transform their organization to become more innovative and create a culture of continuous innovation that enables strategic renewal. A simple question but a big challenge. It touches the fundamentals of why anyone would want to start a business. Businesses exist because of opportunity and opportunity is why we innovate. But what enables successful innovation, how do we embed that innovation culture (innovation culture – everybody wants one)? Much has been written about it and based on 20 years of working with clients we have our own views how to achieve this.

When people read or hear about successful companies that pursue one good opportunity after another they admire them and try to understand how they do it (innovation = admiration). The Apple’s and Google’s of this world, the Lego’s and Virgin’s they all have great stories to share and each is a worthwhile company to study [1]. But benchmarking, copying or emulating doesn’t guarantee success; on the contrary it often leads to disappointing results. If the ambition is to transform your organization into one where innovation is at the core of what you do then there are better ways.

We believe that there are three key elements that businesses’ should focus on to address this challenge:

1. create a clear purpose for the organization
2. use that purpose to make innovation happen from day one
3. and make it stick in your organization

CREATE PURPOSE

Often companies state their ambition in numbers, e.g. market share, % growth, margins etc. But the problem with numbers is they very seldom excite most of us unless we’re discussing world records.

We would argue that most people do not get out of bed in the morning to win a percentage point in market share. They need a clear purpose (HBR: Strategic Intent, Gary Hamel, C.K. Prahalad) to connect to on a more emotional level, something that is engaging, exciting and provides a compelling reason and a clear direction to seek opportunity for the business.

A purpose should describe what the company aspires to, an ambition it wants to achieve. It should be clearly linked to opportunity because that is at the heart of why we’re in business anyway. And the ambition needs to be stated at the right level. On a recent project I have heard Gary Hamel tell a group of senior executives, “you will never exceed your ambitions”, meaning that if you set it too low you won’t stretch people’s imagination, set it high enough and people will realize that business as usual won’t get them there, they will need to innovate to achieve it (no innovation without aspiration).

Our strategy should inform in detail about that ambition or future state, it gives us direction and drives us to make clear choices (say yes to strategy – how to make tough choices) about where we will play and how we will win. This is why strategy and innovation are very closely linked (what does strategy have to do with innovation anyway). Opportunity informs strategy and strategy drives choice on an ongoing basis about which opportunities to pursue and which to ignore.

MAKE INNOVATION HAPPEN

Opportunity drives innovation whereas processes and organization enable innovation to happen efficiently and repeatedly. Yes you need to design processes, develop capability and the right organization that supports innovation in the longer term. But innovation is initially about generating excitement, about realizing people’s ideas (talent needs to see their ideas realized); it has the power to mobilize teams to focus on delivering something new and of value to the business. People generally do not get excited about processes and organizational design. Starting with that kills any momentum you may have generated.

Instead we focus on running innovation challenges that activate and execute our strategy. These challenges range from what we call early stage (broader opportunity areas that need to be explored) to late stage (specific ideas we want to realize) and from management innovation[2] (new ways to organize, lead, coordinate or motivate) to front line (engaging the wider organization or even beyond for ideas).

So rather than focusing on a ‘grand design’ which you probably won’t get right the first time anyway it is better to start innovating, building momentum, removing obvious roadblocks along the way and learn what works best in your situation and circumstances. Designing how to innovate should be an iterative process while you are delivering real results for the company, activate the strategy and motivating people to fuel innovation with their ideas, creativity and persistence to make it work. That is the greatest learning you will gain and it will help to fine-tune the innovation system to make it stick.

MAKE IT STICK

Making your strategy and innovation stick will ensure that what you have started is built to last and in time allows you to evolve with changing circumstances, i.e. strategic renewal.

Innovation Challenges are a great way to start to make your strategy stick, build momentum and communicate real results to the business. Innovation Challenges are highly participative, engaging activities, which enable us to develop capability in organizations from day one (capability building: learning by doing). When teams work on innovation challenges they will learn and adopt new behaviors through specific tools and techniques and understand the principles that support them (principles of innovation part 1, part 2). The principles help teams to adapt approaches to suit their particular needs.

We believe that systemic challenges require systemic solutions and capability building is but one element of that system that we address through innovation challenges (learn by doing) as well as running specific micro skill modules. Other elements include portfolio management, innovation processes, organizational structures, metrics, leadership development etc. Making it stick is absolutely necessary to embed and scale innovation across the organization but it shouldn’t be the starting point of your effort to transform your company. Focusing on strategy and innovation help you to start that journey.

[1] The Google Model: Managing Continuous Innovation in a Rapidly Changing World, Annika Steiber, 2014
[2] The why, what and how of management innovation, Gary Hamel, HBR Feb 2006

image credit: michel van Hove

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Michel van Hove is a Partner at Strategos. His experience includes strategy and business development, managing client relations and leading teams through innovation change programs. Since joining the firm in 2004 he has led strategic innovation initiatives across a wide range of sectors including energy, telecommunications, consumer electronics, and food and beverage.