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Making innovation work

  • Daniël Pairon, Partner |

In a rapidly changing business environment, organizations face a variety of new competitive forces:

  • Changing customer and employee demographics, behaviors, and expectations are accelerating the impacts of technology change;
  • Rapid technology innovation is challenging existing business models, enabling new operating models, and driving rapid change in customer behavior and expectations;
  • Big technology companies and Labs—including Apple, Amazon, Google, Microsoft, IBM, and MIT Labs—have become important players beyond their traditional markets and are making significant investments to develop game changers;
  • Start-ups and scale-ups, together with the organizations who are funding them, are intent on reinventing business models.

The most recent KPMG Global CEO Survey also revealed the following:

  • 65% of CEOs believe that the next three years will be more critical for their industry than the previous 50 years;
  • 39% of CEOs feel they will be running significantly transformed companies in the next three years.

Regardless of size, a persistent challenge for all kinds of organizations is how to define, practice and experience innovation. It requires deep strategic thinking about your organization’s positioning and innovation values: Do you want to be a frontrunner? To innovate yourself or partner with another organization? To follow innovation in other sectors and apply solutions to similar problems within your own sector?

A lot can depend on the size and structure of the company. The organizations with the biggest challenges when it comes to making innovation work tend to be those at opposite ends of the spectrum: large organizations and small or family-owned businesses. Mid-sized companies are more likely to rest in a sweet spot: being small enough to be agile and responsive when it comes to implementing ideas and getting buy-in from collaborators across the organization, whilst being large enough to have sufficient resources and human capital to invest in change.

In the case of large organizations, implementing a cultural shift can be slow if for no other reason than the sheer number of people who need to be aligned and feel engaged with the innovation cycle. Among other things, this includes instilling a common understanding and acceptance across the workforce that failure and setbacks are a necessary part of that cycle – an ethos that can be tricky to foster in some competitive environments.

For small and family-owned businesses, challenges can range from limited resources to tunnel vision at management level at the expense of more open-minded thinking; in terms of creating an ‘innovation culture’ the latter can be more difficult to overcome. After all, the intersection of broader perspectives and ‘out-of-the-box’ thinking are key to allowing innovation to flourish, which can be stifled if management aren’t open to incorporating new ideas into their vision. It’s not easy to admit when this is the case and takes a good deal of self-reflection and honesty to do so, but if real innovation is the ultimate objective, identifying where your organization might be facing these kinds of limitations is a crucial first step.

So how to harness innovation for your organization?

Firstly: by collecting, exploring, discovering and developing bold new ideas, new trends, new technology and new players, stimulated through collaboration across different functions through a structured process. The so-called "collaborative innovation" that develops as a result will lead to the identification of well-founded concepts, supported by employees and management for further development.

Secondly: by looking beyond your company to identify look-alike problems or solutions from other sectors that could potentially be transposed to address the challenges you are facing. Be willing to explore possibilities such as organization venturing - whereby a large organization with a defined problem or question invites start-ups that already offer a particular solution to form a partnership to further tailor existing solutions and explore alternative options through a process of co-creation. By combining the financial resources and experience of a larger organization with the specialization and agility of a smaller start-up, an optimized solution can be developed, which both solves the original challenge of the organization and at the same time can be leveraged by the start-up to further grow its business. It’s a win-win scenario which allow the two parties to each benefit from the capacities of the other, and has repeatedly proven successful in a number of industries.

Thirdly: remember that vision, ideas, and agility on their own are just components of innovation - they need to work together at strategic, tactical, and operational levels for an innovation culture to take root and grow across an organization. It’s all about linking bright ideas from creative minds to decision-makers. The stimulus for this may come from the customer (external driver) or be driven by strategic objectives (internal driver), but for it to be effective, consider how commitment to innovation is embedded in your organization’s structure, particularly in terms of governance and position within your operating model.

Fourthly: to ensure that there is a clear line of sight on innovation throughout your organization – which involves and aligns everyone from the CEO to entry-level collaborators. It’s also important to demonstrate that innovation has worth for both individuals and the organization itself, through a clear innovation governance and process of inclusive idea creation, decision-making, experimentation, development, and implementation. There should always be a clear business case for developing a new idea, with a specific problem statement or objective that the innovation is designed to address, and which outlines the expectations of the delivery process and clarifies the desired outcomes.

Lastly: try not to forget that while innovation, technology and digitization are often linked together, they are not inseparable. Broadly speaking, think of innovation as the overarching process, through which the development of technology is one way to provide a solution. But solutions can also take the form of products, services, systems, and processes – anywhere where there is a problem, there is potential for innovation.

After all, innovation is about more than creativity; it’s not just about coming up with new ideas. Above all, it’s about executing an idea and implementing real change to solve a challenge in a way that delivers value for the organization, its ecosystem and its innovation culture

That’s what makes innovation really work.