Despite the plethora of advice on how to improve innovation outcomes, innovation leaders in many organisations continue to ask the question; why aren’t we getting more bang for our buck on innovation? Some of the reasons behind this struggle include (but is not limited to); lack of sufficient goods ideas, selecting and developing the wrong ideas, perpetually ending up with incremental ideas only, disjointed innovation efforts across multiple business units, inability to get good ideas over the line. These factors are in the most, often related to an inability to manage the creativity of innovation or the tension between creativity and value capture.
Using a structured process to manage creativity may seem contradictory and it is one of the biggest reasons why innovation proves difficult for many organisations to master. Is it possible, necessary or even right to have a structured management process where a lot of creativity is required? The answer is Yes. To succeed at innovation, it is important that organisations couple a structured management process that demands discipline, with the contrarian, divergent and anti-status quo thinking, as well as the spontaneity characteristics of creativity. To understand why this is necessary we need to examine innovation through the lens of one or the other, rather than both co-existing.
“Just providing smart people with some creativity space, fuss ball table and a big budget, without a process to follow, will only lead to a disjointed effort where little value is created compared to resources committed”
On the one hand, if innovation is left as an unstructured and unmanaged creativity exercise (where you give smart people from different parts of the organisation some creativity space, fuss ball table and a big budget) without metrics, idea selection process, performance indicators, organisational alignment, planning and accountability and an overall process to follow, the end result is likely to be a disjointed effort where, although great ideas might be generated, efforts may be duplicated, wrong ideas are backed (sometimes due to vested interests) and very little commercial value is created or captured, compared to resources committed. On the other hand, if innovation is turned into a standard project where, before resources and finance are approved, all costs need to be defined to within +/-5%, the leadership team wants to know what the final product or service will look like, when profits will be realised and the ROI involved, then at best, such an organisation will only continue to incrementally improve parts of what they currently do, rather than succeed in commercialising semi-radical or radical innovations that can transform organisations and markets.
“Organisations need to use science (process) to manage the art (creativity) of innovation”
Against this backdrop, structure is not the antithesis of creativity. To sustain positive innovation business outcomes, organisations need to have an understanding of how to methodically arrive at the value capture stage of innovation without stifling the creativity aspect. In essence, they need to use science (process) to manage the art (creativity) of innovation. Without these two (process and creativity) working in tandem, positive innovation outcomes cannot be sustained. Thus to sustain positive innovation outcomes, organisations must have an end-to-end innovation management process that simultaneously combines freedom and discipline, enabling creativity to flourish and ensuring that value capture is consistently realised. Such a process must be characterised by (but not limited to)
- Strong leadership steer and support for the innovation process
- A coherent innovation strategy that informs where the organisation is focusing its innovation
- A system to support both perpetual unconstrained and guided idea generation
- A strong methodology to screen, rank and prioritise ideas to develop
- A methodology to categorise ideas into innovation types
- Budgeting and funding process to back promising ideas (even when ROI is not yet known)
- A methodology to understand the market potential of an idea
- Concept development progression or termination indicators (knowing when to carry on or stop)
All the above features should be covered in an end-to-end innovation management process, one that starts with the innovation strategy and ends with the value capture or idea commercialisation. A management process that supports this approach is shown in InnStrat’s End-to-End Innovation Framework.
This model puts emphasis on leadership support, which is shown as required throughout the end-to-end process. In the absence of leadership support, innovation cannot succeed within any organisation. In essence, leadership support is not only the beginning of the journey, with Innovation Strategy formulation, but it is also the foundation upon which the entire process thrives.
The above framework, which builds upon a classic 3-stage model called the “Innovation Value Chain” (developed by Morten Hansen & Julien Birkinshaw and appeared in the Harvard Business Review in 2007), represents a perfect example of a process that allows an organisation to methodically move from one stage of the innovation process to the next. It should however be noted that the above process in not entirely linear. By having appropriately defined metrics or indicators in place for moving between the stages, the creativity required within each stage can be allowed to flourish. As an example, the creativity required in idea generation can be allowed, subsequently by using an agreed screening methodology, those ideas that are identified as feasible and potentially viable during the screening phase will be ranked and taken forward for concept development. Similarly, the creativity required during Idea Conversion can be left to flourish as the innovation team work to develop the concept of a product, service or business model, design business experiments, validate screening assumptions and conclude the viability or otherwise of the innovation idea.
The efficacy of the above framework is of course dependent on the understanding of the user on what to do within each phase and what the best resources to use within each phase are. Here, we provide a brief outline of how organisations can navigate through each stage.
Innovation Strategy. Innovation strategy is required to be formulated as a starting point of any serious organisation’s innovation journey. The innovation strategy must be aligned with the organisation’s business strategy. The strategy formulation must consider the market trends, the risk of discontinuity, the organisation’s competitive position and ambitions as well as the internal constraints. Based on these considerations, the leadership team must determine if the organisation will be pursuing only certain types of innovation or a mix of the different types of innovation (Incremental, Semi-radical and Radical). This step sets the scene for the next stage and allows innovators within the ecosystem to know which type of ideas to come up with.
Idea Generation. We call ideas the oxygen of innovation, simply because the minute an organisation runs out of ideas, innovation dies. Organisations must thus develop a range of processes to foster perpetual idea generation. This should allow both unconstrained and creative ideas as well as ideas to solve more specific and narrowly defined ideation challenges, as may be required by the business. Organisations looking for inspiration on idea generation can read the science of idea generation. Organisations should also have an idea management platform through which employees, customers and other ecosystem partners can easily put their ideas forward and the organisation can also request potential ideas or solution to specific business challenges or initiatives. Idea management platforms are proven to statistically improve idea sourcing and overall innovation performance.
Idea Screening. Ideas are not created equal and this is why idea screening is a critical step in the innovation process. Whilst creativity should be left to have its way under idea generation, idea screening must take a more methodical approach to weed out those ideas that;
- Do not have a hint of value proposition
- Do not have a potentially economically viable product, service or business model
- The market potential is not big enough to make it worthwhile
- Have risks that cannot be managed or mitigated
- Are not aligned with the organisation’s reputation and or innovation strategy
The objective of screening is not to limit the ideas taken forward, but instead, to ensure ideas that are not worthwhile are dropped as early as possible. This typically avoids a situation where ideas without potential are competing for funds and starving great ideas of much needed resources and funds. InnStrat’s InnoScreen is a methodology that organisations can use to screen their ideas.
Idea Conversion. Idea conversion (or concept development) is at the heart of innovation. Not only is it the link between a good idea and successful value creation and capture it is also the stage where leadership have to put their hands in their proverbial pocket and show support to development of individual ideas. Conversion is the process of taking a raw idea with a value proposition and creatively building the concept of a competitive offering (product or service) or business model and then moving from that concept to building a model offering (prototype) to capture the value in the idea. Part of idea conversion must include validating any assumptions made in the earlier screening of the idea. As such, the screening framework and scoring used to sanction the idea for development must be frequently revisited and updated with better defined information (or market realities) during the conversion stage. If at any point, new and more accurate information from tests and business experiments (typically involving customers and or supply chain partners) makes the idea unattractive, an objective decision must be taken to terminate the concept development, if there is no way to modify the premise or pivot to make the idea commercially viable and sufficiently attractive.
Idea Commercialisation. For ideas that have proven viability and attractiveness through the concept development stage, the final stage to reach value capture is commercialisation. Whilst this is the final stage of the process, the foundations for a successful commercialisation must be built into the whole process from the moment the value proposition was identified. Both internal and (to the extent that is possible, without giving away competitive intelligence) external stakeholders, as well as co-innovators must be engaged. These stakeholders must be aligned with both the value proposition and the business model. The fact is successful commercialisation is not a given, even for the most impressive innovation ideas, which is why such engagement is necessary to ensure, where relevant, all necessary channel access, licenses, regulatory approval and any other internal or external support required for successful commercialisation are in place. Additionally, this step must also consider the go to market plan. Again, this is a plan that would have its origins from the concept development stage when engaging customers and supply chain partners for business experiments and viability tests.
In summation, organisations can combine discipline and creativity to drive sustained and positive innovation business outcomes by adopting the InnStrat’s End-to-End Innovation Framework. The framework provides an overview of the stages that an organisation must manage in order to go from innovation intent & strategy, all the way to value capture. The framework also provides indication of what should be considered at each stage of the process, thus ensuring a complete picture of process and inputs required to drive success.
Organisations that need help in adopting and deploying this framework in depth can get in touch with InnStrat here.