The term “innovation” is quickly approaching buzz-word status, taking on the likes of “digital business,” “X-as-a-service,” “social,” and “I-anything” as this decade’s most sought-after phrase for the en vogue tech-minded executive. Please don’t misunderstand; innovation is a core ingredient to any company’s long-term survival. The issue is that too many companies behave like innovation is “magic.” Almost as if as long as the term is used often enough and takes centerstage on important PowerPoint slides, then the creativity in the culture will auto-magically transform towards a new competitive advantage.
The interesting part is that in the markets of the recent past, this may have held true. Heroic efforts of top designers or mindful product managers could bring ideas to life, and markets would reward them with growing revenue. Adjustments to the underlying business model and accompanying resources could almost be made after product development neared completion. In that era, products/services were fairly separated into siloed user experiences. Each experience was at a particular point in time and users didn’t have expectations that one product experience should be meshed with the next throughout their day or life. At times, this has actually been the key ingredient for major brands’ relationships with consumers. They demanded the attention of a customer and saw brand success as defining a moment in their life that was all about their product space, not about being an integral part of a broader system of their life. A system made up of many experiences that mesh to make all experiences better.
If that is how your company or your favorite brands are still positioning themselves, then let me be the first to welcome you to the connected world, a world where experiences are blurred and innovation requires a more systemic approach.
Innovation in the Connected World
Innovation is not some sort of magic. It isn’t simply about takeout meals at 2 a.m., leading to the next big idea (although that is part of the creative process many times). Today’s innovation is about establishing a process that an organization can follow. It is about investing in core building blocks that can be repeated so that innovation embeds itself into the cultural fabric of the firm. It is about tapping a broader idea pool to ensure external and internal innovation work in harmony. There is not necessarily one equation for innovation, but there are definitely patterns emerging that help define some of the core aspects that should be included.
A Prescription for Innovation
There is no one prescription for how to enable innovation at your firm. However there are building blocks that seem to be relevant time and again. A repeatable framework that has proven successful in jump-starting programs include:
|Example Innovation Jump Start |
|Program Building Blocks|
- Innovation Strategy – Innovation must be integrated into the corporate strategy.
- Innovation Team Planning & Formulation – Define the organization structure fitting your strategy.
- Innovation Process – The process itself isn't the key, it is how you support and apply it.
- Sandbox Environments – Build environments (or participate in ones like CITE) that represent the world in which you wish to innovate. These environments must include physical and digital components and should be scalable to be able to test many ideas and how they interact with today's and tomorrow's environments.
- Ideation Mechanisms & Ecosystem – This is where a lot of the "magic" happens. Deciding what combination of the following the firm will have is critical in setting the "style" of innovation that will be supported: R&D/Labs; Employee Ideation; Application of Vendor/Third-Party Solution; Partner Co-Development; Consortiums Creation; Corporate Venture; Joint Ventures; M&A.
- Idea & PoC Management – Testing technology is getting easier and cheaper, but predicting how the technology will produce value with users and ultimately for shareholders takes a lot of practice.
- Innovation Transformation Program – When it comes down to it, successful innovation programs take the right culture. Assume at least 20% of the overall budget for a formal cultural-change program.
|(© 2012 CGS Advisors LLC)|
As we continue down the “connected” path, even the approach to innovation is in need of disruption. In a connected world, everything from who is the innovator, to where innovation occurs needs to be reconsidered.
For a long while, corporate innovation has been entrusted to a small group of professionals, such as R&D teams, working inside of locked rooms far away from other employees or the market. Often focused on technical development, these teams are being shut off from so many tools necessary to compete in the emerging connected market. It is not to say that centralized groups entrusted with inventing or applying invention is not valuable, it is just not enough anymore.
Being in a connected world requires a more open approach to innovation, one that is inclusive of a broader array of contributors. This ranges from a broader set of employees, to partners in the value chain, to adjacent industry partners, to the end user/consumer. A “connected innovation” program can be recognized by a strong focus on ecosystem rather than any specific innovation. This trend is not unique to the innovation space, but really has been observed in many improvements during the last decades. In the early 1900s, competitive advantage was made by vertically integrating an industry to secure access to all necessary parts of a product.
For example, manufacturers controlled everything from core materials (ore, refineries, etc.) to power generation, through manufacturing and assembly. Mid-last century, firms specializing in a step of the value chain could partner together to revolutionize the supply of products, shattering the previous vertical-integration theory. At the end of last century, this same revolution took place in the software and IT services industries. Open innovation is continuing this trend with some twists. It is taking this concept of reaching outside the internal supply chain, way upstream to the “ideation” phase and suggesting the innovation of experiences requires collaboration very early in the process, in a much more “open” style.
No matter if your firm believes it needs partners during this idea formulation phase or not, the basic premise of the connected world is forcing companies to rethink how they test and deploy new products. No longer is a simple “test” environment good enough. Now you need to understand how different parts of the connected world may affect your newest innovation, in a complete sandbox.
For years, large companies have been testing products at their own facilities. They test in closed environments that are made to simulate usage of their own products. Once these closed tests have been suc