Innovation is on every organisation’s agenda. How can companies continually adapt to the seemingly relentless advance of new digital technologies and embrace new ideas at the pace they need to? The unpredictability and speed of change in today’s competitive world means being able to achieve this is now paramount. That’s why I recently authored a report with VMware looking at digital disruption and outlining steps to bridge the innovation-execution gap that exists in many organisations today. Here are some of the key lessons.
Creativity and innovation shouldn’t be confused
Many businesses admit they are not good at turning new ideas into business outcomes. This stems partly from a view that creativity and innovation are the same thing. Being ‘creative’ and coming up with the idea is just the starting point. To paraphrase Kevin O’Connor from global information and insight provider IHS Markit, 'innovation should be treated as a muscle that needs to be exercised; the more you use it, the stronger it gets. It becomes the day-to-day of who you are'.
It’s a long journey to deliver value from new ideas – a journey that requires an evolving strategy which incorporates adequate processes to capture and refine ideas, identifies where and how they can help an organisation, secures resource to implement them, measures impact, and rewards involved staff accordingly.
Innovation doesn’t always have to be ‘new’
Many organisations invest huge time and effort unearthing ‘new’, innovative business models resting on digital technologies. But new business models are rarely based on unprecedented ideas.
Rather, digital technologies allow companies to deploy a broader range of business models than before. These can be adapted from one domain for another, or organisations can adopt a portfolio of business models to ‘hedge bets’ across different opportunities, to enhance overall financial sustainability and resilience.
Innovate by experimentation
Traditionally, businesses have maintained a linear relationship between innovation and execution, in which expected outcomes are defined at the outset. This model is outdated. Your path and destination have become difficult to predict; it’s almost impossible to obtain all the information to establish with certainty whether a new idea will be successful.
Companies therefore need to be able to green light an idea quickly, adjust strategy as problems arise and learn from any issues or successes during the overall process. Failing to do so can be costly – with new ideas becoming obsolete before they are implemented, or cast aside altogether.
As VMware’s EMEA CTO, Joe Baguley, says: 'we must have a solid framework that allows agility, founded in the culture, the methodology and technology of an organisation. But we must also be brave enough not to discard everything we’ve learnt so far'. Ultimately it’s a balancing act – between moving forward and taking on key learnings from existing strategies.
Creating an innovative culture is easier said than done
Culture translates formal rules into unwritten ones, and it is these unwritten rules that determine behaviours and guide employees. Any attempt to change culture without an understanding of the underlying assumptions and repercussions is likely to fail.
For example, I recently interviewed the CEO of a large conglomerate going through a major strategic transformation, where a new reward system was introduced to incentivise a culture of innovation. However, in this environment the operational leaders just became more risk averse, focusing only on low risk, simple, short term ideas with guaranteed success in order to secure personal rewards. Projects that are more innovative and risky, taking longer to succeed but strategically more important for the business, were overlooked.
Cultural changes also need support from the right technology infrastructure
Developing a holistic innovation strategy requires more than a change in mindset and culture. For it to be successful in the long term, businesses must first put processes in place so it can be delivered quickly and effectively.
Senior business leaders must take strategic responsibility to ensure their digital infrastructure is ready and able to scale resource at speed across today’s range of devices, applications, and clouds, with confidence that everything is secure.
A gap exists between innovation and execution – but there are ways to overcome it
In a world characterised by exponential growth, blurring sector boundaries and expanding ecosystems, the survival of many businesses depends on their ability to understand change and respond to it quickly. They must be able to innovate as they go, without all the answers in place. The traditional linear relationship between innovation and execution has been replaced by an interactive learning process, characterised by innovating through experimentation and improvisation.
Good ideas, in isolation, won’t do this. Being innovative means building and maintaining the capabilities to pursue these ideas, at the right time, while regularly revisiting and updating strategic plans in response to the latest information available.
Professor Feng Li is head of technology and innovation management at Cass Business School.
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