CIO
4 keys to sustaining innovation
By: Imran Sayeed and Fariha Chaudhry
Thousands of articles, books, talks, and seminars have been devoted to tales of cool innovative projects that have transformed companies and even entire industries. Indeed, innovation is unarguably a key business differentiator.
But little has been written about whether those success stories have staying power. Were they able to sustain and grow their initial innovation into a pipeline of disruption? What lessons can be learned from their success?
Following are four truths about sustained innovation. Some of these may seem counter-intuitive or even downright heretical, but they're based on our years of experience guiding innovation in private and public companies across 40 cities globally.
1. You don’t need a visionary
Popular wisdom holds that innovative companies are driven by visionary leaders, and their success can be attributed to the charisma and imagination of those individuals. Classic examples are Steve Jobs and Elon Musk: In both cases, their names are synonymous with their companys' accomplishments.
But those examples are more the exception than the rule. In most cases, companies that sustain innovation over an extended period, transcending any one leader, share the following characteristics:
- Grassroots support: Rather than relying only on the innovation or strategy team at the top, these organizations cultivate a culture of innovation across all employees, thereby greatly expanding the probability of uncovering a successful idea,
- Incremental effort: Our experience working with 100s of large companies has shown that an innovation methodology that yields incremental value but does so consistently, quarter-over-quarter, with a methodical approach can create far bigger impact than a disruptive idea that may never materialize.
- Customer centricity: “Breakthrough” innovations coming from executives sitting in an ivory tower far removed from actual customers are destined to fail. By empowering employees who are closest to customers, and encouraging them to improve the customer experience, organizations can dramatically increase both the number and quality of innovative ideas.
When I (Imran) was at a leading global IT services company, some of the most innovative product offerings came out of our India office, which did not have dedicated innovation team but where innovation was infused in the culture; every employee took part in a number of innovation activities such as design thinking workshops. They also employed a Kaizen strategy for incremental innovation, harvesting ideas from customer-facing employees, rapidly deploying them, and measuring effectiveness. The sum totality of these ideas over a period of several years exceeded the value of a disruptive solution that may or may not have surfaced in that same timeframe.
2. You don’t need a lot of money
Another common myth is that innovation requires deep pockets. This misconception is unfortunately perpetuated by large organizations whose idea of innovation is a fancy collaboration space stocked with the latest gadgets and the coolest furniture. On a recent visit to a global insurance company, the head of innovation gave us a tour of their cutting edge co-working space outfitted with the latest telepresence and collaboration tools. The purpose of the visit was to discuss their innovation strategy so, after hearing about the space for about an hour, we asked, “What business drivers does innovation in this organization address and what metrics do you use to measure it?” The response was a blank stare followed by an uncomfortable, “We haven’t thought of that.” And then “Hmm, maybe that’s why our CEO was asking me what we have actually accomplished in the last two years.”
Also perpetuating the myth of expensive innovation is the belief that organizations need to hire high-end consultants or ivy league grads to lead innovation programs. When I (Imran) was CEO of Netnumina, a digital consultant startup, I was told by my VCs to visit an “innovative” startup that had raised $100M to see if there was anything I could learn from them. At that meeting the CEO asked me what kind of people I hired. I replied, “Smart, hard-working and creative folks without a huge ego.” I don’t think he liked that answer too much because he responded by saying, “There are three types of people in the world: followers, leaders and legends. We only hire legends.” I nodded and understood where the $100M had gone.
3. You need metrics
Innovation should lead to business benefits as measured by:
- Increased productivity
- Improved process and organizational efficiency
- Greater topline growth
- Faster speed to market
- Stronger customer loyalty
- Enhanced employee engagement
- Reduced risk of disruption
If an innovation activity doesn’t result in at least one of the above business benefits, then it should not be undertaken. But before you can make that determination, you need the right metrics to measure the benefits, and that will depend on the specifics of the business you are trying to innovate.
One of the challenges we had at a Japanese technology firm that we worked for was a shortage of team leads who could drive new product development. The traditional approaches of developing team leads, which involved either costly, in-person training or online computer-based training, had been ineffective. So, we decided to be creative and developed a leadership game where the protagonist was a samurai (this was a Japanese company, after all) battling a big, bad ninja. To win the game, the protagonist had to recruit, motivate and lead others in a series of tasks. While the game certainly showed out-of-the-box thinking, we needed to ground it with metrics that measured its effectiveness. We mapped the “enhanced employee engagement” benefit to several metrics, including voluntary attrition, employee referrals and, of course, the percentage of people graduating to team lead. All of these could be measured, and the results allowed us to objectively evaluate the efficacy of this solution.
4. You need an ecosystem
Innovation cannot exist in a vacuum. It needs an ecosystem to thrive and flourish. There are several components of this ecosystem that need to be developed.
Innovation champions. Employees who believe in the value of innovation become ambassadors for its deployment in their business units. Many successful grassroots innovation activities result not just in identifying interesting ideas but also finding these champions.
Customers who see the value. One of the best things you can do to sustain innovation is open it up to customers early on. When a recession hits and the CFO is looking for cost-cutting measures, he/she will think twice before terminating an initiative a top customer is involved with.
Startups who challenge the status quo. It’s not enough for organizations to develop their own innovation muscle. They should always be looking outside to find the most interesting startups that are trying to disrupt their core business and figure out a way to work with them. For example, a billion-dollar healthcare company we worked with acquired a 13-person startup that fundamentally changed our entire relationship with medical providers.
Universities to expand your thinking. Interaction with leading academics working on some of the biggest challenges in your industry can be a great source of inspiration and creativity. Fortunately, most leading universities have well-developed corporate partnership programs that allow organizations to tap into this wellspring of innovation. One such program is the Industry Liaison Program at MIT, which provides multiple avenues for external organizations to collaborate on cutting-edge research projects with professors across the university.
