Do companies know how to innovate? Should innovation be part of an individual’s job title? Should it be in a job description? Does a company even need to innovate?
Most big companies think technology when thinking about innovation, regardless of whether or not they’re technology companies. Startups are often considered to be de facto innovators, but is that the case? Marketing tends to have their own way of talking about innovation. Is there any Fortune 500 company that doesn’t talk about their innovation capabilities in their “About Us” section of their website?
“The organization must determine what the various company divisions and groups need to achieve in order to contribute to the strategic priorities.”
To improve an organization’s innovation, leaders must start with the company’s strategic priorities. What are they trying to achieve? Innovation is only meaningful if it is in service to that. The organization must determine what the various company divisions and groups need to achieve in order to contribute to the strategic priorities. These become the mission statements for the groups. The groups should next evaluate what behavior is necessary among their people to accomplish their missions.
The first problem with “innovation” in most organizations is that no one stops to define what innovation means for the company. To one group, it means technological invention; to another it means continuous improvement of processes. To one leader, it means adopting a learning and exploration mindset; to another, “innovation is not my job.” To one employee, it means dreaming up a new product; to another, it means creating new value for customers.
Innovation needs to be defined and then shared across the organization.
It truly doesn’t matter which definition you land on. It only matters that if an organization is going to use the word. The term needs to be defined and then shared across the organization. I like “something original that creates new value for stakeholders.”
The desired outcomes are more important than the definition. Is growth needed in order to hit revenue targets? Is it expansion of market share? Improvement in customer satisfaction? Improvement in employee happiness? All of the above?
“The innovation mindset is characterized by behavior reflecting learning and exploration. It’s how to deal with uncertainty.”
Innovation might be one avenue toward achieving any of these. But leadership should be agnostic about how they achieve the desired outcomes. Other possibilities could be acquisition, market expansion into emerging countries, retooling existing products for adjacent markets, partnerships, and so on. Companies need a diversified approach to accomplishing their priorities. Poorly defined innovation ensures innovation groups are not aligned to corporate strategy.
While “innovation” might be one method of achieving priorities and goals, having an innovation mindset is required no matter the pursuit. The innovation mindset is characterized by behavior reflecting learning and exploration. It’s how to deal with uncertainty.
Lean innovation is an iterative approach to moving from the unknown to the known.
I prefer lean innovation as representing the desired learning behavior. It is the integration of human-centered design, rapid experimentation, and working agile. This customer-centric approach to exploring the unknown combines developing empathy for customers and other stakeholders, purposefully validating or invalidating assumptions, and leveraging data and insights to cut through biases when making decisions.
It’s an iterative approach to moving from the unknown to the known. Agility helps teams balance the execution work on the known with continued exploration work on the unknown.
Lean innovation, or other such practices, has a role to play across the entire organization, wherever uncertainty exists. New technological inventions or alternative business models obviously require a lot of exploration. But they also need execution work. Otherwise, they never leave the idea stage. Trying to improve marketing or sales for the core business benefits from exploration, albeit to a lesser extent.
It’s useful to think about this balance of execution vs exploration across time horizons. I’ll tackle that next time.
Brant Cooper is the author of the NYT bestseller, The Lean Entrepreneur. His next book, Disruption Proof is available for preorder now. Order from your favorite retailer or for bonus bundles, go to https://brantcooper.com/disruption-proof/.