Process Improvement is Not Enough To Significantly Change Innovation Results
Increasing the probability of success in innovation is a key challenge that even the most experienced market leaders face. The probability of success is an even bigger challenge when it involves doing new things to expand business boundaries, typically called adjacent or transformational innovation.
Working to discover a critical insight or to identify a great idea is not a given but these are not necessarily the major challenges of innovation- it is hard to think of a time that we didn’t find a new critical insight or better frame an opportunity. So why isn’t having a well-defined innovation approach or innovator’s process utilizing consumer empathy, design-thinking, learning agility, and data-driven insights sufficient for companies to produce the transformational results CEOs crave?
In over the two decades of helping organizations improve innovation, we can conclude that process improvement, including implementing new tools or approaches, explains less than 30% of the success. To explain the rest we must look beyond improving the process by focusing on the People and the Environment. Executing on innovation requires a defined approach or process, but to help organizations drive a more efficient innovation outcome and improved results, focusing on the Right People, the Right Process and the Right Environment drives 3x more effective results.
The Right People
Is there a right person, personality trait or something else? Many might quip “ideators” are who are needed to innovate and the better innovators are creative-type people. It is true that when assessing people on innovation teams, “ideators” or rich idea generators are typically lacking in these organizations and for good reason – business is analytical in nature as resources are managed effectively, and related risks and judgments must be made. After all, the business case must carry priority, so organizations can train or contract with ideators to help jumpstart promising ideas. However, ideators by themselves, left alone, will continue generating new ideas and thus delaying or at worst never launching the solution. Others may claim innovation’s success lies in the execution, or the doers, because nothing ever happens until someone does something. Ok, so we now have idea people and execution people on the innovation team, we are good right? No, actually, it is more about training in thinking styles than a type of thinker. Furthermore, we actually need 4 thinking styles to make it through innovation, and so, when picking the right people you are also picking the right minds and people with the right flexibility in decision choices based upon project stage.
The concept of a cross-functional team may seem like a great approach, but it is insufficient in nature because it misses the point of the Right People – meaning the right frame of mind or approach to the problem at that stage. Unique skillsets and thinking diversity are excellent traits in teams for many reasons, but it can be accessed or added by a team with good innovation instincts. We apply a thinking-styles model founded by Min Basadur, a renowned researcher best known for his work in applied creativity, workplace innovation development, and patented thinking, to help teams assess their thinking styles. These thinking styles essentially group into four types: ideator, conceptualizer, optimizer and executor, which succinctly follow the decision styles necessary to progress through innovation most effectively. If the team or organization is unbalanced or lack flexibility, training or changing up the team configuration is the solution to improve innovation results.
What else about teams do we find stalling good innovation? Hand-offs are a major killer. When various leaders or departments are passing the innovation project from its early ideation stage to development, to research, and then to marketing and sales, it can cause discontinuity in execution. This project management approach does not afford flexibility to learn and evolve innovation to its best solution. Even worse is when we have seen hand-offs create a left-to-right inertia in innovation development, where bad ideas may be left unchallenged or good ideas changed driving innovation the wrong way when each party adds their “touch.” The right thinkers must take an entrepreneur’s journey with high control (i.e., low hierarchy, minimum boundaries) to have the ability to manage pivots especially early n the process and if the pivot requires a change in stage, the thinking style approach must change as well.
For example, during an agile pivot from a failed market test, you want to move back into the mindset that there are “no bad ideas,” and pull back those who are naturally execution-oriented thinkers to iterate on the concept and find a new possible product-market fit. With a room full of executors, you’ll certainly launch faster every time, but only some of the time with the right proposition; hence why you see results in these situations as varied and might conclude innovation is seemingly unpredictable. You can add subject matter experts for gaps in knowledge or skills but you cannot substitute the right thinking to navigate innovation at a higher probability of success. Just having the right people in addition to right process, doubles the chance of success- people who are trained in and able to adjust to these problem-solving thinking styles.
The Right Process
While innovation process is not often sufficient to maximize probability of success alone, having a sound innovation process is critical. Luckily proven best practices are fairly well known today. In 2021, design-thinking starts with empathy, a standard of understanding customers at a human level to uncover tensions. It requires teams to immerse themselves in the behaviors of their customers through deep understanding and continuous learning with the target market. Speed adds another complexity to innovation and is equally as critical as consumers are far more aware and informed than in days’ past and market competitors don’t offer the luxury to sit around on new ideas.
Here is a list of key elements to assess if your current process helps drive innovation success:
- Critical decision points: Whether gated or sprint-oriented, key decision-making moments allow for learning and assessment of the work in progress to increase the probability of success at each point
- Repeatability: An overall systematic approach that defines steps and stages with clear budgets as guidance to ensure the closeness and to minimize variability of testing-results
- Flexibility and Ambiguity Allowances: Allows for an iterative approach that supports the refinement and learning of the proposition of the job to be done within a defined sprint time and investment
- Decision-Science– Align decision points with process to create some level of consistency and comparative data to create better predictability
- Relational Risk by Type of Innovation: Define types of innovation by level of risk. Three main types are: core business – existing products and market improvements, adjacencies expanding business boundaries and transformational – breakthrough, disruptive
- Portfolio Management– Determine the make-up of the innovation projects done from typing and weighting or balancing projects such as with right balance of risk (types of innovation), ensuring balance across categories/line of business or managing portfolio by # of innovation projects
- Assessment of Success– Innovation has a high failure rate and success should be judged on how the innovation project was managed (ex. identifying killer issues and killing an unsuccessful innovation early which frees up resources); at the project level look at how the innovation was “managed” not if the individual project succeeded or failed and judge revenue growth success on the portfolio sum of innovations over a period of time
- Post-Debrief– Doing new things requires continual learning and adjusting, ensure your process includes periodic time for continual improvement that feeds back into and training
Measures of Innovation Output
Measuring progress of innovation at various stages can be a major subject area itself, but, generally speaking, think of innovation progress in 3 stages: Early on 1). Exploration: qualitative analysis of empathy work to identify discriminating tensions or open opportunities. Also, get quick market feedback to iterate on initial findings. If it is high risk/transformational innovation you might look at foresight and the outcomes of foresight solutions to fit with growth strategy to determine success to proceed. The next phase is 2). Developing: Once the concept or opportunity is understood, use concept testing or a custom quantitative study. What is critical is to test with a defined level of confidence the market reaction. If possible for the solution, an early minimal (low cost) prototype or way to demonstrate or express the idea. This middle stage is critical to iterate and gather insight continually from the target customer/consumer and in sprints or stages. 3). Validation: test the whole proposition not just the parts, first moment of truth at purchase and at use and repurchase, reuse.
It is difficult to account for all these elements within an innovation approach, but the early identification of gaps in the approach will only help increase success. For innovation approaches that have been honed and tested, a change in mindset to simply stop chasing the next “big idea” tool or method and focus on the People and Environment may be all that is needed to see a step-change result.
The Right Environment
What does the Right Environment mean? The right environment is measured by six key environmental factors that we have validated from numerous studies to aid the innovativeness of an organization:
Assessing these elements will help identify strengths and improvement areas. However, it is important to remember that the Environment for innovation is rooted in the culture set by leadership, and as such, creating the Right Environment becomes the responsibility of leadership. Alignment to strategy, investment levels and risk-taking philosophy is necessary background work. Moreso, demonstrating consistent behaviors, reactions, and decisions on innovation projects among the CEO and leadership team helps set an innovation culture. When there is a gap in the decision environment, many times, it is caused by lack of awareness created by leader decision biases – likes/dislikes as example or deference to leadership making all risk-based decisions by innovation managers.
One common problem area of clients is creating an environment that promotes risk-taking. Calculated risks are necessary to find breakthroughs. The currency to measure success is the learning so we want to promote an environment to learn quickly from success and failure and adjust or pivot accordingly. This is particularly true for organizations who do not have a good pedigree for doing new things because driving such a transformation in the environment is not likely to happen overnight and must be continually reinforced. Many times, the symptom is that the failure or risk part of the equation is over emphasized versus the risk of doing nothing or doing something too small. That risk must be weighed against launching and adjusting because many times the market has the answers. Plenty of products fail already so brand risk is always there and to be considered, but it should not be emphasized over learning where there is strategic fit for a new idea.
For most organizations of any size, focusing on speed of decision and learn by doing can significantly shift the environment to get to the 3X results in success, probability adjusted of course.
Many times, just a high-level survey assessment of the broad environmental areas and management interviews can help identify areas for intervention steps to gain improvements. You may be able to spot improvement areas yourself by just looking at behaviors such as:
- Ideas are greenlighted that are similar to competition
- Bias for proving your size of prize and delaying earlier implementation for learning because lack of enough certainty, lack a learn by doing or behavioral proof approach
- Your product is consistently 4th, 5thor 6th in the market or category
- Budget is gated but the decision is very subjective at the top
- Financial data and business case (on paper) is valued over qualitative and customer feedback in early stages
- Focusing on what we know vs what we don’t know
- Testing parts but not the whole proposition or solution
From these priority issues identified, improvement will requires structuring intervention to change the environment.
Culture change happens by focusing on interventions to change the environment. Companies 10-15 years ago that wanted to get new ideas began to compensate employees for ideas. More importantly, today is to promote them with visual, public praise or run intrapreneurial contests. It’s this simple; the behaviors shown start to open the environment to take risks and trying things to adapt from learning. Start with an assessment of what could be improved, we have done this through interviews as well as through benchmarking other companies to gain an understanding of possible future innovation environmental state.
- Here is a common list of intervention topics for improvement that we have identified in our work with clients from which you can consider for your own organization:
- Speed to market
- Big idea generating or testing
- Learning/Learn by Doing
- Deep insight (such as empathy methods)
- Concept Testing (interpretation & communicating predictability)
- Market Testing
- Entrepreneurial risk management thinking
The precursor to a good environment is getting right people on the “bus and clear innovation process. It also helps to articulate the growth strategy direction and defining what boundaries are to help set the foundation for the right environment. If leaders are deliberate and careful to align to right environment, innovation will thrive and while there are always improvements to the right people, process and environment especially as the organization grows and market evolve and change, you can tell almost immediately it’s working by the openness of staff, collaborative nature with outside world and the financial results.