Setting the “Why” for Innovation in Your Organisation
Setting the “Why” for Innovation in Your Organisation
In our previous article we looked at how the world of work is increasingly VUCA and suggested that those organisations that can identify the organisational threats and opportunities this presents will be in the best position to thrive in the VUCA world. In this piece, we suggest some considerations and tools to help innovation leaders identify these threats and opportunities. Once these considerations and tools have been utilised and the threats and opportunities identified, the Innovation Leader is in a position to set effective challenges to address these areas, we put forward some ideas about setting effective challenges later in this article.
For organisations wishing to promote a sustainable culture of innovation, there is often a requirement to engage the wider workforce to look for and contribute new ideas. Of course, for some, this comes naturally, and their instinct is already to be creative in the context of their work setting and continually look for new, better, ways of getting the job done. For most, however, they can be helped by the provision of stimulating innovation challenges that pique their interest and direct their innovation capabilities towards some meaningful mission. In this article, we consider how and where these challenges are created and suggest an ideal form for communicating them so that all staff can participate.
Innovation through the Small Ads
The first thing to consider is - who sets the challenge? The answer to this question will determine the nature and typical features of the challenge. In an ideal world, of course, anyone can set an innovation challenge. Any given individual can identify for themselves an issue they want to resolve with new thinking and they then look for help from others – perhaps from both inside and outside the organisation. Using an innovation platform makes this type of activity more viable and it’s possible to imagine a vibrant digital “innovation notice-board” where people post their requests for help which colleagues can then peruse and choose which they will engage with. Indeed, beyond the notice-board analogy, done well, this type of activity can end up as a virtual innovation marketplace. Here colleagues trade their own time and creative capacity for challenges that they think will provide interest; and affords the individual with an opportunity to contribute beyond the usual parameters of their job.
Whilst the picture presented above represents perhaps the ultimate “bottom-up” innovation culture, during the early stages of developing such a culture it’s more likely that most of the challenges will be set “top-down”. We would expect that the senior management will look to set strategic and tactical challenges that may, in turn, drive a trickle-down of challenges at regional, departmental, and functional levels. Function and department heads are also likely to set challenges focused on performance improvement. We will look at both challenge types here.
Typically, we support senior teams to identify mission-critical innovation challenges. These challenges are usually developed following some form of strategy review which identifies the important issues that need to be resolved so that the organisation can more easily achieve its overall objectives. These strategic reviews are most typically aimed at listing strategic issues which are captured using a standard SWOT analysis. Using this approach, and in the context of overall objectives, we would look for senior managers to identify the key Strengths, Weaknesses, Opportunities, and Threats which have been unearthed using a range of analysis techniques. Just to make sure we are working with the truly strategic issues; we sometimes ask the team to filter the items in each category by adding an adjective for each. This way we ask for the identification of Key Strengths, Critical Weaknesses, Exciting Opportunities, and Killer Threats. When these lists have been completed the task then is to identify those items where innovation would really help – which of these items do we not know how to resolve. These are the items that we would usually pull out to form the basis for the strategic innovation challenges that will be communicated across the organisation.
There is no end of strategy analysis tools that can help identify the items that should populate the strategic SWOT analysis. Whilst not exhaustive, we find that senior teams can make a lot of progress with the following techniques.
PESTLE Analysis – PESTLE stands for Political, Economic, Societal, Technological, Legislative, and Environmental and this checklist is designed to help teams consider the impact on the organisation of changes in these areas.
Porter’s 5 Forces – this tool encourages senior teams to consider the impact of changes in the dynamics of their industry; the five forces refer to changes in relationships with customers, relationships with suppliers, competitor activity, the threat of potential new entrants to the industry, and the possibility of substitutes replacing the need for the organisation’s products or services.
Business Model Canvas – this is a strategic template for assessing current business models. It is usually represented using visual charts with elements describing value proposition, infrastructure, customers, and finances.
Product/Service Life-Cycle – this analysis is based on assessing the movement in the profitability of key products and services and confronting the reality that some may be approaching the end of life.
Ansoff Analysis – this tool is concerned with identifying the most likely routes to growth based on the four fundamental strategies of market penetration, new product development, market development, and diversification. These core strategy options carry with them implications and understanding these is key to making good choices.
Innovation Pipeline Review – when considering setting innovation challenges, it’s important to bear in mind what innovation projects are already in development and to take a view on the timeframe for delivery and predicted impact.
Accountability Analysis – this analysis takes account of the fact that organisational innovation is also sometimes a requirement. Accountability Analysis is a review of the effectiveness of the organisational arrangements and considers management structure, role definition, levels of empowerment, and performance management arrangements.
These tools provide some much-needed structure for senior team discussions and enable easier consensus and agreement. These tools are very helpful in remote-working settings as the structure of the tools makes for more transparency and coordination of effort.
These challenges should be true strategic initiatives. And real strategic initiatives often support multiple projects and can take years to resolve. Importantly, by encouraging senior managers to identify strategic challenges, leaders are nudged to think bigger picture - to raise their focus to a higher level.
When setting challenges at the functional or departmental level, managers have a few choices. The first of these concerns interpreting any strategic level innovation challenges set and determining how the department or function can contribute. This determination may facilitate the development of a more focused challenge for the department/function with a clear line of sight to the higher-level challenge.
In this way, strategic level challenges can be deployed throughout the organisation as a hierarchy of challenges which are set thus enabling wider engagement with the organisation’s overall strategy and mission.
A second obvious choice for department/function heads is to set challenges based on the department’s purpose and performance. It helps to be able to take a “systems” perspective on the function to inform challenge-setting. Sometimes, functional problem areas are well-known, and these can themselves become the focus for challenges.
To supplement the problem perspective usually means understanding the required outputs of the department’s work, the inputs, and the transformation process. With a clear understanding of these dimensions and some standard and high-level measurements, various performance-based challenges can be determined. These challenges would typically be based on growing capacity, increasing the rate of transformation (speed), reducing the costs of transformation (efficiency), improving the quality of the outputs, and getting the most out of the resources consumed (productivity).
A high level of organisational maturity and management sensitivity helps when setting challenges of this type. The quest for improvements in efficiency and productivity may end up forcing those doing the work to consider how they perform – and in some cases if they are needed to do the work at all! In these circumstances, a high level of trust between management and the workforce makes a huge difference. Where this trust is not well-developed, then management may need to think very carefully about the nature of the challenges they publish.
Many organisations already have well-developed approaches to functional scorecards and KPIs. In these circumstances, the scorecards and KPI variance analysis can be useful starting points for challenge-setting discussions.
Setting Effective Challenges
As with most elements of our innovation system, we believe that good communication of the challenge is vital for its success. Keeping the challenge brief and clear is the way forward here. Our preferred approach is to develop a one-page brief based on the following key headings:
Mission title – an engaging name that brings people into the challenge
Background – a narrative section that explains why this challenge is important at this time, how resolving the challenge will make a difference, all written in such a way as to reveal the logic of the situation but also to connect emotionally with as many of the workforce as possible
Request – a simple statement identifying what kind of ideas are being sought
Constraints – a statement that helps shape the creative effort by clarifying what kind of ideas which would not be useful at this stage; these are often related to constraints on the organisation’s purpose, values, or ability to deliver
Starting points – some initial guidance to employees as to where they might look for potential solutions
The best challenges make it crystal clear how staff can contribute without any further direction from management. Moreover, the best challenges will make it more likely that more people will get involved through the emotional attachment that they can make to the challenge – looking for ideas and submitting them for consideration becomes a “no-brainer”.
Impact of Effective Challenge Setting
In an organisation with a healthy innovation culture, we would expect to see many challenges in play at any given time. These would include trickle-down “sets” of connected challenges, focused departmental challenges, and individual requests for help. A plethora of challenges like this makes it clear that the organisation is serious about innovation and that it is hungry for the active involvement of all staff.
At the same time, a range of different challenges provides a range of opportunities for individuals to contribute beyond their usual role. This situation increases the potential for diverse contribution on a wide range of organisation opportunities and problems – which is a good thing.
In addition, having managers at all levels stepping back and considering where their operation really needs innovation is a tremendously beneficial exercise. We’ve known many senior teams who claim they have made real breakthroughs in their strategic development by being forced to think hard about how they are trying to deliver their objectives and where they most need new thinking to help them. In some cases, we have heard teams say that that the task of challenge setting has significantly sharpened their thinking related to their growth strategy.