Build a strong foundation for innovation through strong business fundamentals.Those of you who know me won’t be shocked by the fact that I have a serious passion for innovation. I believe you always need to be constantly pushing your organization (and your life) forward. You need to focus on reinventing what you do and how you do it as often as possible to drive new value for your customers and your organization. To succeed, you need to build a strong foundation for innovation.

Companies like GE or IBM who have consistently changed their business sold off core components, reinvented their primary revenue base, and evolved how they execute based on the demands of an evolving market. These are great examples of companies that innovate very well.

But their innovative success isn’t based solely on a mindset, fancy frameworks, or crazy wild innovators (although that helps). To earn the right to be innovative they first had to be exceptional companies.

The Succeed Sooner Hierarchy of Organizational Needs

To illustrate what I mean by the sound business foundation, I have built a simple model that I would consider a simple hierarchy of organizational needs (similar to Maslow’s Human Needs Hierarchy):

Succeed Sooner Hierarchy of Organizational Needs

For your organization to earn the right to be Innovative, you need to build the foundation. Skip a layer, and you’ll find your house crumbling, and you’ll be scrambling to stay relevant. Build strength at each layer, and you’ll enjoy the rewards that IBM and GE have. You will develop the ability to shift and adapt to the market and customer demand.

Strong Business Fundamentals

Every business needs to have someone actively managing the “business” things first. In entrepreneurial companies, this duty falls to the founder or entrepreneur early in the development of the company. In my experience, however, it should be assigned to a dedicated manager as quickly as the business can support it. Entrepreneurs tend to be visionary, but the fundamentals require process, boundaries, and structure which don’t play to their strength.

In larger organizations, a Controller or CFO who has accountability for the strength of the foundation may fill this role. (However, I would argue that they should play at all levels of the hierarchy, just with a different lens than the founder or CEO).

Basic business controls, processes, frameworks, and structures need to be in place to manage:

  • Finances
  • Human Resources
  • Workforce
  • Sales & Operations Planning
  • Etc

There should be regular reporting, alignment to relevant regulations and external controls, and periodic external reviews to ensure that those processes and controls are effective. Active measurement and monitoring provide the solid foundation for the business.

Clear Vision and Strategy

Vision and strategy are where the Entrepreneur or CEO is likely going to focus much of their time. Every business needs to have a clear purpose (WHY?), a clear articulation of how they will achieve it (HOW?), and an articulation of the core business and customer base that will be used to reach these goals (WHAT?). (Note: See Simon Sinek’s TED talk on How Great Leaders Inspire Action for more details on the importance of the order of operations.)

Your vision and strategy should link from the broad vision of the organization down through the elements of the business organization. All the way to the individual supporting strategies and strategic priorities for each area of the business. (See my thoughts on the importance of linking Strategy and Execution).

A well-articulated vision and strategy become the playbook for the entire organization. Everyone knows the goal, and everyone knows how their work connects to that goal. Link every project to the strategy and measure every action in a way that is relevant to the goal.

Aligned Metrics and Measures

Once you have the necessary processes and controls in place and you have a clear understanding of your vision and strategy, you can build the metrics that you are going to use to monitor your progress. Metrics should be clear, aligned to the desired outcomes, easy to understand, and visible to the organization. Everyone should be able to see how the organization is doing at all times.

Individuals who understand the connection between their work and the goals should also have visibility into the metrics that they affect. They will be more engaged if they see the progress they are helping the organization make. Many of the highest performing people I know are motivated by an achievement orientation so being able to see the progress helps them perform better. (Note the existence of “scoreboards” throughout operations and call centres across North America).

Flawless Execution

Once you have all the right controls, processes, vision, strategy, and metrics in place, you now have to execute against the goals. That includes flawless execution in:

  • Product Development
  • Sales and Marketing
  • Project and Program Management
  • Operations and IT Execution
  • Customer Support and Experience

Each discipline has its own set of expectations and should align to the metrics you have developed. The execution needs to be monitored and managed before your company can enjoy a stronger position in the market. Great goals, strategies, and vision are only useful if you can achieve them. Metrics that don’t get monitored don’t deliver success.

I once heard a wise leader articulate it this way… “Knowledge isn’t power… Execution is.”

Innovation

Once the foundation is in place, you are now in a position to build your innovation portfolio. Innovation requires management like any other part of the business. Innovation needs its own set of processes, gates, metrics, and measurements to be successful. However, these will likely look very different from the measures you use to maintain the strength of the foundation.

The foundation alone doesn’t make for a strong company, however. You need to build an innovation platform on top of that strong foundation for long term success. Ask executives from the former Kodak company or the Nokia Mobile Phone division what happens if you forget to innovate. It’s easy to simply “run” your business into the ground with great effectiveness.

I won’t dig deeply into the management and structure of an Innovation Program in this post as I’ve covered much of it in the past. Simply, innovation is a function to be actively managed and directed, not a free-for-all pursuit for a new idea. Build your innovation program with the same structure, thought, and direction as you built the foundation of the organization. A strong foundation for innovation will maximize your chances for success.

Aligned Leadership and a Foundation for Innovation

Finally, I want to highlight the importance of the aligned leadership across the entire company. Entrepreneurs and CEOs need to participate and advocate at all layers in the organization to ensure that their vision is clear and aligned. Your business manager or CFO also needs to participate at all levels of the organization as an execution balance. The CEO paints the vision and the CFO/COO ensures it happens. A strong business will have two leaders working side by side to create success.

You need to earn the right to innovate, but make no mistake you need to ensure that you are innovating. Business, markets, and people are evolving faster than they ever have before. You need to be working towards the future to remain at the top of your game.

You can watch my video summarizing this topic here:

About Tim Empringham, MBA
Tim Empringham is a passionate advocate for Innovation in organizations of all sizes as a mechanism to drive growth, create uncontested market space, create new customer value, and drive efficiency into the internal organization. His focus is on disruption of thinking and markets through integrative thinking, structured Innovation frameworks, and leadership development of Innovation and Change leaders within the organization.

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