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 pushing your organization (and your life) forward, reinventing what you do and how you do it as often as possible to continually drive new value to your customers and your organization.
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 are great examples of companies that do innovation very well.
But their innovative nature isn’t based solely on an innovative mindset, fancy frameworks, or crazy wild innovators (although that helps with the innovation part of things). Before these companies earned the right to be innovative they first had to be exceptional companies.
My Simple Hierarchy of Organizational Needs
To illustrate what I mean by the sound business foundation I have build a simple model that I would consider a simple hierarchy of organizational needs (similar to Maslow’s Human Needs Hierarchy):
In order for your organization to earn the right to be Innovative you need to build the foundation of your business first from the bottom up. 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 with 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 some entrepreneurial companies this is a duty that the founder or entrepreneur plays early in the development of the company, but in my experience it should be assigned to a dedicated business manager as quickly as the business can support it. Entrepreneurs tend to be visionary people but the business fundamentals require process, boundaries, and structure which don’t tend to be their strength.
In a larger organization this role may be filled by a Controller or CFO who has a clear accountability for the strength of the business (however I will also argue that that person 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:
- Human Resources
- Sales & Operations Planning
There should be regular reporting, alignment to relevant regulations and external controls, and regular external reviews to ensure that those processes and controls are effective and providing the desired solid foundation for the business to operate from.
Clear Vision and Strategy
This is 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 achieve those 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 as a whole down through the elements of the business organization into 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 becomes the playbook fro the entire organization. Everyone knows the goal and everyone knows how their work connects to that goal. Every project is linked to the overall strategy and every action can be measured in way that is relevant to achieving that goal.
Aligned Metrics and Measures
Once you have the basic processes and controls in place and you have a clear understanding of your vision and strategy you can build the metrics and measures that you are going to use to monitor your progress against those goals. Metrics should be clear, aligned to the outcomes you are looking for, easy to understand, and clearly visible to the organization so everyone can see how the organization is doing.
Individuals who understand the connection between their work and the organizational goals should also have clear visibility into the metrics that they affect on a daily basis so they can also see the progress the organization is making. Many of the highest performing people I know are motivated clearly 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).
Once you have all the right controls, processes, vision, strategy, and metrics in place you now have to actually execute against those 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 it’s own set of expectations and should be aligned to the metrics you have developed, but the execution needs to be monitored and driven before your company can enjoy a strength position in the market. Great goals, strategies, and vision are only useful if you can actually 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.”
Once the foundation is in place you are now in a position to build your innovation portfolio. This requires management like any other part of the business and needs it’s own set of processes, gates, metrics, and measurements in order 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 durable company, however, and building your innovation platform on top of that strong foundation is critical to long term success. Just ask executives from the former Kodak company or the Nokia Mobile Phone division what happens if you forget to innovate and simply “run” your business with great effectiveness.
I won’t dig deeply into the management and structure of a strong Innovation Program in this post as I’ve covered much of it in the past (and may build on those thoughts in the future) but I will simply say that Innovation is a business 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 and you will maximize your chances for success.
One other thing I will highlight in summary is the importance of the aligned leadership across the entire hierarchy. Entrepreneurs and CEOs need to participate and advocate for all layers in the hierarchy in order to drive adoption and ensure that their vision is clear and aligned up and down the organization. Your business manager or CFO also needs to participate at all levels of the organization as a balance to the CEO/Entrepreneur’s lofty goals and visionary ideals. The business needs to work up and down the organization in the same way as the vision needs to be understood up and down the organization. A strong business will have two leaders working side by side across the hierarchy in order 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 and 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:
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.