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How to cultivate an innovative environment
Good intentions do not equal being intentional with innovation efforts, says lead CTO architect for Sungard AS
Most people have heard the phrase “innovate or die.” Books have been written, articles published, and websites created around this phrase. It’s not a novel idea. So why aren't all companies embracing it?
It comes down to good intentions versus being intentional. I can have the best intentions when it comes to my health. I can decide to eat healthier or improve my fitness. But until I actually put a plan in place and begin working that plan, it’s just wishful thinking.
The same concept applies to the innovation of products and services. Organizations that want to be more innovative must be more intentional if they want to effect change. They can do this in four ways.
[ See our related article: 3 keys to innovation: Collaboration, architecture, and culture ]
Intentional organization: Don’t assume that “we already do innovation.” Sure, product roadmaps require innovation. But that’s usually in the context of an existing product. If this is your only innovation effort, you’re managing your company to a slow demise. Focus some of your resources – organized as a New Innovation Team (NIT) – on new products and services that are not associated with a current roadmap.
Intentional boundaries: Oftentimes, there is a tendency to pull in resources – the NIT – to help with revenue-generating situations. This must be managed carefully. If unmanaged, the NIT could end up dissolved, leaving no one to work on the next ideas. Occasionally, some NIT involvement elsewhere is a good thing, as it offers immediate feedback and keeps the NIT in touch with what customers want. Again, it’s about managing the situation rather than “getting pulled in” to too many projects.
Intentional budgeting: Some large companies regularly spin out and spin in new innovation teams or fund formal innovation labs. These teams are often treated like internal venture capital (VC) investments. Unfortunately, many companies cannot afford this approach. Instead, they should focus a small NIT on the task. How much should a company spend on this? Opinions vary, but common wisdom is that you should spend 10 percent of resources on new discoveries and advancements. Regardless, there should be funds in the budget allocated to this effort, with the knowledge that sometimes it’ll pay off and sometimes it’ll just be a learning exercise.
Intentional focus: Established companies have a known customer base and a defined go-to-market approach. New ideas should be a fit for at least one of these areas. If it’s a great idea that addresses a different customer base and requires a different go-to-market approach, it should probably be spun out to a separate entity. Left inside the walls of the current company, it will likely die a slow death or take so long to get to market that the opportunity will be missed. This may be the most difficult area to be intentional about, as there’s a fine line between encouraging a company to head in a new direction and still being realistic about what it can execute.
How strategic partnerships can spark innovation
In addition, a common way to be intentional about innovation and to augment the four points above is to partner with a company that can help you.
At least once a week, I find myself surprised by a partnership I see in the marketplace. A couple years ago, DHL Parcel partnered with Volkswagen on a pilot for in-car delivery, and more recently, Taco Bell and Grubhub joined forces on food delivery. Yet, when you really think about it, this makes sense.
Time to market is more important than ever. Partnering with another company gets you where you want to go faster, and seems to have pushed out the “not invented here” mindset. However, in order for this to work, both companies need to have a clear line of sight to the upside of the partnership and senior leader ownership of the relationship.
[ More on partnerships: Why CIOs can't go it alone and stay sane ]
How to get innovation right
Companies that aren’t constantly innovating aren’t going to last. Yet there is a large difference between having good intentions and being intentional. By being intentional in the four areas above, and partnering to augment internal bandwidth to accelerate your time to market, you are more likely to succeed with your new product or service innovation. Now go out and make it happen.
[ Is your leadership playbook outdated? Read our new report from HBR Analytic Services: Transformation Masters: The New Rules of CIO Leadership. ]