This is the time of year when we're all setting goals. Top of my list for 2014 is clearing a path for innovation in our organization. Allow me to make the case for why I need your sponsorship as CEO.
Our organization is challenged by complex issues -- technology, demanding customers, new competitors, a changing regulatory environment, on and on. And still we're expected to show profitable growth. We both know there isn't a company in existence that isn't declaring that the answer to this collective conundrum is innovation.
For too many organizations this is an aspiration disconnected from a concrete plan. I want to spend the next year making what our organization says about innovation real.
Here's my list.
Expand our boundaries. In 2013 we worked to define the difference between rigor and rigor mortis in our pursuit of new commercial ideas. In 2014 I think we should work on what I'd call "sector mortis," by which I mean clinging to a rigid definition of who we've been and what's worked in the past.
The first thing I need from you is encouragement to take a bigger view of our business sector. We need to show a willingness to press traditional boundaries so we can liberate our thinking to see pockets of opportunity we may have overlooked.
My idea of innovation is not about undermining the profitability of our current core business. My idea of innovation is about the expansion of our operating boundaries. Defining our sector on our terms is fundamental to business strategy. It sets our innovation agenda. If business strategy is too narrowly framed it becomes a constraint that will inhibit the advancement of the big ideas needed for revenue growth.
Many innovative companies have broken away from a narrow definition of their sector. Take a look at Google, which never viewed itself as a permanent resident of a single sector. Or look at how Anthropologie defined itself around a lifestyle, not simply as a woman's clothier, giving customers broader selection that allows women to create--and purchase--the Anthropologie "experience" at price points extending well above its clothing line.
Or think of Nestlé, an increasingly important player in health, nutrition and even pharmaceuticals that never stops growing its core business as a food-products company. When Nestlé wanted to grow its coffee business it didn't define its objective as, "How do we get more shelf space in the grocery store?" It allowed employees to reconceive coffee drinking as an experience to be savored. The result was Nespresso. Nestlé discovered from consumer insight that many coffee drinkers compared the fifty-five cent Nespresso drink with a four-dollar Starbucks latte, and saw the in-home experience as competitive with a trip to a barista. Abruptly Nestlé broke through the boundaries of the retail grocery segment and became a nontraditional competitor in a new sector.
Our own imaginations can be just as expansive in 2014. Let's start by sending the right signals to the organization.
Sending signals. We've got talented leaders and thinkers and do-ers in our organization. They look to senior leadership to give substance to all the words spoken about the importance of innovation. The innovation agenda has to be defined, supported with people, time and money. It needs to be reflected in our everyday goals, monitored and managed just like any other effort we claim to be serious about.
My role as The Daily Innovator℠ is to help you reconcile what might at first seem like irreconcilable issues in our business--the need to grow new revenue from new sources that might challenge what's made us successful balanced against the need to protect the profitability of the core business. For me to help you here is what I'll need: authority to innovate and take smart risks, air cover in the face of resistance, the ability to make decisions and test ideas, and a small but sufficient budget with access to talent.
I need access to expertise in our organization and in the industry, which could involve borrowing key people for periods of time or bringing in independent specialists.
And I need your permission to venture into areas that might challenge established roles as they are structured today, or that perhaps feel threatening to the professional security of some of our leaders.
From senior leadership I need permission not to simply stay in touch with the unmet needs of customers but to bring back insights from customers and apply them. There is tremendous room for insights to drive financial results if they shape product-development decisions and how customers experience our brand.
Open us up. The last important question is about building innovation into our identity. Naturally I consider the question in relation to our organization as it already exists. I want to take advantage of the talent of our existing team. But I don't want to be constrained by the familiar.
We don't need to own all the capabilities to drive new businesses. We can find capabilities by partnering with collaborators. We can learn from the examples of what other companies have done (their stumbles as well as their victories). Let's use these analogs to advance our thinking and figure out the best way to institutionalize an innovative culture.
Here's a model that's led some companies to success: freestanding innovation centers. Innovation labs work when they are tied closely to operating units. But if they are too detached from the daily work they quickly become silos, ivory towers removed from the gritty realities of operating a business. That is antithetical to the neural network of a creative organization.
If we want more flexibility in tapping the power of innovators who may not be our employees we can crowdsource. P&G's famous "Connect & Develop" model engages thousands of external partners in a global network. Another approach worth considering is investment in external partners to expand our perspective with ideas unencumbered by day-to-day operating distractions. This means setting up a strategic investment group and allocating some of our balance sheet to an investment purpose, as many healthcare firms have done.
There are less elaborate approaches we can take to help open us up, including the increasingly commonplace practice of "coworking", which has become something of a worldwide phenomenon among independent entrepreneurs. The idea is to create a workspace where people from different industries mix deliberately in the hope of stimulating creativity and, once in a while, hybridizing big ideas. There's no reason our organization can't join the movement.
My message is this: we need to engage our whole organization. We need to create an environment that encourages people to take good risks. Whatever model we choose will derive from a baked-in culture of innovation sponsored at the top of the house.
And that will come from you.
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Other Daily Innovator articles you might be interested in:
Ideas are the Easy Part: 10 Concrete Steps to Eliminating Fear as an Obstacle to Successful Innovation
Daily Innovators have a career stake in beating back fear and feeding optimism, both for their own sake, and as a means of enlisting colleagues in the cause of an idea. Here are 10 concrete steps for doing that.
Rigor or Rigor Mortis?
How does the daily innovator manage the tension between imaginative, diverse thinking and an organization's natural aspiration to control?
How Big is Something that Doesn't Exist?
The Daily Innovator will always be competing for resources against core-business interests. A sales manager, for example, can argue from experience that, if she gets budget for one more body at an average productivity that investment will generate a given amount of sales. How does the Daily Innovator compete with that?
The Daily Innovator: Using Value Constellations to Map New Business Models
How does the Daily Innovator take the glimmer of an idea, a gut instinct and build a compelling business case around it to rally support? A good start is to map its value constellation.