Innovation isn’t just a buzzword—it’s a vital element of any modern business, especially in an era of constant digital transformation. It can boost a company’s competitive edge, open up opportunities in new markets, and fuel growth. But to cultivate an innovative culture, you must start with establishing an innovation process.
How to implement an innovation process
Putting structure around a creative endeavor may seem counterintuitive. In fact, according to a survey from management consulting firm Accenture, more than half of respondents saw innovation as an “ad hoc” creative process.
Yet companies that invest in innovation without a process pipeline often fail to see strong results. As Sarah Kelly, the innovation program manager for communications company Liberty Global points out, “Innovation isn’t just a fluffy thing that’s going to happen. You have to put a lot of thought, manpower and resources into innovation.”
There isn’t a one-size-fits-all approach to developing an innovation process. Instead, companies should create one that’s tailored to fit their organization. Here’s a look at some key elements other organizations found essential to their innovation processes.
1. Involve executive leadership
As is the case for almost any effective change management initiative, especially within a large organization, C-suite buy-in is a key ingredient to success. But executive leadership shouldn’t just be committed to an innovation process; it should also be an active participant.
“You have to be willing to play referee sometimes,” says Greg Wright, the president of Omega Engineering. “It can be threatening to people, and there can be friction. Your people have to understand that management knows what’s going on and is supporting them.”
At Liberty Global, a C-suite sponsor is required for every campaign. “If you have a product manager as a sponsor, your employees won’t believe that their ideas will be taken seriously,” says Kelly. “But if you have the CFO or CTO as a sponsor, there’s a strong belief that their ideas will get implemented.”
Example: One innovation campaign with a theme of “cash savings” was sponsored by the chief technology and innovation officer of Liberty Global. An idea selected and implemented was to make a small process improvement to its cable-splitter kit. By switching out one type of screw for another, the company was able to reduce the amount of cabling in each kit, resulting in an annual cost savings of over $1 million.
2. Create a cross-disciplinary innovation team
Many large organizations, including Xerox, CVS and Home Depot, have set up long-term innovation programs or labs with dedicated staff. Other companies, such as Target, have also been successful in creating smaller, less formalized innovation teams either for a specific project or as an ongoing operation within the company.
“We really couldn’t learn as quickly as we needed to in our existing organization. But now we see cross-pollinating, and we’re taking that learning internally and changing.”
Diversity should be an essential element of the team, both in areas of expertise and roles within the organization. In a recent study on diversity and innovation, researchers found that businesses with policies that encourage the retention and promotion of diversity were more innovative and released more products.
“Your best bet is to nurture an internal team with the expertise and insights to be constantly producing new ideas,” says Sun Wu, the author of Strategy for Executives. “The team needs to develop ‘absorptive capacity,’ or the ability to understand what’s going on outside of the company’s walls.”
Example: Omega Engineering created an innovation team that is independent of the organization. “It feels like an entrepreneurial group, and they have a lot more freedom to operate autonomously,” says Wright. “We really couldn’t learn as quickly as we needed to in our existing organization. But now we see cross-pollinating, and we’re taking that learning internally and changing.”
The innovation team and its agile processes have also allowed Omega to accelerate innovation tremendously, cutting product development time by a quarter.
3. Build iteration into your innovation process
When Liberty Global runs its four-week innovation campaigns, the company recognizes that it’s only the beginning. “Ideas don’t come fully fleshed out and ready to be implemented,” says Kelly.
NOBL, which designs and implements innovation processes at large organizations, reinforces the idea with clients that they are building “a skateboard, not a Cadillac.” According to Paula Cizek, the company’s chief research officer, the analogy—which centers on how to build a minimum viable product (MVP)—comes from consultant Henrik Kniberg, who works with companies like Spotify. It’s a technique that can rapidly speed the time to market for innovations and deliver a better overall product as feedback from customers gets incorporated.
Example: Tressie Lieberman, the former vice president of digital innovation at Taco Bell, says NOBL’s iterative approach had a significant impact on the fast-food giant’s innovation timeline: “What we spent years talking about, we were able to accomplish in one week.”
4. Always put the customer first
In design thinking, empathy for the customer is at the heart of the innovation process. Ideas are only as good as their value to the customer.
“Unless you wrap your products in a business model that can capture a piece of the value that they create for your customers, even the most innovating product will fail,” says Wu.
Example: SAP, one of the world’s largest technology organizations, has used design thinking and a focus on customers in its innovation process. In his book Winners Dream, Bill McDermott, the CEO of SAP, discusses one of the company’s biggest innovations. Called HANA, it’s a technology that can access in-memory computer data as much as 10,000 times as fast as data residing on a conventional disc-based system can. “Customer-centricity was a driving force behind HANA’s creation,” he says.
Pave the way for greater innovation
Truly innovative companies with strong organizational health don’t decide which ideas to implement or how to implement them based on an ad hoc or arbitrary set of rules. They create a culture of repeatable innovation by having a rigorous innovation process.
It takes time, resources and effort to put an innovation process into place. But done right, it can make the difference between falling behind competitors or staying ahead.