Volume II, Issue 5 November 20, 2018
What innovation processes and tools are key to institutionalize innovation across all parts of your organization?
A wise man once said, “Every basic story that people tell to make sense of the world has already been told.” Another wise man responded, “That may be true, but what happens to those stories when the world changes?”
IXL Center partners: Ronald Jonash and Hitendra Patel
Choosing the right story to understand the economic world today is especially important when we try to find the best solution to this persistent question in innovation practice: “What innovation processes and tools are key to institutionalize innovation across all parts of your organizations?” The first and unavoidable step to answering this question is: Leadership must make a very visible commitment to innovation and ensure that all innovation efforts are connected to clear business and/or strategic goals.
This truth about innovation will never change for business. Nevertheless, over and over, companies mistakenly skip this necessary step to successful innovation. Why? Executives today are so often distracted by the accelerating marketplace that they can confuse speed with strategy. Because of this, they tell themselves (consciously or sub-consciously) the wrong story about the world: because speed is essential, tools like crowdsourcing or artificial intelligence will solve my company’s strategic problems. This is a nice story, but it’s totally false. It is true that being speedy is important in today’s economy; in fact, one might add that the ability to innovate or change quickly is becoming table stakes for any company playing in the global marketplace. But being speedy means nothing without having a strategic direction in mind.
“On average it takes 4 years for a company to benefit from the ideas that it has invested in” – Dr. Hitendra Patel.
So if we proceed without the fairy tale that speedy tools are a substitute for innovation strategy, we can make better decisions about the processes and tools we need to make that strategy real across all parts of an organization. In today’s economy, this usually means deftly attaching machine processing power (i.e., increasing speed and scope) to strategic thinking (i.e., direction). So, once we’re clear about strategic direction, it would be helpful to keep the next two steps in mind.
1) Gather, Categorize and Share Initial Insights. The first step in this process is generally referred to today as “crowdsourcing.” There are many ways to gather ideas, from in-person case competitions to online systems that connect disparate teams. With all of our online tools and connections, gathering ideas is not a problem. The real problem that arises is the challenge of organizing or “curating” the ideas into meaningful categories. This can be done on a large scale with, for example, natural language processing. These categories can then be more easily aligned with business priorities.
In addition, tagging ideas and innovation with language processing capabilities can be helpful in creating taxonomies that can be used for innovation in the long-term. In addition, taxonomies can allow companies to incorporate data from other sources easily to further inform and enhance findings developed from their own crowdsourcing. Tagging also can perform an important internal function as a means of advertising or sharing ideas that might otherwise remain unnoticed in companies. This is especially helpful for organizations with offices spread throughout the globe.
2) Funnel Ideas into Nuanced Categories of Innovation Efforts. There a many specific tools and approaches, but what is important is that multiple complementary approaches be used. That is because innovation initiatives can (and often do) develop unexpectedly and are targeted towards a business landscape that can often be in flux. Opportunities and emergencies can arise at any moment and priorities can change. Keeping that need for flexibility in mind, there are some reliable questions you can use to understand and prioritize all your innovation efforts:
- How big is the opportunity in terms of ROI?
Innovation can make money for you in big ways and small. These are all net positives for your company, but you should try prioritizing opportunities by estimating where the biggest bang for your buck may lie – and what that “bang” is. These could range from greatest investment to revenue ratio to increase in market share to simply pure revenues.
What’s the big opportunity? Innovation Management tool – Business Opportunity Map (IMBOK)
- How quickly should you get this done? This is a question to follow an ROI estimate because planning speed to market often depends on other factors. How might you prioritize between a process innovation costing $500k and yielding $2 million in savings in six months and a new service costing $1 million but promising to yield $5 million revenues in three years. If your company is strapped for cash, for instance, the first option may be slightly more important to start than the second.
- How will you get this done/get on the right track? Depending on your needs and your capabilities, your company should make an effort to define and plan how to get an innovation project finished, which can include these approaches: 1) “Just Do It” yourself and do it now; 2) Incremental Product or Process Development; 3) Innovation Platform Development; and, 4) Venturing.
- How much investment or partnering is needed? Investing your own resources or working with the resources of others should be planned for multiple stages of the innovation process, from ideation to production and finally to launch / rollout activities.
While there is a lot of planning and a lot of complexity that goes into choosing the processes and tools of an effective innovation program, one should always remember that the final business concept does not have to be complex at all. Innovation can lead to groundbreaking revenue generation with a simple new product that just hasn’t occurred to anybody or to an attractive, easy-to-use service that finds new ways to generate revenues. Disciplining the use of tools with a clear strategic vision will help illuminate opportunities that are complex and simple, big and small – all of which contribute to the growth of your company.
 Recently, Thomas Davenport observed that because “the hype surrounding artificial intelligence has been especially powerful, […] some organizations have been seduced by it.” See Thomas Davenport and Rajeev Ronanki, “Artificial Intelligence for the Real World,” Harvard Business Review vol 96. 1 (2018): 108-116.
 For an enlightening discussion about executives being distracted by the latest technological “shiny objects,” look for our Game Changers innovation podcast with GIMI board member and CEO of IdeaScale, Rob Hoehn, that will be published in December.
 These points are also derived from my conversation with Rob Hoehn that will be shared in our upcoming Game Changers podcast.
ABOUT THE AUTHORS
Mark Rennella. Senior Editor at IXL Center
Mark Rennella is a writer, editor and teacher who uses a historical perspective to examine and unpack today’s complex business trends. He has authored popular Harvard Business School cases on a variety of topics as well as a book on leadership, Entrepreneurs, Managers and Leaders, co-written with Nitin Nohria and Anthony Mayo (Palgrave Macmillan, 2009). Mark’s many books, articles, business case studies, and collaborative writing endeavors have garnered him critical praise from historians, academicians, and business leaders alike. In 2001, Mark earned a PhD in American History at Brandeis University.
Dr. Hitendra Patel. Managing Director of IXL Center
Dr. Hitendra Patel is the Managing Director of the IXL Center and Chair of the Innovation and Growth Program at the Hult International Business School. He has coached new emerging leaders and managers of new and fast growth businesses.Hitendra was a senior leader and co-founder of Monitor Group’s Innovation Practice and was responsible for Asia and Latin America. Prior to Monitor, he was a senior manager at Arthur D. Little. As a management consultant, he has made lasting impact with all types of companies by helping them identify new engines for growth and develop their own capacity to innovate.