3 Ways to Develop a Culture of Innovation
By Abram Walton
We hear a lot about innovation. If we want to make a strategic change or meaningful difference in our organization, practice or industry, then we’re told to innovate. To think outside the box.
Yet, innovation may be one of the most misused and poorly understood words in business today. Often misconstrued to mean something that is simply new, inventive, or creative, innovation is a science as well as an art.
The overuse and misapplication of the word innovation has diminished our ability to have a conversation about what real, successful and valuable innovation is, where it comes from, and how organizations can achieve it repeatedly and predictably. Because when innovation is unpredictable, so is growth.
There’s a gap in economic value creation between those who can identify and capitalize on new opportunities and those who cannot, and it’s growing disproportionately. Of the world’s 6,000 largest public and private organizations, 10% are capturing 80% of the economic profit, with a mere 58 of those firms accounting for 6% of the total profit. Staggeringly, over 95% of new product innovations and 50% of product improvement initiatives fail, with only 3,000 out of 1.5 million U.S. patents being commercially viable. This means 99.8% of those patent efforts consume resources but fail in the market.
Even with odds like these, a culture of innovation can lead toward strong outcomes. The winning organizations are those that level-up their ability to create predictable and sustainable competitive advantages. They do so by strategically and systematically implementing proven innovation methodologies that execute on the most innovative and profitable opportunities.
How can you create a culture of innovation?
Take a long-term perspective. Innovation is a process that is best managed with a long-term perspective, not necessarily measured in long time increments but rather in the completion of prioritized goals.
Define a course of action. Creating and driving the effective use of innovation tools, processes, and metrics requires a strategic and disciplined approach. It starts with the enterprise growth strategy and cascades throughout each business unit, division, and group structure. Using data, it’s possible to map out areas that are ripe opportunities for innovation, to prioritize and select valuable and solvable problems, and then ideate on potential solutions.
Establish metrics. To measure your success as you innovate, it’s critical to establish metrics that support the collective innovation goals of the organization, permitting business leaders to drive return on investment, organizational capability, and leadership behaviors at multiple levels of the firm.
During UID in 2020, I’ll lead a session that will introduce participants to the art and science of innovation and teach them to systematically determine customer needs through a combination of qualitative and quantitative methods. We will look at the stages of the innovation process and how to implement them: planning, defining the course of action, establishing the motivation, attributing the action items, prioritizing, monitoring, and driving desired new behaviors, considering input and output metrics and a suite of leadership metrics to support specific growth initiatives. Properly managed, innovation should provide a strategic road map to successful revenue generation at any distribution or manufacturing company.