Don’t stop halfway: How to build an end-to end innovation capability

Research at Slalom shows treating innovation as an end-to-end system offers a variety of benefits, from maintaining momentum to avoiding costly “organ rejections” from unwanted projects.

By James Janega

Corporate leaders assign huge importance to innovation as a mechanism to power their companies’ growth strategy, but when trying to create a reliable business capability, progress is unpredictable.

That’s frustrating when 84 percent of executives report innovation to be important for their company’s growth strategy, and nearly half say they expect innovation to uncover new business models for them in other industries. 1 Corporate innovation priorities include new products, business models, better client experiences, and the implementation of game-changing technologies. 2 Still, only 6 percent of executives are satisfied with their innovation performance.

Experience doesn’t match up with the expectations: Common complaints include frustrations over “risk aversion,” a missing “culture of innovation,” and organizational processes insufficient to develop or sustain innovative efforts.

Ambiguous advice and uncertain effectiveness further add to the fuzziness around innovation. Meanwhile, cultural divisions fester between creatives urging permission to “fail fast” and corporate leaders charged with presenting a tidy ship to shareholders — who are unlikely to be inspired by that particular call to arms.

“How often do you hear a success dismissed as simply the right product at the right time?” asked innovation author and academic Clayton M. Christensen in his latest book. Indeed, given the importance executives assign to it, why should innovation be the least-understood process in the corporate toolkit?

“We can do better than that,” Christensen said. 4

Informal root-cause analysis I conducted for Slalom on professional innovators’ observations at Back End of Innovation summits since 20133 reveal underlying organizational problems that lead to underwhelming performance. The biggest ones include business process problems, poor organizational capacity, and inability to justify the upside of innovation efforts in collaboration with finance functions.

Five strategies can help executives get a hand on their end-to-end innovation system, offering a path to competitive agility.

Meanwhile, very few companies bother to tie their “back end” innovation process optimization to the “front end of innovation,” a more creative process that has its own conference. Many leaders are stuck between those apparently conflicting sets of advice.

That’s one way to explain the lack of progress many industries are experiencing.

end_to_end

In research with colleagues at Slalom, we’ve found that treating innovation as an end-to-end system offers a variety of benefits:

  • It allows a consistent “chain of custody” for innovation projects, from ideation to operational excellence, by way of opportunity definition, solution discovery, design, lean feasibility tests and innovation portfolio management.
  • It reduces risk of “organ rejection” for expensive efforts that are misaligned from strategic growth targets, a leading cause for lack of business unit cooperation.
  • It’s enabled by early alignment around rudimentary, forward-looking metrics for Returns on Innovation that act as a Rosetta Stone, translating creative prerogatives and expectations from operational business managers.
  • It incorporates internal as well as external proof-points for projects to be approved and advanced. That means surfacing internal objections earlier in the process, and offers the opportunity to turn those opponents into advocates as the innovation team gathers evidence to de-risk the project.

While those capabilities might sound great, they’re more likely to rest in a fully mature organization. Nevertheless, here are five valuable places company where leaders can look for ideas now:

  1. Take an inventory – Many companies already have substantial resources and processes in place. Understanding where existing investments pick up and leave off can help guide investigation of how valuable targeted investments in more crucial areas might be. Do you have an innovation strategy tied to your corporate growth goals? How about a robust innovation engine to take ideas to proof of concept? Are your efforts sustained through careful portfolio management and alignment with business units? Does your company have a mechanism to identify deserving projects and reroute resources to help them scale up?
  2. Scrutinize the areas that result in more predictability – The goal of more successful and repeatable innovations begins with … successful innovations. (See the case study on a previous post, here.) Success rates can be improved by devoting time to an innovation strategy on the front end and making sure that there is careful and deliberative ideation and solutioning early in the innovative process.
  3. Develop an innovation framework – Avoid the problems of “organ rejection” and “shiny-object” innovations that nobody but the innovator wants. To ensure the most promising, growth-enabling projects get necessary resources, we recommend aligning with executive peers on innovation goals, processes, criteria, and toolkits so that diverse opportunities can be compared more easily.
  4. Establish KPIs – What gets measured gets done. Assign rudimentary, forward-looking key performance indicators to the innovation process you have. These include the financial and ROI metrics mentioned above, but also include market-impact metrics involving corporate reputation, leadership achievements, and staff development.
  5. Look for a quick win – Develop a proof-of-concept project with three goals in mind: Project success, internal buy-in from peers, and the collection of insights that will improve the end-to-end innovation process in the future. Aim for big, simple targets first – did it work? Did our process help? Then get more granular about efficiency and collaboration on later efforts.

Innovation isn’t a line-item in a financial statement. It’s a process – one of the most ignored in business.

Given the competitive stakes, it deserves more attention.

James Janega leads the Innovation & Insights group at Slalom Chicago. He is an Entrepreneur-in-Residence at the University of Illinois’ EnterpriseWorks accelerator, a member of the Chicago Ideas Co-Op, and helps enterprise companies and startups improve the way they think about innovation strategy, customer validation, building more robust innovation capabilities and processes. You can reach him at @JamesJanega on Twitter.

Notes:

1 2010 McKinsey Global Innovation Survey

2 2013 PwC “Unleashing the Power of Innovation”

3 “Innovation: It’s Not the Idea, It’s What You Do With It”

4 Clayton M. Christensen: “Competing Against Luck: The Story of Innovation and Customer Choice

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