Accenture released a survey of 630 executives at large U.S. and U.K. companies, Innovation: a Priority for Growth in the Aftermath of the Downturn. The report discusses enterprises’ view toward innovation during the Great Recession. This information in general is useful for anyone following the field.
Just as interesting are the nuances that come out in the survey, that point toward opportunities for improving innovation. There are clear gaps in innovation management that reduce companies’ effectiveness. Let’s examine several of these with an eye toward how the gaps can be bridged:
- Organizational innovation structure
- Looking for the silver bullet
- Advancing existing markets and products
- Well-defined innovation strategy
- Innovation-related challenges
Organizational innovation structure
Accenture asked executives how innovation is structured at their organizations. Their responses:
- 45% => Part of R&D organization
- 29% => Formal innovation organization
- 16% => Not a designated responsibility of any one department
- 10% => Part of marketing
Now the heavy R&D department focus may be industry-specific. But looking at that data, I can see two opportunities for improving innovation.
First, the heavy reliance on R&D departments presents a significant opportunity. R&D departments are fantastic for innovation, and their role is critical to developing game-changing new products. But there’s a large amount of untapped innovation energy in the rest of large companies. Employees whose job titles don’t include the technical R&D designation, but nonetheless are faced with solving problems each day. These are smart folks, and need to be part of a larger innovation strategy.
The other opportunity that can be seen is that 61% of firms do not leverage a formal innovation organization. Imagine not having a formal sales group, or finance department of HR. Everyone wings it in how they approach those key corporate activities. Would performance suffer? You bet. A number of Spigit customers have professionals whose job is to focus on ways to help the organization get better at innovation.
Who in your organization is thinking about the strategy, culture, processes and systems to drive innovation?
Looking for the silver bullet
Accenture asked executives to state their level of agreement with a series of statement about their organization’s innovation. The statements included this one:
My organization is looking for the next silver bullet rather than pursuing a portfolio of opportunities
Here’s how the executives answered that one:
- 33% => strongly agree
- 25% => agree
- 16% => neither agree nor disagree
- 22% => disagree
- 4% => strongly disagree
58% of respondents agreed that their companies were overly focused on silver bullet innovation. This is, as Jeffrey Phillips wrote, the Olympics of innovation sport. Finding the BIG IDEA that can disrupt markets is highly valuable.
Making it your primary pursuit isn’t.
Large companies consist of thousands of processes, products, and customers. If the focus is too much on silver bullet innovation, what happens to all the good ideas that can have an equally powerful impact en masse? How about the innovation culture silver bullet thinking instills? The mindset excludes a lot of employees from innovation.
Pursuing a portfolio of small, medium and BIG innovations balances the approach and leverages much more of the organization’s Innovation IQ.
Advancing Existing Markets and Products
Accenture asked the executives to characterize the primary goals of their companies’ innovation efforts:
- 53% => increase share in existing markets
- 49% => add new value to a current product
- 45% => enter new markets
- 42% => introduce an entirely new product category
Notice the top two priorities. Improving on what you’ve already got. This is smart, in that existing markets evolve, and companies that are slow on the switch will find themselves losing share in their primary cash flow generators.
This is where involving the greater organization in innovation becomes incredibly valuable. Who knows better what is happening with your current markets than employees in the trenches? They’re working to satisfy evolving customers demands, they know where the company’s strengths and weaknesses are firsthand.
They may not always have the “right” solution, but achieving perfect 10’s in suggesting new ideas should never be the point. Rather, workers have an internalized understanding of opportunities for improvement in existing markets and products.
If the focus is on improving existing markets and products, leverage the collective wisdom of those working on them every day. Don’t rely strictly on an R&D group, or a cadre of cloistered executives.
Well-defined innovation strategy
Accenture asked respondents to rate how much each of a series of statements applied to their organization’s approach to innovation. One of the statements was this:
Our organization has a well-defined innovation strategy
41% of respondents agreed with that statement about their companies. Which means 59% did not.
In another post, Corporate Innovation Strategy: Making Your Own Luck, we discussed the value of establishing a formal strategy to improve innovation. It started with the premise that there continues to be a view toward innovation as random acts of creativity. This is unfortunate, because it treats a key driver of corporate performance as out of the control of the company.
From that post, an innovation strategy consists of four elements:
- Establishing the culture and expectations that everyone has valuable ideas to contribute
- Providing direction for innovation efforts
- Setting up a common basis for everyone to share and collaborate on ideas
- Putting in place specific processes to turn good ideas into real initiatives
A theme we continue to pound on is the need to think holistically and systematically about innovation, leveraging the entire organization in the process. Establishing an innovation strategy is required to make this happen.
Accenture asked respondents to rate a series of answers to this question:
What would you say are the innovation-related challenges facing your organization over the next two years?
Here are the percentages for four of the answers:
- 42% => Predicting future trends
- 32% => Identifying changes in customer behavior or emergent and unmet needs
- 29% => Getting cross-divisional teams to work together
- 28% => Changing the organizational culture
Predicting future trends: Seeking a crystal ball. This particular challenge does seem to be the province of a dedicated R&D team. People who can step back from the day-to-day and consider longer term evolutions in markets. But how about putting these people together with the folks responsible for daily execution on the corporate mission? AT&am
p;T does this in its Spigit implementation. AT&T Labs researchers participate with the rest of the organization in their innovation efforts.
Identifying changes in customer behavior or unmet needs: As Gary Hamel discussed at the Spigit Customer Summit, the pace of change in markets is accelerating. But most companies’ practices toward see signals of those changes have not. Here’s a question: as customers begin to alter their behavior, who is best-positioned to see that first? The folks at the edge of your organization. In the post, Is Enterprise 2.0 Just for Knowledge Workers?, we argue that incorporating groups like account management, customer service, sales and field operations into the innovation process is critical. These are the groups that will hear t5hings first.
Getting cross-divisional teams to work together: Silos of knowledge and perspective will be an ongoing challenge for organizations of certain sizes. The inability to bring different perspectives to bear on ideas becomes an inhibitor to innovation. Ideas fail to evolve into polished innovation. Lack of input by a group often translates into lack of commitment toward an initiative. Creating a basis for sharing across departmental, geographic and technology barriers represents a valuable opportunity to improve innovation.
Changing the organizational culture: Employees will take their cue on innovation from the culture they see around them. As described earlier, if an organization has a “silver bullet” approach to innovation, that can have a negative effect on the amount of time and energy employees put toward innovation. A company that encourages and rewards innovation efforts across the workforce is one that is going to realize the full benefits of its employees.
Take a look at the Accenture report. There’s some good information it it. And think where your organization’s opportunities to improve innovation are.
(Cross-posted @ the Spigit Blog)