YES, Elephants Can Dance…And Innovate!: The Importance of Creating the Right Climate
By
V. Michael Mavaddat
Executive Vice President, Innovation and Development, DSI
Innovation has been a hot discussion topic in managerial circles lately. Business Week, The Economist, and other leading business publications have devoted much ink to the coverage of innovation stories, the sharing of “best practices,” and the identification of the “most innovative companies.” Governments and policy makers around the globe, in Singapore and Ireland for example, have launched initiatives fostering the formation of innovation clusters for scientific and technical disciplines such as biosciences.
The renaissance of Apple Computers under the leadership of Steve Jobs has been an inspiring story for executives of established, mature businesses in industries as varied as financial services, life sciences, consumer goods, and IT/Telecomm. The message has been clear: “It is possible to become innovative again! The leaders of this diverse group of enterprises, which includes non-profits, have taken this message to heart and are focusing their attention on innovation as an imperative for the future success of their organizations.
WHY INNOVATE NOW?
While the story of Apple Computer is in its own right inspiring, there are other factors rooted in the events of recent past that are driving executives to focus on innovation.
In the 1990s, most organizations were focused on achieving economies of scale, operational efficiencies, and growing globally. Mergers and Acquisitions as well as financial engineering techniques were highly sought after by these companies as the tools for achieving their objective of “globally efficient scale.” Following the demise of Enron and WorldCom and the collapse of Tyco International, the focus on “empire building” changed and was replaced by a focus on regulatory compliance (on the heel of Sarbanes-Oxley Act of 2002 1).
Today, fewer opportunities exist for executives to repeat what Jack Welch, Sandy Weill, and Michael Eisner did in the 1990s to build GE, Citigroup, and Disney, respectively. The question today is: how can the leadership of a mature, well-established company achieve growth without resorting to the tactics and habits of the past?
GROWTH THROUGH INNOVATION
Achieving double-digit growth organically is one of the key challenges facing today’s senior executives, and growth through innovation is a viable response to this challenge. Therefore, it is not surprising that executive attention is focused on how mature firms become innovative again to achieve their growth objectives.
The good news is that the topic of innovation has been extensively researched, and multiple frameworks and approaches have been developed to help organizations build their innovation capacity. Figure 1 illustrates, partially, the breadth of approaches and methods developed for innovation.
Figure 1
[click image to enlarge]
Availability of multiple approaches, however, poses a challenge to leaders interested in building their organizations’ innovation capabilities. A common question we often hear is: “As a leader interested in fostering organic growth through innovation at my firm, which of these frameworks should I implement? Or should I implement them all?” Answering this question requires:
- A deep understanding and appreciation of the organizational climate.
- A detailed understanding of the tools and frameworks and experience in how best to use them and combine them in an inclusive and synergistic manner to achieve the best outcomes for the firm.
Innovation is not a one-size-fits-all affair and there is no off-the-shelf framework that can instantly turn a firm into an innovation powerhouse.
The simple truth is that to become innovative requires hard work and a supportive organizational context, environment, and culture. As William J. Baumol, the noted New York University (NYU) economist has observed, “Innovation is about the romantic flights of the imagination, the leaps of faith and plummets into the unknown, which alone are likely to open up new worlds.” In our experience, there are very few mature firms with a supportive climate that allow their employees take these “leaps of faith” or provide a relatively safe haven for them to engage in “random acts of innovation.” To become successful innovators, firms must create and foster an organizational context and climate capable of nurturing ideas, encouraging collaboration among groups of employees and allowing commercially successful innovations to germinate and take root.
DECISION STRATEGIES INTERNATIONAL’S NEW HORIZONS INNOVATION PROGRAM: A NEW APPROACH FOR BUILDING INNOVATION CAPACITIES OF ORGANIZATIONS
Decision Strategies International’s (DSI) New Horizons Innovation Program is a tailored intervention that we have developed and successfully used to build our clients’ innovation capacities.
The genesis of the New Horizons Innovation Program dates back to 2002, when my DSI colleagues and I were asked by one of our financial services clients to help develop its innovation capacity and engines of growth. We began the process of architecting the appropriate program for the company first by assessing its innovation deficits, areas where it had fallen short of expectations in the past, and by clarifying how innovation was intended to support the organization’s strategic objectives and what type of innovation (breakthrough versus incremental) was being sought (i.e., innovation intentions).
Having deepened our understanding of the client’s organizational context, we tailored an innovation intervention that addressed the deficits and supported the firm’s intentions. In architecting the New Horizons Innovation Program, we drew upon proven innovation tools and methodologies and my experiences with venture capital investing and building systems of innovation. From its inception, the fundamental purpose of The New Horizons Innovation Program has been to create the organizational context and safe haven for employees to engage in acts of innovation. The program supports the following business objectives:
- Generate fundable business plans to fuel growth
- Develop the organization’s “Innovation DNA”
- Build or sustain an entrepreneurial culture
- Provide for professional development of participants
Deploying New Horizons Innovation Program involved the introduction of new innovation processes and tools and techniques. In parallel to introducing these tools and techniques, we helped build and sustain an organizational context and culture that was inquisitive, collaborative, and interested in learning and exploration, supported by training in using innovation and ideation tools, and most importantly capable of producing fundable business plans.
The New Horizons Innovation Program was so well received in 2002 that since then we have been asked to deliver it in three subsequent annual cycles, with each cycle involving a new group of 50 or more participants drawn from the rank and file. Since its inception, the program has resulted in the funding of three business plans from a final group of about ten fundable plans generated at the end of each annual cycle.
The chairman of our client company had this to say about the program: “Even with programs like New Horizons, I can’t promise that Business Week will put [our] business on the front cover the next time they do a story about innovation. But New Horizons is showing us how we can use our company’s core strengths to meet the changing needs of the markets we serve. Moreover, it is helping [our] people develop the planning skills, management talent, and creative vision we will need to maintain our position of leadership. Frankly, I can’t think of anything more innovative—or important—than that.”
In architecting the New Horizons Innovation Program, we viewed innovation as an inclusive process and built enough flexibility in the program chassis to allow us to be creative about innovation by combining and leveraging emerging best of breed methodologies to foster entrepreneurialism and innovative thinking and ultimately develop “the client’s Innovation DNA.”
For example, we have effectively used multiple tools and methodologies, such as Blue Ocean Strategies/Value Innovation, Discovery Driven Planning, Real Options Analysis, and Scenario Thinking, in different New Horizons Innovation Programs we have delivered. While we provide well-tested managerial tools, we never lose sight of the importance of the time we spend with the participants to create the right organizational context and atmosphere for innovations to take root. Indeed, in our experience great tools without the right organizational context and climate at best may yield some interesting ideas, but the affect on building the organization’s innovation capacity tends to be unsustainable and fleeting.
Since 2002, we have successfully deployed the New Horizons Innovation Program in other client settings. In each instance we have tailored the program content based on assessment of the client’s organizational climate to ensure delivery of best outcomes.
We have been successful in delivering on our promise of generating fundable business plans and building the innovation capacity of clients as evidenced by the comments from the senior leadership of some of our clients in financial services. These companies have been well established and long-standing institutions in their respective segments with a proud history of many accomplishments and firsts over more than 100 years of their existence.
Here is what one of these clients had to say about our work with them, which in this case was focused exclusively on technological innovation within the firm:
- “There’s a lot more to innovation than coming up with good ideas. Often, the most difficult challenge is turning those ideas into commercially viable products and services.
The Technology Innovation Program was designed to help with just that—identifying projects with the most business potential and giving people the means for turning those ideas into reality. The technologists’ goal was to generate commercially viable ideas, and win the support of the firm’s senior management for funding of those ideas.”
After reviewing the business plans the company’s CTO remarked: “All the ideas were fantastic, and it really was hard to choose.” Another senior executive added, “Each of these business plans, along with four others that we didn’t hear about today, probably deserves to be funded—and we’re putting plans in place to make that happen.”
Participants praised the breadth and rigor of the program. One of the participants said, “It not only provided us with techniques to come up with new ideas, but also provided the discipline to perform a rigorous economic analysis of those ideas.” The client’s internal program manager said participants valued many aspects of the experience: “Some said that networking, particularly meeting people in the businesses, was most valuable. And virtually everyone said, ‘I can think differently now.’”
We have been successful in helping mature and established companies become innovative again. Doing so takes a deep understanding and knowledge of the history, organizational climate, context, and intentions of our clients and the expertise required to develop a tailored grogram to fit each client’s unique circumstances. Our experience suggests that it is possible to teach elephants to dance and innovate!
Notes
1Learn more about the Sarbanes-Oxley Act of 2002 at http://en.wikipedia.org/wiki/Sarbanes-Oxley_Act.
