Leading Innovation: Insights From the Real World


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This research was conducted with leaders from organizations with a proven track record of innovation success. The report sheds light on the critical issues surrounding innovation and the implications for organizations.

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Leading Innovation: Insights From the Real World

  1. 1. Leading Innovation:Insights From the RealWorldBy Craig Perrin and Chris Blauth
  2. 2. “Innovation is the Innovation. Business conditions demand it, and senior leaders say they must have more of it. Still, for all the talk, themost important innovation results these challenging times call for remain elusive. So, how do you make innovation happen?word in the AchieveGlobal set out looking for answers by conducting more than one on one interviews with senior leaders andvocabulary.” managers from a cross section of industries both in the United States and internationally. Each respondent —Toshiba America represented an organization with a proven track record forInformation Systems, Inc. innovation success. Here’s what we learned. executive Innovation Defined: Big, Small, New, or Improved? While some may argue that it’s the most important word in organizations today, what does innovation really mean? Having a shared definition a common language to describe innovation is an important first step. Is innovation big, bold actions or incremental improvements? Does it mean brand new or value adds to existing products or services the new and improved laundry detergent or a whole new way to clean clothes? Revenue building or efficiency generating? Leaders define innovation in terms of two broad categories: • Breakthrough something new that no one has experienced before • Advances, enhancements, incremental improvements to, or different applications for existing products, services, and processes Executives with acute awareness of what it will take to sustain their organizations are more likely to describe innovation in terms of breakthroughs as opposed to incremental improvements. Their manager counterparts echo the importance of new advances, speaking less about breakthroughs and more about innovations that are different and unique. Although the quest for breakthrough ideas is exhilarating and potentially game changing, it cannot be the sole focus. A manager from Toshiba stressed the importance of a balanced approach, explaining that “People tend to believe the term innovation always means ‘value innovation’ creating totally new value and process , but pursuing nothing but value innovation would not help achieve sustainable profit and growth. Much of our business success depends upon whether we can improve our existing products.”
  3. 3. and systems to support them, sometimes Business Conditions that Demand impacting or conflicting with the way current Innovation: products and services are managed.• Globalization and intense and unpredictable Innovations that alter existing products and competition services can cause ripple effect changes inside• Industries in flux as industries converge and organizations, as expectations, job roles and new ones are created responsibilities shift. These changes need to happen fast, requiring team and individual agility.• A buyer-driven economy, changing customer needs and unpredictable demand For some organizations, innovation will require deeper change a changed mindset, a rebalancing• Shorter product life cycles as competition of priorities, a shift in leadership style, and, accelerates the pace of imitation perhaps, even organizational structure.• The rising power of the customer Change capable organizations and the people experience within them would seem to have a built in innovation advantage.• Pressure for growth, not just cost control• Workforce and regulatory concerns as Challenges: An Innovation Reality Check organizations prepare for an uncertain Change is at the center of what makes innovation future so filled with possibility and, at the same time, so• Demanding financial markets challenging. Two clear winners emerge in the challenges category, where managers and executives strongly agree. Both relate to theWhether defined as breakthrough or incremental, challenge of change: integrating innovation intothree fundamental themes are loud and clear. the existing environment.• Customers are at the center. • Time• Creativity is one part of the equation; One of the challenges we re faced with today in implementation is the other half. business is that every business has been restructured, and there is more work than there• Innovation means change. are people. So we got our head down on theInnovation and customers are inextricably linked. ground trying to get all the stuff done, and thereThe creation of customer or client value is at the isn t a lot of time spent on innovative types ofcore of any definition. Innovation, after all, is thinking and trying things differently. We re justabout growth, and what better way to grow than trying to get the things that are sitting on ourto get and keep customers lots of them. plates. Xerox executiveAn innovation doesn’t exist until it is in the hands • Existing Organizational Structuresof those customers or end users who will benefit.References to creativity are frequently paired with If we didn t have to navigate all of the layers ofreal world practicality words like applied and management and departments within anexecution. Leaders know that creativity, although organization and could do things more nimbly,critical at every stage in the process, isn’t enough boy, watch out! Huntington executiveto ensure results. Time is an ever present dilemma for managers andAnd whatever the definition, one thing is certain: executives. Both groups struggle to makeInnovation sparks change. innovation a top priority, even when its value and strategic importance is crystal clear.Breakthrough innovations change customerbehavior and the nature of the market. These bold An Informa executive netted it out by saying,innovations create the need for new structures “There is a tension between the requirement of fulfilling the existing product, the needs of LEADING INNOVATION: INSIGHTS FROM THE REAL WORLD | 3
  4. 4. particularly tough in a business environment with an intense focus on short term profits and gains. The third challenge for managers is insufficient top down support for innovation. Managers cite seemingly insincere “corporate speak” from senior leaders about the commitment to innovation. Given the challenges associated with making innovation happen, failing to lead by example is a real deal breaker. Innovation Success Factors: What Does It Take to Win the Game?existing customers, hitting monthly targets,hitting budgets it is a challenge to make sure There is strong advice for those who want tothat innovation is not something that isn’t sort of seriously invest in turning innovation talk into… well, if we’ve got time left on Friday afternoon.” action. Five factors seem to play the greatest role in helping to deliver innovative results:Others look at the challenge of time from adifferent angle. Some leaders, particularly those in • Make innovation a strategic priority.R&D, feel intense pressure to deliver innovations • Demonstrate leader commitment.under tighter and tighter timeframes. A Takatamanager expressed the concern that, “Insufficient • Create a culture that supports it.time generally yields very similar products.”Executives cite the big picture need for • Align systems and processes.innovation speed. They are keenly aware that to • Collaborate broadly.stay ahead you must innovate faster than yourcompetitors. Make Innovation a Strategic PriorityManagers and executives alike are frustrated by Given the degree of innovation success of thethe need and effort it takes to maneuver through organizations involved, it’s no surprise that theorganizational layers, paperwork, and bureaucracy call to innovation has been heard loud and clear.to make innovation happen. Governance, Leaders have internalized that innovation is a corecompliance, and strict guidelines are givens that part of their organization’s business strategy formust be managed. Functional silos spark internal continued success, growth, or even survival.competition for success and resources. Navigating Innovation is seen as essential to movingthe organizational politics that result is both a organizations from a defensive to an offensivechallenge and a chore. These issues hit innovation position in the marketplace, being ahead ratherimplementation speed hard. The big question than continually playing catch up.seems to be this: What structures facilitatemeeting the goals of the current business while An executive from Blue Cross/Blue Shield statedalso facilitating innovative thinking and action? that innovation is now an explicit part of the organization’s strategic plan.For executives, funding rounds out the trio of topinnovation challenges. Executives describe the A manager from Brady Corporation said ittough budget decisions about appropriate eloquently, In this ever-increasing global economy,allocation of money to support current products being innovative is critical to the sustainability andand services vs. innovation experiments and long-term growth of any organization to helpprojects. Several executives mention that what differentiate that organization from the competition.adds to the challenge is the very nature of It’s clear that a key factor in innovation success isinnovation itself and the inherent varying degree consistent messaging that innovation is critical toof uncertainty and financial risk, which is4 | LEADING INNOVATION: INSIGHTS FROM THE REAL WORLD
  5. 5. the organization’s strategy, not a fad or a passing Having that passion for it, that sells it at leastpet interest of a select few individuals. Innovation for me. That s something I really look for, thatis a priority and, as such, it should be taken somebody s committed that they really believeseriously. in it. Mettler Toledo managerDemonstrate Leader Commitment It s necessary that all the decision makers … believe in what you are doing, and they are asSaying innovation is important is not the same as courageous as you are. Stabilo executiveshowing it. Demonstrated executive engagementmakes up another essential element of innovation Create a Culture that Supports itsuccess some even call it passion. Some Align Systems and Processesorganizational initiatives can take hold at thefront line and generate results from a modest These days, winning the innovation game requiresgrassroots start. Innovation, although it may equal attention to two elements that might in yearsindeed begin that way, requires a different past have brought success alone. Leaders must createapproach. To gain needed momentum and sustain an environment that nurtures innovation, while alsoit, top down support is a widely acknowledged establishing the systems and processes that facilitateprerequisite. results. One manager explained that it’s a Without that, you can t do anything. Gale … balance of that loose environment on the manager front end and tight environment on the back end that helps the products to go through.It’s imperative for the senior team to Takata managerdemonstrate that innovation is a priority.Without that level of commitment, the Innovation can only flourish in a fear free zone achallenges working against innovation will win culture that promotes customer focus andout and business as usual will reign and it advocacy, constructive questioning and curiosity,doesn’t stop with executives. Leaders throughout as well as individual initiative. Experimentationorganizational levels must be prepared to must be encouraged as a primary means fordemonstrate their commitment. Staying the learning and advancing ideas to the next level.course and properly allocating time and resources On the softer side of things, it was creating anare actions that speak volumes. environment that really was different andCreating a Culture of Innovation tentative, or waiting for confirmation. Leaders who build confidence build innovators.Leaders are pivotal in creating cultural norms.Innovative workplaces share the following cultural Curious—Encouraging people to think in terms ofcharacteristics: “why?,” “why not?,” and “what if?” leads to new understandings and business opportunities.Context rich—Information feeds innovation. Leadersensure free-flowing communication so that innovators Challenging—Resting on past success does not drivecan draw on a richness of background and perspective. innovation. Environments that encourage employees to reach for new heights inspire and enable innovativeCustomer close—Creating customer value is central to results.innovation. Doing so requires a deep commitment toconnecting with customer expectations, needs, and Collaborative—Innovation is a team sport. People mustwants. work together in a variety of structures—from informal networks to officially sanctioned teams—to generate,Confidence building—Innovative ideas are not brought advance, and implement new ideas.forward or executed by individuals who are fearful, LEADING INNOVATION: INSIGHTS FROM THE REAL WORLD | 5
  6. 6. allowed people to think differently and Innovation needs to be driven from all areas. encouraged different thinking in the early It can t come from a think tank somewhere or stages, particularly as we kind of went through from upper management. The companies that the first design of these new processes. foster that do much better. Mettler Toledo Physicians’ Mutual executive managerThe environment must contain an element of Everyone owns innovation. Vista managerchallenge. Effective collaboration both across the A strong culture that pushes people to feel that organization and outside it creates the synergies they need to be successful in their mission. required for breakthrough thinking and sound Toshiba America Information Systems execution. executive There is almost nothing you could achieve just …failure tolerance but also they have to be by your own knowledge or expertise. Toshiba demanding. They have to push their people and manager really make innovation a part of the Information sharing, idea exchange and objectives. SGL Carbon manager generation, implementation planning, and followClearly, innovation does not just happen by through must occur within groups, betweenattending to the “softer side of things,” or by departments, functions, divisions, brands, plants,chance. Smart people, good ideas, cool and even among countries. Customers, suppliers,environments, even flashes of brilliance fall short and outside experts offer insights that spark newof business results in the absence of disciplined, thinking.yet flexible systems and processes to enable Central to this innovation brand of collaborationinnovation. Executives and managers consistently is diversity. The richness of perspectives thatreferred to “gates,” “checkpoints,” “objectives,” exist among those with highly technical“targets,” and “metrics” in their discussions of expertise, as well as those with nearly none,what makes innovation happen. Innovation needs those who have a depth of historical knowledgeto be treated like the serious business that it is. or years on the job and the newcomers, those who think analytically and those who thinkCollaborate Broadly imaginatively, varied educations andInnovation is an “all hands all hearts all minds” backgrounds all those differences need to beeffort. Everyone’s strengths and talents need to be celebrated and leveraged.deployed whether it is for creative idea generation or In fact, “diverse” is a word that was spoken byrigorous implementation. Everyone has a role to play. nearly every business leader interviewed.The Leader’s Role in Innovation genuinely and backing up their words with action.At the center of the leader’s role in innovation is thecapability to manage and facilitate a process that will • Generate the greatest quantity of and qualitybring results to a new level. A process creates a of ideas possible by optimizing diversity andcommon language and serves as a critical focal point for sparking new thinking.appropriately prioritizing and deploying the effort andenergy of all involved. • Shape and select promising ideas and opportunities.Innovative leaders: • Enable execution by leveraging teams• Commit to take definitive action to support effectively, managing change and problem and make innovation happen by speaking solving.6 | LEADING INNOVATION: INSIGHTS FROM THE REAL WORLD
  7. 7. The more diverse a group you have … often times … the greater amount of innovation you can spark. Unisys executiveLeading the Way: LeadershipCapabilities for SuccessAlthough every employee has a role in innovationsuccess, the leader’s role takes on particularsignificance. Given the challenges and potentialopportunities innovation represents, theimportance of developing innovation’s essentialcapabilities across leader levels can’t beoverstated. Executives and managers prioritize Thinking Skills, Strategies, andthe following key skills and behaviors as most Approachescritical to any innovative effort: Executives and managers agree that innovation• Effective communication requires a lot of different kinds of thinking. The• Thinking skills, strategies, and approaches capacity for strategic thinking, in particular, is a highly prized commodity. A leader’s ability to• Team formation and leadership observe, analyze, interpret, make decisions, and act on complex data is frequently called into• Employee performance development action. This skill set is essential when evaluating and selecting ideas to pursue, as well as makingEffective Communication the tough call to stop innovation projects at justExecutives and managers resoundingly agree that the right time. Business grounding and acumenleaders must possess a range of communication provide leaders with the baseline and contextskills to effectively lead innovation. needed for their unique contributions to the innovation process. …our communication skills are weakening. We often just exchange e-mails instead of having Team Formation and Leadership direct conversation. The chances for innovation under such circumstances will be minimal. Given the make or break nature of collaboration Toshiba manager to innovation success, it’s critical that leaders be highly skilled at encouraging high levels ofThe ability to present and persuade across involvement, team chartering, facilitatingorganizational levels to diverse audiences received understanding, resolving differences, and teamsignificant attention from managers and decision making.executives alike. Leaders must master both thecore skill of listening through to complex Leaders must also be able to intelligently assemblefacilitation of groups, at the same time managing teams capable of a range of activities, frommultiple issues, cultures, and ideas. They must be creative idea generation to testing and evaluating,able to generate specific and targeted messaging and fast and seamless execution. Today, leadersthat is clear and consistent, as well as craft global must know how to carefully select the right mix ofexpressions of the vision, and the big picture of team members for each stage of the innovationwhat innovation really means. They will need to process, being sure to consider such factors asshare information on plans and negotiate for experience, technical expertise, geography and/orresources, hold effective one on one meetings and culture, discipline, and tenure to create a teammake group presentations, persuade internal with just the right mix of individuals capable ofstakeholders and communicate convincingly with delivering innovative results.customers and others in the marketplace. LEADING INNOVATION: INSIGHTS FROM THE REAL WORLD | 7
  8. 8. Employee Performance Development differences as they contribute to these carefully selected teams. Discipline and excellence inTo deliver innovative results, leaders must be execution against individual and team goalshighly skilled at supporting high levels of rounds out the ideal profile.employee and team performance. Skills related toempowerment, creating a supportiveenvironment, leveraging strengths, recognizing, Conclusionredirecting, and holding people accountable go a Innovation is a high stakes game with enormouslong way toward making innovation a reality. potential for gain and equally enormous challenges. Organizations wishing to remain Innovation needs care and feeding. Toshiba vibrant and viable must take the steps necessary to America Information Systems manager instill and sustain the culture, systems, structures,Executives expressed that leaders must excel at and skills for innovation success.unleashing employee potential, curiosity, creativity, Ask the following questions:and openness to new ways of thinking. Managers,by contrast, emphasized the critical ability to set • How does our organizational culturethe structure necessary for innovation. Defining support connecting with customers ingoals, objectives, and expectations, providing meaningful ways?guidelines, establishing timelines, and providingfollow up are all front of mind for implementation • Do we have the organizational diversity tooriented managers. spark new thinking? • Do we have the discipline, resources, andIndividual Contributors: Partners in skills to successfully execute innovation allInnovation Success the way to the goal line?In the spirit of true collaboration, the skills • How change capable is our organization?required of individual contributors to makeinnovation happen mirror those required of leaders. Your success lies not only in your answers, but also in what you are prepared to do if you don’t like theExecutives and managers agreed that answers.communication is among the most critical skills thatindividual contributors must possess. Listening,sharing ideas, engaging in dialogue, and seeking tounderstand others form a needed foundation. Theability to persuade and educate diverse and variedaudiences across multiple levels within and outsidethe organization build on that foundation.Individual contributors must develop and drawupon flexible, inquisitive, creative thinking stylesbalanced with analysis and logic. Folks who really think outside the box and people, yet who at the same time, can have their feet on the ground and understand what s going on organizationally. Physicians’ Mutual executiveParalleling the leader’s need to assemble and leadteams, individual contributors must have the skillsto collaborate effectively and make the most of8 | LEADING INNOVATION: INSIGHTS FROM THE REAL WORLD
  9. 9. About the Research Detection, Navigation, Guidance, Aeronautical, and Nautical System andAchieveGlobal identified a need to investigate the Instrument Mfg.; Offices of Bank Holdingconcept of innovation in the workplace. The Companies; Periodical Publishers; Precisionobjective of the research was to understand the Weighing Instrumentation;components of innovation and its behavioral Telecommunications Resellers; Dry,determinants and individual competencies necessary Condensed, and Evaporated Dairy Productto bring about business results. Mfg.; Direct Property and Casualty InsuranceA preliminary literature review provided valuable Carriers; Crude Petroleum and Natural Gasinformation to guide our understanding of Extraction; Lead Pencil and Art Good Mfg;innovation. In order to properly explore the topic in Iron and Steel Mills; Motor Vehicle Partspractical terms, we conducted in depth interviews Manufacturing; Book Publishers; Travelwith individuals from a variety of organizations. We Arrangement and Reservation Services;engaged discussions among executive level members Communications Equipment Manufacturing;of organizations, as well as mid level members. Computer Systems Design Services; andInterview guides were used to focus the conversation Wireless Telecommunications Carriers;on issues surrounding how innovation is defined, Photographic and Photocopying Equipmentsupported, and practiced in organizations. Mfg.We used our internal database of prospects and Interviewees were located in the following countries:clients, our professional networks, and our Canada, Germany, Indonesia, Italy, Japan, Malaysia,international partners to identify possible candidates Philippines, Singapore, Switzerland, Thailand, UK,for the research. To ensure we only included and USA.organizations who excelled at innovation, we usedBoston Consulting Group’s list of the “TopMost Innovative Companies” as a filter.Our final sample of interviews includedrespondents from a broad range of organizations andindustries across the globe.During the research, we spoke with a diverse groupof individuals from a wide array of industries in avariety of locations. Industries include but are notlimited to : Dry Pasta Mfg; Direct Health and Medical Insurance Carriers; Prefabricated Metal Building and Component Mfg; Sign Mfg; Photographic and Photocopying Equipment Mfg; Medicinal and Botanical Mfg, Computer Systems Design Services, Wired Telecommunications Carriers; Search, LEADING INNOVATION: INSIGHTS FROM THE REAL WORLD | 9
  10. 10. Books and Professional Articles Mathisen, Gro Ellen and Stale Einarsen. . “A Review of Instruments Assessing Creative andAmabile, Teresa M., Regina Conti, Heather Coon, Innovative Environments Within Organizations.”Jeffrey Lazenby and Michael Herron. . Creativity Research Journal. , .“Assessing the Work Environment for Creativity.”Academy of Management Journal. , . McLean, Laird D. . “Organizational Culture’s Influence on Creativity and Innovation: A Review ofAmabile, Teresa M., Karl G. Hill, Beth A. Hennessey, the Literature and Implications for Human Resourceand Elizabeth M. Tighe . “The Work Development.” Advances in Developing HumanPreference Inventory: Assessing Intrinsic and Resources. , .Extrinsic Motivational Orientations.” Journal ofPersonality and Social Psychology. , . Nohria, Nitin and Ranjay Gulati. . “Is Slack Good or Bad for Innovation?” Academy ofAxtell, C.M., D.J. Holman, K.L. Unsworth, T.D. Management Journal. . .Wall, P.E. Waterson and E. Harrington. .“Shopfloor Innovation: Facilitating the Suggestion Potosky, Denise and H.V. Ramakrishna. . “Theand Implementation of Ideas.” Journal of Occupational Moderating Role of Updating Climate Perceptionsand Organizational Psychology. , . in the Relationship Between Goal Orientation, Self Efficacy, and Job Performance.” Human Performance.Choi , Jin Nam. .“Individual and Contextual ,Dynamics of Innovation Use Behavior inOrganizations. Human Performance. , . Scott, Susanne G. and Reginald A. Bruce. . “Determinants of Innovative Behavior: A PathCooper, Dr. Robert G. . Stage Gate System. Model of Individual Innovation in the Workplace.”http://www.prod dev.com/stage gate.shtml. Accessed Academy of Management Journal. , / . Product Development Institute. Zairi, Mohammed and Majed Al Mashari. .Drazin, Robert and Claudia Bird Schoonhoven. “Developing a Sustainable Culture of Innovation . “Community, Population and Organization Management: A Prescriptive Approach.” KnowledgeEffects on Innovation: A Multi Level Perspective.” and Process Management. , .Academy of Management Journal. , .IBM Global Business Services. . “Expandingthe Innovation Horizon: The Global CEO Study .” IBM Corporation.Isaksen, Scott G., Kenneth J. Lauer, Goran Ekvall,Alexander Britz . “Perceptions of the Best andWorst Climates for Creativity: PreliminaryValidation Evidence for the Situational OutlookQuestionnaire.” Creativity Research Journal. , .Jex, Steve M. . Organizational Psychology: AScientist Practitioner Approach. John Wiley & Sons,Inc. New York, NY.Joy, Stephen. . “Innovation Motivation: TheNeed to be Different.” Creativity Research Journal. , .10 | LEADING INNOVATION: INSIGHTS FROM THE REAL WORLD
  11. 11. About the AuthorsCraig Perrin, Director of SolutionDevelopmentAs AchieveGlobal’s Director of SolutionDevelopment, Craig is a thought leader who workscross functionally and with clients to guide creationof a range of responses to market needs. Since ,he has played a central role in developing thecompany’s flagship programs in leadership, sales, andcustomer service; co authored two best sellingbooks; written many articles and position papers;and produced eLearning and video that have earnedscores of national and international awards. In ,Craig was named Times Mirror Editor of the Year.Craig’s positions before AchieveGlobal includecurriculum designer, stand up facilitator, collegeinstructor, and art curator. Craig holds a B.A. andM.A. from San Francisco State University.Chris Blauth, Director of Product StrategyChris spearheads AchieveGlobal’s efforts to developand maintain products that will prepare leaders at alllevels of an organization. He has also been involvedwith Web based learning, launching an asynchronousWeb based tool to reinforce the skills taught inAchieveGlobal’s flagship sales program, ProfessionalSelling Skills®. Prior to joining AchieveGlobal, Chrisspent seven years with Leica Microsystems, Inc.,where he was a financial analyst and productmanager. Chris holds a B.S. in Accounting andFinance from the University at Buffalo, and an MBAin Marketing from Canisius College. He is a memberof Beta Gamma Sigma Honor Society and theAmerican Management Association. LEADING INNOVATION: INSIGHTS FROM THE REAL WORLD | 11
  12. 12. About AchieveGlobalIn the st century, the level of human skills will determine organization success.AchieveGlobal provides exceptional development in interpersonal business skillsgiving companies the workforce they need for business results. Located in overcountries, we offer multi language, learning based solutions globally, regionally, andlocally.We understand the competition you face. Your success depends on people who havethe skills to handle the challenges beyond the reach of technology. We’re experts indeveloping these skills, and it’s these skills that turn your strategies into businesssuccess in the st century.These are things technology can’t do. Think. Learn. Solve problems. Listen. Motivate.Explain. People with these skills have a bright future in the st century.AchieveGlobal prepares you for that world. World Headquarters 8875 Hidden River Parkway, Suite 400 Tampa, Florida 33637 USA Toll Free: 800.456.9390 www.achieveglobal.com© 2009 AchieveGlobal, Inc. No. M01265 v. 1.0 (08/2009)