How can we become a more innovative company? How do I manage innovation more proactively? How can I ensure our innovation investments are generating positive results? These are good questions that good business innovation leaders should be asking themselves. An Innovation Framework is a model that can help to clarify and institutionalize your answers to those questions and more.
The specific approach to innovation is different for each company but can be structured within a common framework to help define and manage your innovation activities in a disciplined way. Innovation programs can sometimes get a bad reputation as frivolous or unproductive, especially when they emphasize the creative and behavioral aspects of the front end of the Innovation Lifecycle without sufficient focus on their business impact, which tend to have longer timelines to impact than core business operations. By using a defined and documented innovation framework, you can help align expectations and establish common terminology for innovation practices with company leaders and staff which leads to common understanding and accountability.
There is no one right answer or approach to how you define your innovation framework, but they all share similar concepts. Once you do, it can become the scaffolding against which innovation activities can be defined and managed. Here is the framework that we use for BRI and our clients.
Setting Your Course
Our framework starts with “Objectives and Constraints”. This is the foundation for everything else. Why are you investing in innovation? What are you trying to accomplish? Innovation can be a means to achieve many different goals. The important thing is to be clear about which one or few are most important. Here are a few different potential goals for innovation:
- Change the company’s growth trajectory
- Improve operation costs, speed, or flexibility
- Diversify the business to create greater stability
- Respond to significant or unexpected disruption from competitors or the market
- Help improve employee recruiting or retention
- Re-position the company brand
It’s also critical to understand what constraints your innovation efforts need to operate within. For example, innovation efforts have inherently higher uncertainty and risk versus core business activities, so what is the company’s financial risk tolerance? What’s the target timeframe for results? What resources of the company should the innovation projects leverage and with what conditions (i.e. brands, customers or channels, technology assets or IP, etc.)? Should you avoid or focus on specific markets or geographies? Are there specific types of liabilities or risks that should be avoided? Defining these constraints up-front is critical to establishing trust with company leadership and enable greater degrees of freedom and flexibility within target areas.
With the Objectives & Constraints well defined and agreed by all stakeholders, you can develop your “Innovation Strategies” that are aligned to those goals. Are you going to pursue a balanced portfolio or different types of innovation - Process vs. Product/Business, Incremental vs. Radical? Are you going to invest in internal, organic incubation, or external strategic investment and acquisition? Are you going to create a centralized “innovation lab” or “incubator” or invest in developing innovation skills and processes throughout the company in different departments or business divisions?
Defining Success - Metrics and Analytics
How will you know if your strategy is working and meeting the expectations of your key stakeholders? You must define what success against your objectives means in quantifiable and measurable ways. If your goals are not measurable, then you might want to revisit them. This is a common stumbling block for many innovation programs. They are either lacking clear and measurable goals, they are not agreed by all key stakeholders, or they are unrealistic relative to the constraints.
Don’t be afraid to apply metrics to innovation. If defined and managed properly, metrics can be empowering and bring discipline to your efforts. However, poorly defined metrics can have an equally crippling effect. So, take your time to make sure that optimizing towards the metrics you’ve chosen will almost always align with the desired behaviors and outcomes, and not unintended consequences.
You can use metrics to align stakeholders and focus the efforts of innovation teams. Use them to build trust and credibility with stakeholders by showing regular progress and that you are focused on results and mindful of the key constraints. Make the goals and success metrics clear and visible to execution teams, so they understand your priorities and the criteria that will be used when making decisions about innovation projects.
Also make sure that you’ve thought about how you are going to capture the data required and analyze it to monitor progress against those metrics. How will you do so consistently across projects and teams around the company? These questions can help define requirements for roles, processes or tools that you might need to put in place as part of your innovation practice.
Enabling the Organization
Now you’ve got a solid foundation for your innovation practice. You’ve got well-defined, measurable goals, clearly defined strategies to pursue them, and systems defined to measure and monitor your progress. Time to execute. Execution will need to involve the coordinated efforts or many resources, potentially internal and external to the company and likely across functional groups and divisions. To do this, you must enable the organization. Within our framework, we break this down into three areas:
- Defining or Adopting Best Practices and Methods
- Leveraging available Tools & Services
- Developing required Behavioral Skills & Culture
Processes & Methods
Most businesses have some type of established product or business planning process that provides a common structure and method for how new products get defined and implemented, often referred to as the Product Lifecycle or Planning Lifecycle. Innovation planning and execution has its own “Innovation Lifecycle” which is similar but has some important key differences. Product Lifecycle management methods focus on execution planning and minimizing risk or exceptions, while Innovation Lifecycle methods tend to focus on efficient exploration planning, maximizing agility and option value. There are numerous Innovation Life-cycle approaches that can work, but the key is recognizing the difference from the methods used for your core business product or business planning.
Another critical area of focus within Process and Methods is the use of appropriate “Governance Models” for different stages of the Innovation Lifecycle such as ideation, incubation, mezzanine, and scaling. The differences in activities, success metrics, investment/risk levels, operations, levels of integration for core process, etc. will likely require the creation or modification of organizational structures, roles and processes.
One of the most important considerations for the Innovation Lifecycle is to focus on the transition points between the different stages - When and why to transition, how to define & recognize when a project is ready to transition, and how to manage the changes in governance dictated by those transitions.
Tools & Services
There are myriad tools available for helping with all the different aspects of innovation work and they come in many forms. There are academic thought frameworks, paper tools, software tools, and professional services. Depending on your circumstances, you may be biased toward building your own, outsourcing to an expert, or leveraging a mix of these. Whichever you choose, make sure they are aligned to your needs based on the types of innovation you’re focus on (internal process innovation vs. new product/business innovation), the different phases of the Innovation Lifecycle, that the evaluation and analytics support and inform the measurable goals you’ve defined, and align with the specific operational requirements for your company.
Behavioral Skills & Culture
Don’t forget this important part. The behavioral skills for new business & innovation are not the same as those required for core business operations. There are certainly many areas of overlap, but they are not identical. A great operations person may find themselves frustrated by the ambiguity and uncertainty of innovation work. Conversely, great innovators may chafe against the constraints and sometimes narrow, but deep, focus of operational work. Make behavioral skills expectations clear for each role, set up appropriate reward & recognition systems that align with them. You may need to bring in new talent or provide training to develop new behavioral and technical skills in order to be successful with your innovation practice.
Depending on your goals, you may need to embed more innovation behavioral skills and practices into your company culture to become a more ambidextrous organization that is good at both exploratory innovation and operational execution. This will take time but start by making it clear to the organization how your innovation practices align with the company values, vision and goals and highlight the value of the differences between innovation practices and operational practices for different aspects of the business.
Summary
New Business & Innovation are different from daily core business operations but can still be disciplined and results oriented. These differences should not be an excuse to shed accountability, but the differences need to be recognized and proactively managed. Doing so is critical for the long-term success of innovation or new business group but can also benefit the whole organization and using a clear innovation framework is a good place to start.
