Leading Innovation across enterprises

This is my first post in the space of general business strategy and management. I have written some posts about defining and designing solutions to problems specific to certain industries such as transportation and supply chain. However, translating what I knew, what I felt, and why I felt needed some digging. This post is an outcome of that effort.

One of the prime aspects that I would like to present is building and leading the innovation charter, more importantly, leading this charter continuously and sustainably. Innovation, contrary to the major belief, isn’t a one-time thing. It is an all-time thing. You don’t innovate once in a while; you innovate all the time. Little or big is irrelevant. Incremental or disruptive is all but just a part of the game. Let’s start with building models of innovation and approaching this seemingly mammoth of a task bit by bit. These blocks and bits are true for startups, small and medium-scale enterprises and highly relevant for large-scale companies.

Future Fore-sighting

First, it needs you to put the as-is and to-be state of your company. While it is almost super easy to identify the company’s state, it is tough for anyone to predict what the to-be future should be. It often tends to be vague or, worst ill-defined. To address this fallacy, we recommend a model. Rather than pursuing a random walk to the company’s most desirable future, this model aims to discover well-researched and weighted paths to innovative futures. It does this by finding the most possible, preferable, and probable set of futures for the firm. Once you obtain these sets, the model helps filter high potential projects or high potential bets. Here is how the model sequentially works -

1. Start by putting the immediate industry and the customer on the y and the x axis.
2. Then, plot the neighbouring industries and the customers juxtaposed to the original industry and customer segment.
3. The intersection of each industry and customer segment gives one current offering. For-example — Let’s say that the parent company is an automobile manufacturer and the target segment is a 4 member family, then the intersection of automobile industry and the customer segment is a family car. And the neighbouring customer segment could be individuals — who work or the ones who are retired. The neighbouring industry segments could be energy, or car consumables.
4. Now each of the current offerings is extrapolated into the future guided by their unique set of industry segment drivers and weak signals of upcoming technology trends flooding the segments. The team is going to brainstorm on the possibilities using these hooks — current offerings, neighbouring segments of customers and the industry, industry drivers and upcoming technology trends.
5. These exercises will give a set of the most possible, preferable, and probable projects of the future that the company should pursue.
6. Once these probable sets are obtained, there are plotted on two scales -a) Impact vs Investment and, b) Impact vs Time
7. Here, the impact could be measured in the terms of the customer experience, revenue or profits.
8. Once plotted, the most desirable projects are selected and pursued in depth further.

Figure 1 and 2 : Building set of aspirational, possible, preferable, probable future of the organisation.

Figure 3 and 4 : Plotting the futures on different criteria map- Impact vs Time and Investment vs Time

Building and Managing Innovation Portfolio

Once the future projects are identified, they need to be prioritized, assigned budgets and teams, and managed. The best way to move forward is to draft them into an innovation portfolio. The portfolio should be built to yield the highest impact against the most optimum investment of resources and time. Moreover, the portfolio should be built in a way to minimize the inherent risk. Following model aids in selecting, prioritizing and then assigning a budget to reap the best benefits against the most measured risks.

1. First categorise the projects into following major subsequent sets - incremental, disruptive and transformational
2. Identify different parameters to go deeper from the above criteria of Time, Investment and Impact. Following are some examples on the parameters that can be chosen to qualify the projects at a much deeper level a) Impact — Brand impact, strategic fitment, market share etc b) Time — Urgency to the market c) Investment — Assets, teams etc
3. Once these categories of evaluation parameters are built, assign weightage to every parameter so as to assign quantified priority to every project.
4. Obtain a final score for every project- out of 10 or out of 5 doesn’t matter. What matters is that all parameters must be mutually exclusive and collectively exhaustive

Figure 5 : A sample innovation ambition matrix to show priority investment areas

Culture Transformation

While it is clear that the model helps identify what needs to be done to move the firm from its As-Is to To-Be state — what projects to choose and how to prioritize etc. However, what is missing is the how. How do we move the company from its starting point to the desired point in the future? One key ingredient required for this movement is the culture of the company. No matter how rigorous the project selection is, if the company’s culture isn’t ready to work on it and deliver, it is all but a futile exercise. To avoid this pitfall, it is important to select those additional projects in the priority list, which will nudge the culture towards a path such that it automatically fuels the project progress. Furthermore, there is also a need to identify project-specific KPIs to measure its progress and impact. Let’s take a sample scenario to work around and through it.

Figure 6 : Project selection that fuels the desired culture which in turn propel the overall innovation portfolio.

1. Just like we defined the As-IS and To-Be state of the overall company, let’s also define the As-Is and To-Be state of the culture of the company.
2. Once this is defined, let’s also define how the innovation projects around the culture will fuel this overall culture change
3. Most of the organisations have a strong value-led culture. In amidst of the pandemic and heavy environmental degradation as well employee exhaustion, it is imperative that the culture shifts towards more purpose led.
4. Purpose led organisations look at the larger picture and also much ahead of its time. Such an alignment is more comprehensive and stands much beyond value creation themes such as — revenue/profit growth, giving maximum returns to the stakeholders etc.
5. Once a purpose driven alignment is set and articulated, it must be ensured that it either drives wellbeing of the below stakeholders or the wellbeing of the following stakeholders is derived from the purpose itself- a) Employees, b) Community c) Ecosystem
6. This is turn has to reside on core values of the organisation as well as individual.

Figure 7 : Purpose driven culture residing solidly on the foundations of sustainable thinking

7. Also, culture cannot be turned around overnight. It has be gradual, keeping

Firstly, the incremental innovation projects that drive business-as-usual has to be foremost priority along with top-level investment

1. As this plays, increase the talent density of the organisation gradually
2. Here, put one innovation expert/actor as a facilitator in each department responsible for the projects
3. Define and measure project level success criteria, KPI on progress and impact
4. This will start injecting innovation into the teams, bottom up

Secondly, as incremental innovation projects start waning out, bring adjacent or close-to-disruptive projects in focus with similar level of investments

1. As this plays, make the high calibre talent empowered, independent and accountable at the same time by lifting control measures around daily routine activities such as travel or expenses policies
2. Here, start passing on the baton of facilitation from the innovation actors to the departmental team members
3. This will strengthen the innovation fabric from within.
4. At this point, the department will become independent in leading and managing the incremental innovation projects on their while, the innovation actor will facilitating the disruptive innovation projects

Thirdly, bring transformative innovation projects in focus by slowing waning out disruptive and incremental projects in focus

1. As this plays, all departments will become independent in defining and leading innovation projects — both incremental and disruptive
2. The external innovation actors will become redundant, paving way for new generation innovation leaders groomed from within the departments
3. All departments can now lead their own innovation portfolio with the external innovation actors can drive different and new mandates of newly formed businesses.
4. This churn needs to continuous to make the innovation truly sustainable

Figure 8: Democratising the innovation across the organisation