This may sound simple, but for most companies, creating an environment for innovation can be daunting.
The challenge is neither lack of resources nor of creativity, but of management capability. Specifically, the capability needed to translate new ideas into value creation. Building innovation capability can be done, but doing so requires a willingness to do old things in new ways, to develop new skills and to challenge thinking that originally made the firm and its leaders successful.
Innovation is the business discipline of doing things in new ways that create economic value. It describes the skills needed to solve business problems and meet customer needs in new ways that drive economic profitability. Like all business disciplines, innovation requires skills that can be taught, practiced and mastered.
Critical innovation skills fall into three categories: discovery skills, execution skills and leadership behaviors.
Discovery skills: Discovery skills refer to skills needed to develop insights about emotional, economic or functional needs, and to create new options to meet those needs. This is different from more common problem-solving approaches in two ways: Discovery thinking involves developing customer insights first and then visualizing new products or services to meet them, rather than vice versa, and discovery thinking employs lateral thinking techniques to create multiple options, rather than analytical thinking to find one solution.
The key leadership skill required here is the ability to suspend judgment, particularly in the face of ideas that are unfamiliar. By learning to suspend judgment, managers can reduce tension and avoid killing ideas too soon in the discovery process.
Execution skills: Once a new solution concept has been created, it is time to create a project plan and execute. Because innovation projects typically have a high level of uncertainty or guesswork associated with them, they must be managed differently from other projects. To this end, three distinct execution skills are required: the ability to manage uncertainty by running projects as disciplined experiments, the ability to convert project feedback into new insights and opportunities “on the fly” and the ability to recognize and manage the forms of psychological entrapment that afflict innovation teams and managers.
Leadership skills: Leaders, in turn, must learn to hold their managers accountable for how they manage innovation projects, and not for the results those projects generate. This means creating an environment in which managers are held accountable for completing projects on time and on budget, and for capturing learning from each effort. Further, the environment must be one in which failure to produce a positive ROI is tolerated. This is a difficult concept for managers to accept but necessary for innovation to thrive.
Because innovation requires the confidence to try new things with uncertain outcomes, building innovation capability is often best done using customized innovation simulations because:
• Business simulations allow learners to safely experience the unique situations that occur during innovation projects without risking money or resources.
• Simulations allow instructors to dynamically re-create conditions that are unique to managing innovation projects.
• Simulations are proven to facilitate improved performance in real-world settings.
Growing one’s organization through innovation is critical to business success. Many firms fail at innovation because they lack the right management capability. Developing the proper capability means stepping outside of traditional processes, having the willingness to try new things and develop new skills, and challenge the thinking that originally made the firm successful. By developing discovery, execution and leadership skills, innovation is a capability any firm can develop.
Peter Mulford is executive vice president at BTS, a strategy alignment company. He can be reached at editor@CLOmedia.com.
