Innovation at companies: often touted but lacks the right toolbox – Series 2 of 2

So – in this series two, the Effectiveness lab addresses the questions: how do leaders, managers, and organizations achieve sustainable innovation? However, before delving into the answer/s to the latter questions, we share below an excerpt from McKinsey that makes clear the power of innovation and its signature value-addition within the organization’s business value chain:

“More than 70 percent of the senior executives in a survey we recently conducted say that innovation will be at least one of the top three drivers of growth for their companies in the next three to five years. Other executives see innovation as the most important way for companies to accelerate the pace of change in today’s global business environment. Leading strategic thinkers are moving beyond a focus on traditional product and service categories to pioneer innovations in business processes, distribution, value chains, business models, and even the functions of management.” McKinsey

From the above, and given the extremely complex global competitive landscape, innovation-practice is shifting ground; away from the focus on differentiating products and services, to creating unique processes that are used for: reflection, design, manufacture, delivery, and application of goods and services by the buyer

It’s no longer enough to spend all your innovation dollars on making unique core products and services, without paying attention to peripheral or secondary processes that are used to manage the entire product/service lifecycle, before and after manufacturing. Innovation now focuses on making unique the design process for products and services, sales and distribution channel uniqueness, different ways to deploy/use products, and after-sales services.

The above paradigm shift in innovation is a testimony to the maturing of the product/service innovation paradigm. We will call it, for purposes of this blog, the Coca-Colonisation of traditional innovation. Innovation is today, a standard and cheap process whose core-competencies any firm can acquire, and in a cost-effective manner. Unique products aren’t enough to make you unique

Firms can hire top scientists, to design the best iPhone if you are Apple, or Galaxy phone if you are Samsung – but unique core product design is no longer enough to secure a company sustainable competitive advantage. Indeed, even for a product as sophisticated as the iPhone, sales have been declining year on year

And firms like Apple are responding appropriately, providing a blueprint for the ‘new’ innovation challenge. Apple is shifting attention to the peripherals of the company’s product business value chain. Apple is investing significant dollars in the service-provision game, using the iPhone as the delivery vehicle.

Yes, the science and art of designing and bringing to market cutting edge products is still key in Apple’s value-chain, but not enough to help Apple keep its valuation on the stock market. What would Steve Jobs think of this? Interesting times, not so?

We are also witnessing the same titanic shift in other industry sectors – Uber and Uber-eats, Amazon and its now extending tentacles into all sorts of retail spaces including drone delivery, Supermarkets and the banking offer via in-house credit cards and financial services, even the traditional conservative local government is changing; example, the Boris-Johnson bicycle hire scheme in London, the Yaka (pay-as-you-go) electricity distribution model for utility titans like Umeme in Uganda, etc

The business world is thinking about and delivering innovation differently – we are witnessing, not acquisitions and mergers per se, but a new partnership via which actors in the same industry sector combine forces to offer state of the art, realtime and convenient services to their target market: hospitals and pharmacists setting up in the same place and sharing space and in the process bringing convenience to the client – brick and mortar banks joining forces with mobile-money operators to offer hybrid and extremely convenient, on-the-phone, financial services with direct and secure access to one’s bank account details and in realtime, etc. The latter is an example of innovation via the repackaging the distribution/supply of traditional banking service and in effect, making a clearly old and mundane service, appear new and cutting-edge. The Effectiveness lab

With product/service innovation a standard thing and for all intents and purposes a given, and innovation shifting to the peripherals of the value-chain, what kind of skill and OD. context should companies need to deliver the ‘new’ innovation?

1. Whilst it’s no longer driven exclusively by the nerd scientist, spending day and night in the innovation lab, innovation is still mainly about having the right people. However, what you are looking for in the people this time – the innovation junkies – is not necessarily the topmost IQ, but the right attitude, tenacity and the knack for working with and in groups of others towards innovative practices. So do you have the right innovation DNA on your team?

2. The second factor is the culture at the institution – right from the person at the top to your rank and file in the supply-chain unit. Does the OD. context encourage, define, and monitor innovation, including holding seniors accountable for failing to innovate?

“There is also widespread agreement about the cultural attributes that inhibit innovation: a bureaucratic, hierarchical, and fearful environment. Such cultures often starve innovation of resources and use incentives intended to promote short-term performance and intolerance of failure.” McKinsey

3. And the third and last innovation influencing factor is the power to create and work within relevant networks – both informal and formal, to keep the innovation candle burning? Do we encourage such herding of innovative souls and ideas? Have safe innovation-spaces or labs been created within companies?

It appears like innovation is a software (the three above) and not hardware (men and women in coats toiling away in labs behind complex machines) that is key to successful innovation at the modern company.

It’s not, therefore, wrong to opine that innovation is now a mindset/soft and not exclusively hard issue.

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