What Is Your Company’s Return On Innovation?

Today it is no longer good enough for organizations to simply be “innovative” occasionally.  Successful companies will need to innovate quickly, constantly, effectively, and comprehensively; developing new products, processes and strategies. The ever-increasing level of competition simply demands it.

Think about the person in your position 20 years ago. How many more ideas per day/week/month do you need now to be effective than that person did, simply because it was a slower pace of change then?  Twice as many? Three times? Ten times as many to get the job done?

With that frame of reference, I want to talk about some specific strategies you can use to turn the vague notion of innovation into a more concrete concept you can use every single day to differentiate your organization, succeed and prosper in the market.

Here are a few best practices I find common among innovation leaders:
Embrace an opportunity mindset. This means believing that there is no such thing as a truly mature market, or a truly bad economy; there are only tired imaginations.  In challenging times, a key competitive asset is the imagination capability of your organization.  Consider this example; Michelle works as a receptionist at a manufacturing company in Ohio.  As part of her job, she is frequently on the phone with customers, and sometimes they are unhappy with something the company has done, or failed to do.  Rather than getting upset, she pulls out her writing pad and records their complaints. Then she asks a simple question: ”What do you think we should do so this never happens again?”  Those suggestions end up in the company new ideas program.  For her efforts, Michelle won her company’s Innovator of the Year Award. I love that story because Michelle could have rightfully said – Innovation, make it my business?  You have got to be kidding.  But instead she realized her time spent on the phone with customers was valuable and she had a system to share those ideas with management. This is what I mean about having an  opportunity mindset.

Involve everyone in the organization. No matter how good you are at generating new ideas, you can’t achieve the necessary level of new idea output alone.  You’ll need to involve everyone in your enterprise. To accomplish this, successful companies create a culture of innovation, with specific metrics, responsibilities and incentives so that people are recognized, rewarded and encouraged to be part of inventing the future.

Procter & Gamble is an example of a company that truly champions innovation, but that wasn’t always the case. Just a few years ago they hit an inflection point; growth was stalled, their stock was languid, and they were getting beat up by lower priced store brands. They hadn’t had a breakthrough idea since Head & Shoulders Shampoo in 1963. Then a new CEO shook things up by acknowledging and rewarding employees who had new ideas.  He conducted annual innovation reviews with stretch goals so that every business unit knew what their innovation deliverable was, not just their profit and loss target.  And, in one of the most controversial ideas for that time, he pioneered “open innovation” at P&G, which acknowledges that not all the good ideas must be found inside the company.  A goal was set that, in 5 years, 50% of new ideas would come from outside the company. They achieved that goal and created a slew of successful new products including Crest CD White Strips, Swiffer, and Spinbrush battery operated toothbrush.

Be systematic in your approach.  Today’s best companies realize they have a process for everything else, why not innovation?  As more and more companies see the pace of change accelerating, they are questioning why they are still practicing innovation the way they did 20 or 30 years ago. Consistently innovative companies use idea management systems to systematically record, nurture and  implement new ideas. IBM has a very effective program called ThinkPlace. If an IBM employee anywhere on the planet happens to wake up with a good idea, he or she has a place to submit it.  These idea management systems are not the complete solution, but once implemented, your organizations’ new ideas are more likely to succeed because there is a process to leverage them.

Ask a different question. This is one of the key roles of leadership when it comes to innovation.  During the depths of the great recession, when it seemed the global economy was going off a cliff and auto sales were flatlining for most of the industry, Hyundai sales were actually up 14%.  How did that happen?  They were asking a different question. Everyone else was asking – how do we move our cars?  Do we rebate further, or discount more?  But Hyundai was asking -– why aren’t people buying cars?  Well, one reason was because they were afraid they might lose their job.  How to address that?  Hyundai came up with a one year, no cost, return guarantee. If you lose your job in the next 12 months, you bring the car back. An unconventional solution for unconventionally challenging times. They had never done anything like that before, but sales went up 14%.

Controlled risk taking is essential. Many organizations today are too risk adverse. You cannot innovate in that environment. Experiments are necessary and they will fail more often than they succeed.  I’m not talking about mistakes or incompetency, but failure.  If you think about Edison, he experimented with literally thousands of different filaments before achieving success. Innovative organizations need to fail forward faster if they hope to invent the future and drive growth through innovation in these turbulent times.

And you have to get failures out in the open. If not, a very dysfunctional thing happens in many organizations.  Human nature being what it is, people will start jockeying for position and try to gain advantage over those associated with the failure.  In these situations, it is critical that executive leaders clearly communicate the rules of the road, setting a culture and climate that allows those with new ideas to test them in a safe environment. The risk associated with failure must be borne by the organization, not individuals in the organization.

Whatever your position in your organization, your ability to innovate, to problem solve, experiment, create ideas, drive growth, collaborate and add value, gives you a personal competitive advantage that can never be outsourced.