• Technology
  • 25 July 2018

Paving the way for innovation to bear fruit

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In the first two parts of this series of articles on innovation, I wrote about why companies need to innovate and also on how management and employees have to change their mindsets in order to create an innovative culture within the organisation.

In this concluding article, I will discuss more about the processes that need to change in order to facilitate the seeding of an innovative culture within the company.

Many companies, when they embark on their journey of innovation, fall into a common trap of applying old business models and ways of doing things to the new ideas they want to try out.

But when you are testing out an idea that has a high degree of uncertainty, you require a different treatment.

The old ways of working will kill the project even before it can get tested.
So an important path to innovation is clearing the artefacts in the company that hold people back from being innovative.

Who drives innovation?

For a company to be successful in its journey of innovation, it must be driven by all levels within the company.

The CEO and senior management set the tone and direction and must walk the talk; the middle management must help to facilitate things by allowing ideas to be tested and not snuffed out too quickly; all other employees must feel they have the space to experiment and get creative.

It takes all levels to work towards that goal of becoming more innovative so a purely top-down style of management may not be the most conducive environment for innovation to thrive.

Take the company Intel as an example.

When Intel first started 50 years ago, it was mainly a memory company, producing S-RAM and D-RAM memory chips.

For 13 years, it remained that way and senior executives always held the line that it was a memory company.

But customers started telling the junior staff in the company that they wanted chips that had multiple functions.

The frontline staff started experimenting and making such multiprocessors.

And even though there was great demand for these new products, senior executives still termed Intel as a memory company although it gave employees the leeway to continue producing the new product.

It was only until microprocessors accounted for more than half of the company's profits that it hit senior management and they started saying "I guess we're not a memory company anymore, we're a microprocessor company now".

What does the Intel experience teach us?

That innovation can come from the bottom too – the frontline staff who are closest to the customers and who understand their needs best.

Therefore, it is key that everyone from the most junior staff in the company feels that he or she can contribute ideas that managers would not dismiss out of hand.

Recognise that leaders don't always know best

Which brings me to the next point – that leaders of a company don’t always know the problems its customers or junior staff are facing and what needs they have.

In fact, some studies have estimated that CEOs and senior management know as little as only 4% of a company's problems; middle managers about 20% and the other employees know most, if not all of it.

If this is the case, a company should put in place channels that allow more interaction between the top and bottom layers so that the disconnect is lessened.

Make it easier for managers to make decisions

When an idea has a higher degree of uncertainty, it becomes more difficult for leaders to make a decision, especially if the losses are potentially huge.

So we have to find a way for the manager to have the flexibility to run experiments in short sprints to test if the idea is worth developing while not investing too much money into it.

One way to do this is to look at splitting a project into various phases of testing.

In the traditional mode of doing things, the manager would have to ask for a budget to last the entire length of the project. This would usually mean the sum would be much bigger and senior management may see it as more risky due to the amount invested into a project with uncertain outcomes.

However, if we split a project into tranches, it may make it easier to get approval to kick-start the project. The amount invested at the start would also be much lower.

For the next tranche to start, the team pursuing the idea must show results that justify further testing and further funding.

This method limits the liability of the project. It also puts more discipline on the team to ensure the idea is tested properly and promotes out-of-the-box thinking when faced with a problem or setback.

Doing projects in tranches also mean that more projects can be undertaken at the same time rather than have to join the queue and wait for more resources and budget to be available.

Experiments should always have 'two-way doors'. A two-way door project is one where you can easily back out of if you realise you had entered mistakenly. This means you get out before you invest too much into what may end up as a pointless venture.

But if the project has only a one-way door, then it is almost like there is no way back. In such circumstances, we probably need to be more certain of the possible success of the project before we even embark on trials.

Focus on creating innovators, not innovations

Some companies focus on finding innovations-tasking employees to think of new solutions to old problems.

But the problem with that is that the employees do not usually come equipped with the necessary skills to be innovative.

INSEAD Professor Nathan Furr, who lectures on strategy and innovation and who conducted our two-day leadership forum on innovation, said that companies should focus on creating lifetime innovators instead.

His class at INSEAD focuses not on creating innovations, but on molding innovators.

At MasterCard Labs, the R&D arm of the global credit card, the stated goal is to produce innovators, not necessarily innovation.

Once you create innovators within your organisation, innovations will come.

To do this, we have to put in place a learning culture within the company and help train our employees to develop a more innovative mind.

We won't create innovators nor innovations overnight. But if we have the right environment and culture, and provide our staff with the right tools to be more innovative, we will get there.

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