Legitimising areas of innovation in Mexican companies
At Cirklo, we know that the main challenge that corporate innovation leaders in Mexico face today lies in legitimizing this very area in order to obtain resources and launch it. That is, more than working to innovate, they feel pressured to convince an entire organization about the importance of doing it. This is mostly due to the lack of having a strategy that allows these leaders to report results in the short term.
In this article, we will analyze the challenges that hinder getting the resources throughout the different stages that an innovation area goes through before yielding its first results. This analysis is based on the Framework of Innovation Culture, which we describe below, on conversations that have taken place in the span of 5 years, and 7 projects to structure areas of innovation with leaders in the following sectors: microfinance, insurance, loyalty programs, retirement fund management, banking and construction materials.
Framework of Innovation Culture
We found that a number of important areas of innovation in Mexico start operating without a strategy. This prevents them from replicating their successful initiatives, undermining their legitimacy.
Cirklo collaborated with Luma Institute to create the Framework of Innovation Culture to establish the required criteria to develop strategies that create standardized innovation within organizations. This framework includes four important areas:
- The purpose (the guiding principle, the reason and meaning of the company).
- The infrastructure for strategic decision-making (innovation portfolio, metrics, etc.)
- The behaviours required to innovate within the organisation.
- The necessary resources to implement an innovation process (tools, methods, spaces and exchange platforms).
The path towards the first results in innovation
The path that begins by setting up an area of innovation in a company to yielding the first results, consists of three stages: intention, exploration and activation.
Below we describe these stages as well as the challenges related to legitimizing the area and obtaining the resources. As a solution, we provide certain recommendations to develop a strategy based on the Framework of Innovation Culture.
In this stage, the initiative to create an area of innovation comes directly from the CEO’s office. Some of the triggers we’ve identified include:
- Instruction from the global company.
- New disruptive consumer habits.
- The entry of a new competitor.
- New technologies.
- Shorter product and service life cycles.
- Recommendations from opinion leaders, influencers and consultants.
In some cases, the CEO can be skeptical about the implementation of such an area, especially when it comes from top management. This significantly limits its reach and restrains the access to resources for initiatives almost immediately.
When negotiating with the CEO, it is important not to focus of the area, but on the process, in order to define it. To achieve this, it is essential for them to be defined as a whole, as a project: validate the hypothesis, the goals, times, resources, key success factors, agents involved, stages, criteria and assessment and decision moments. This way, the anxiety that arises from the skepticism about the need to innovate is minimized.
In this stage, the goal is to develop and validate the different hypotheses on the strategy of innovation through research, program prototypes and conversations with leaders in other areas. This stage allows us to identify problems ahead of time.
Faced with the pressure to be legitimate, the innovation efforts are invested in satisfying the demands from other areas of the organization indiscriminately, reducing time and resources that should be invested in validation.
A way to neutralize the players that put more pressure is to involve them in some part of the validation process to instill in them a sense of belonging to the project. Their involvement can range from a single session of co-creation to a 30-minute interview.
In this stage, the goal is to swiftly activate innovation programs based on a validated strategy. This stage is divided into three sub-stages:
- First results
Firstly, during the formation, each of the four areas of the innovation strategy are co-created and developed.
Subsequently, during implementation, the programs focused on addressing the purpose and innovation goals established in the previous sub-stage are carried out. Some examples of the programs include:
- Sessions of product co-creation based on market insight.
- Innovation and design sprints.
- Innovation incubators and accelerators.
- Open innovation programs.
- Continuous innovation.
Then, the first results are measured based on the mechanisms focused on each of the performance metrics created during the formation stage. Finally, these results are shared with all parties involved.
There are cases where the innovation strategy only focuses on creating disruptive results. In addition to downplaying its potential, this hinders the delivery of results in the short term.
It is important to invest part of the innovation efforts in the ongoing improvement of processes and in the gradual improvements to the product and service portfolio.
Certain areas of innovation delay reporting their first results because they invest an unnecessary amount of time in perfecting their strategy during the formation sub-stage. As more time passes, key players lose interest.
The innovation strategy is perfected through various iterations. Usually, the first programs that are implemented should not strive to be perfect, but to accurately validate the strategy, and reach the first results in the immediate term.
We are thrilled to see that a growing number of companies in Mexico are betting on innovation today. If they’re able to permeate the organizational culture, the effects could significantly contribute to strengthening the country’s competitiveness at an international level. To enhance this effect, we also consider it important for these strategies and the knowledge to reach smaller businesses.
By contrast, if innovation is not legitimized, there is a risk of creating a generalized mistrust in the market. This is why it is important for consultants, directors, managers, opinion leaders, universities, businessmen and entrepreneurs to commit to selling innovation that is linked to results.