Future proof your business through enterprise innovation

By Angela Bishop and Maryam Aidini

Not long ago, the CTO of a large organization said to us, “Innovation is not our problem. We have plenty of innovative, smart people in every department and at every level. That’s our problem. They’re disconnected. Some are off doing their own thing. Others are frustrated, and I’m concerned we may to lose them. We’re sitting on all of this fragmented potential; if it were a more coordinated, focused, and strategic effort, we could be unstoppable.” There is no question about it, innovating in a large multifaceted organization is difficult. There are always pockets of great innovation, but how do you get these pockets to connect and scale their ideas, capabilities, and data insights across the organization? How do you ensure they complement core business operations and strategic goals, rather than distract from them? How do you set them up for success?

In our work, we see large organizations facing two complex issues: the pace of change of their market and their ability to connect their organization with the future outlook. Most businesses can see what the future holds for their industry; they have smart people, they track the trends, read the TechRadar, attend the right conferences. But they don’t know how to embrace these changes within their organization to prepare for a future that is fast approaching.

And many of these organizations — both established and startups — also lack the core capabilities required to thrive in future, most notably the ability to experiment with new products and business models and to empower their people to engage in the innovation process. These capabilities require flexibility and fluidity, but their processes and structures involve heavyweight planning and governance which can strangle ideas and initiatives. Like trying to do a graceful high-wire act while holding a 50-kilo barbell. In order to transform, businesses need to embrace a new mode of thinking, organizing and operating. Many companies also plot their growth along Horizons 1, 2, and 3, but attempt to grow into those more distant horizons without disrupting Horizon 1. This is like saying, “we’re going to continue doing exactly as we’ve been doing, but we hope to end up in a very different place.” We’re empathetic to the need keep the current engine running, but Horizons 2 and 3 cannot be reached if Horizon 1 isn’t leading in that direction. (See McKinsey’s Three Horizons of Growth model.)

We have been working with a number of organizations who are embracing change by adopting an entrepreneurial or innovation culture. This involves adopting lean startup approaches by using rapid learning cycles, experimenting, and empowering autonomous teams to innovate and validate at speed and to build new and useful customer propositions. Rapid learning cycles focus on three main steps: Build, Measure, and Learn. This allows businesses to be led by value learning. Data-driven, rapid learning cycles enable leaders to find the right direction for their business and make sure they make informed decisions about the next step of their business plans.

Experimentation is one of the main tools that enable you to learn from an idea and validate its assumptions using the least time and fewest resources available. Experimentation can be used as a key mechanism to drive data and learnings. From guerilla testing to surveys and market analysis, each experiment is a step towards reducing the uncertainty of an idea, validate assumptions, indicate direction, and make more informed decisions. Innovation is usually born from a cross-organisational team that is empowered to experiment and learns on the road to successful new revenue streams and models. Cross-organisational teams, comprised of various people from the necessary parts of the business, are empowered to bring an idea from conception to market. The capabilities required for such a team could include business specialists, product, tech, operations, marketing, and more. It’s really about the outcome desired. The key to success is to keep this team as small and collaborative as possible and to allow them to focus intently on this one idea. This should not be their third or fourth priority.

Cross-organisational teams should also be diverse in terms of level and experience. Well-networked senior leaders with social capital to spare can help navigate operational and political hurdles and secure buy-in and budget — but fresh, new thinkers are equally important (and should be empowered to question and contribute). Encourage the team to “work in broad daylight”; give them a platform upon which to socialize their trials and learnings, progress, insights, and outcomes. These diverse, autonomous teams will not only feel richly motivated and rewarded; they will become a cultural catalyst as their enthusiasm and learning spread like wildfire.

How can enterprises catch up with the pace of change in their market and have the ability to look to the future by adopting lean approaches?

For many of our clients, a dedicated “Innovation Hub” (some call it an Innovation Lab or Innovation Studio) is a way to formalize your commitment to a culture of experimentation towards the future vision for your company. The mission of this Hub should be to explore and validate new products, markets, business models, and capabilities that can help fulfill the future vision of the organization. Innovation Hub concepts can also work well alongside a broader digital transformation as a way of creating and embedding entrepreneurial ways of working. One word of caution: innovation should be everyone’s job. The Hub, however well functioning, should not be a silo or a department solely responsible for all of the innovation coming out of the organization. Rather, it should be an incubator and cultural movement within the organization.

For us the message is simple, organizations need to allow innovation to thrive. However, innovation needs focus, coordination, and alignment. Learnings of that journey must be recognized, utilized and shared. And ultimately, innovation needs autonomy, freedom, and empowerment in order to be successful.

Originally published at www.thoughtworks.com on February 13, 2018.

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