Key Factors for Innovation Success

This article outlines the key factors for success in innovation and forms the foundation of the organisational psychology and organisational culture that will support innovation. Additional insight was gained from our consulting experience and discussions with numerous leaders of innovation around Australia through the “Innovation Inside” interview series published by Marketing Magazine over the past 2 years. This includes interviews with group heads of innovation at both large and small enterprises through to CEO’s and Founders at some of Australia’s most successful start-ups.

What Really is the Definition of Innovation?

Innovation has become one of those amorphous terms that means so many different things depending on whom you talk to. I’d like to draw a line in the sand and provide a definitive viewpoint, one provided by Dr James Moody, who has a PhD in Innovation Theory:

“Innovation effectively is the process of technological change… the thing to really understand is that innovation is a process not a thing. The thing, the outcome of innovation, is the invention. Innovation is deeply associated with business processes, business models and all the different aspects that combine towards creating a new product or service. “

View more of Dr James Moody’s views on innovation and his book on innovation (The Sixth Wave) from an interview with Sidney Minassian in 2016.

The other element impacting our understanding of innovation is that the word has become synonymous with growth as outlined by Mark Payne, co-founder of innovation consultancy, Fahrenheit 212.

“Innovation being synonymous with growth. Companies that aren’t innovating aren’t growing.”

View more of Mark’s viewpoints on innovation and how to innovate from a presentation to the RSA in London (2015).

Now that we’ve provided a definition for innovation, lets look at some of the key factors that support successful innovation within companies and start-ups.

The Key Factors For Innovation Success

Throughout our consulting experience and our interviews with leaders of innovation we found seven common factors (themes) that keep coming up in most discussions of innovation and how they support success within their organisations.

The seven key factors for innovation success:

1. Crisis
2. Examination
3. Diversity
4. Collaboration
5. Creativity
6. Adjustment
7. Resilience

1. Crisis

We define crisis as any event that is, or is expected to lead to, an unstable and dangerous situation affecting an individual, group, community, or whole society. It is a stage in a sequence of events at which the trend of all future events, especially for better or for worse, is determined; effectively a turning point.

Crisis therefore provides a compelling reason for action — you can’t run away from a crisis, and therefore a crisis can drive innovation. War, in general and the crisis it creates, has been a great driver of innovation, and more recently we are seeing the impact of climate change driving new advances in renewable energy and ecological sustainability.

Within business specifically, an existential crisis, where a businesses continued existence is highly at risk, will force change and new ways of doing things. We saw this during the Financial Crisis in 2008–2010 when businesses were going under. In parallel to this we saw the rise of peer-to-peer businesses such as AirBnB and Uber that supported people to generate additional cash from under-utilised assets (a bedroom or a car). With hindsight we can see that “access trumps ownership”, and these businesses have risen as possibly a post-crisis reaction to materialism and overconsumption.

One of the great corporate crisis and subsequent turnarounds in LEGO which in 2004 faced their own existential crisis. This was not just a case of cash-flow issues. It was a down and out existential crisis for Lego that asked big questions of governance, strategy, management, approach to product development, manufacture and distribution processes. In addition:

• Sales fell around 30% in 2003.
• The company was running a negative cash flow of DKr 1 billion (US$160 million).
• Total debt had reached DKr 5 billion (US$800 million).

To survive this existential crisis, LEGO they reviewed and changed their business model to one that was more sustainable. Their achievements in turning around the company are phenomenal with 2015 being sited as their most successful year, generating revenues of close to US$5.2 Billion, a 25% increase year on year.

2. Examination

Examine is to observe carefully and critically — to inquire into and investigate something. We have used the word examination specifically. Perhaps we could have used the word exploration, however examination is better as it denotes the use of focused investigation, careful observation and the use of critical thinking.

The best organisations are continually examining themselves and their approach to delivering their mission & purpose.

• What are the goals and objectives for my business?
• What changes are happening in my industry and how will they affect my company?
• Do we need to change something to achieve our objectives?
• What would happen if we were to explore new opportunities?

A great example is Australian Defence Apparel, a once Government owned business that manufactured uniforms and equipment for soldiers it has since been privatised and driving it’s growth through some very smart and focused initiatives broadening it’s product portfolio to other services and countries. Darren Swindells, General Manager, Strategic Product & Innovation, gave some great advice on strategically managing your supply chain through careful examination.

“ADA has a very long history. But our suppliers, from even two years ago, may no longer be strategically relevant for our business. You’ve always got to apply scrutiny as to whether your partnerships are viable, and whether they’re focused, and that you’ve both got the same vision.”

3. Diversity

Diversity is the inclusion of individuals representing more than one national origin, colour, religion, socioeconomic stratum, sexual orientation, etc. Diversity is critical for innovation to succeed as it creates a much more open environment and also develops more thoughtful solutions and outcomes. For example an engineer, and a designer are going to go about solving a problem completely differently, they think differently — bringing them together and perhaps we end up where 1+1=3.

There are 3 critical areas in which diversity within an organisation supports innovation:

• Different viewpoints working on the same problem.
• Different backgrounds bring different ways of solving a problem
• Diversity unlocks innovation by creating an environment where “outside the box” ideas can be heard

I think the point of difference of both viewpoints and backgrounds between individuals here is the key thing that supports innovation and the reason why diversity is a key factor.

For those of you that follow the start-up scene in Australia you will be aware of Canva and their success. They are one of the highlights in the Sydney start-up scene, with about 120 staff across Sydney, San Francisco and Manila and have developed a product with over 15 million users across 179 countries.

I had the opportunity to discuss diversity and it’s importance to Canva’s success with Melanie Perkins, Founder & CEO.

“Diversity is important in all our people. In our marketing team not only are they diverse in themselves but their particular skill set is entirely different from our engineers, who are entirely different to the people that make up our customer happiness team. That eclectic nature is what makes our company strong. We need people thinking in different ways to handle all the different aspects that we are required to handle to be a successful startup company.”

4. Collaboration

Of course if we have a diverse team and don’t collaborate then nothing will happen. That’s why innovation must be a collaborative pursuit. Collaboration is about working with others to do a task and to achieve and realise shared goals. Where we work together (in relationship) toward something (in a process) in common (a shared outcome). We need to find and work with people that bring complementary skill-sets and a depth of experience in their specialised field.

We think the key of collaboration is geared around:

• Building great relationships enabling us to work together.
• There is an easy to follow and flexible process / approach for us to use.
• Everyone is extremely clear what outcome we are aiming for.

Clear understanding of outcomes is super important, otherwise my viewpoint on success is most likely different from yours. We need to talk about it and make sure we are on the same page and going in the same direction — other wise we might end up at cross purposes without ever knowing.

Google is one of those companies that has collaboration ingrained into it’s culture and it is no wonder that most people place the company on their most innovative companies lists. When speaking with Lee Hunter, Head of Marketing Innovation, APAC, it became obvious how much collaboration is part of their culture.

“Collaboration is so ingrained in the way that we do things. Any time we want to try and do new things, one of the huge elements we talk about is what potential partnerships can we put into play here? How can we work with others to get this out into the real world in an interesting way? We have great products and great platforms. Sometimes the best stuff happens when we are just the platform and we give over the creativity and expression to others to use.”

5. Creativity

Some would define creative as the ability to transcend traditional ideas, rules, patterns, relationships and to create meaningful new ideas, forms, methods, interpretations, through originality, progressiveness, or imagination. Creativity is that ability to think outside the box. With creativity we can unleash the potential of the mind to conceive new ideas, new ways of doing things and innovative solutions. We perceive the world in new ways, we find hidden patterns, we make connections between seemingly unrelated phenomena, and generate new solutions.

This might be controversial but I think there is no such thing as an original idea and therefore it’s impossible to have a “solitary genius.”

Creativity does not and cannot happen in a vacuum. We are always drawing on the work of others, another person’s ideas, another person’s work, both consciously AND unconsciously every single day.

For me the critical thing about the role of creativity within innovation is this exact merging of different ideas, different industries, different technologies and different ways of working to create new things.

This is something that Pernod-Ricard have done with their Jacob’s Creek Wines. We can see some of the mashing of ideas in their new products. They’ve aged red wine in discarded whiskey casks and they’ve worked with Japanese chefs to come up with a new wine to complement sushi in a similar way as does saki.

This focus on building creative capabilities within the business was one of the key points made by Pernod Ricard Innovation Director, Gwenola Hanaut, when discussing their approach and success in innovation within the wine industry.

“I mentioned our Th!nkCreativity Lab. It’s an opportunity for us to instil a culture of creativity in our business, this is what is going to drive long-term change in innovation for our business. Every innovation starts with an idea. This training allows managers to drive and organise ideation sessions, around anything from the name of a new wine to the development of the launch assets.”

6. Adjustment

Adjustment is to adapt or to correct to achieve a desired outcome. As the old proverbs states, “We cannot change the direction of the wind, but we can adjust our sails.”

Adjustment is all about changing those things we can control in relation to those things we cannot. We should be constantly testing hypotheses and reviewing the results to see if we are on track or off track in achieving our goal. When results are not what we expected we change tack. The Test / Fail / Learn, “Failing Fast” and Lean Startup Methodology are THE process of adjustment in action.

Flying from Sydney to Los Angeles our Qantas Boeing 747 is constantly off target.

The autopilot, with the help of the powerful computers and the auto-throttle, makes CONTINUOUS adjustments to speed, altitude and attitude of the aircraft so that it maintains a constant profile. The adjustments are so minute that the passengers do not notice them, and the flight seems level.

For example, if a flight has been asked to maintain 30,000 ft, it might drop to 29,900 ft or rise to 30,100 ft due to winds and other factors, but the autopilot makes constant adjustments to keep it at 30,000 ft. Ultimately even though you’re only ever on course maybe just 2% of the 14–15 hour flight time, you still make it and land at LAX.

Mirvac has built this concept of adjustment into their Hatch Innovation Process under the moniker of “experimenting” as explained by Christine Gilroy, Group General Manager, Innovation.

“We don’t want to take ideas away to perfect them in isolation, and then receive a rude shock when we unveil it to the customer. It’s a continual process. We call it ‘experimenting’, and it’s based on lean startup methodology. This involves identifying the key assumptions that underlie an idea and going out to test them with those front line customers. This is a new methodology for our business and we are just learning how best to do this.”

7. Resilience

Resilience is that process of overcoming (and ability to recover from) stress and adversity in relation to the perseverance for achieving long term goals. Organisational resilience is that single minded focus and pursuit of long term goals. This might mean taking a loss in the short term, in order to achieve a long term goal — it is this continued focus on achieving long term goals that is the key to supporting successful innovation within organisations.

Resilience relies on three factors:Resilience relies on three factors:

1. Flexibility — how flexible is the organisation in terms of how it works, how it is structured and how it is organised?
2. Adaptability — how can you apply what you do and how you do it to deliver better outcomes or results.
3. Learning — how good is your business, at both individual and organisational levels, in learning the lessons from having to adapt or be flexible so that you can either avoid repeating them or leverage them for the future.

Achievement is the product of effort, a function of the intensity, direction, and duration of one’s exertions towards a long-term goal. Therefore we cannot giving up when the results of our activities are not what we hoped. Our business and organisation needs to adapt and evolve in response to short term shocks and at the same time shape itself to be able to respond to long term challenges.

This resilience is something I definitely see in the founders and culture of BlameySaunders. By creating a hearing aid package which eliminates the need to visit a specialist the founders have not endeared themselves to their audiologist peers. In fact the founders have been described as the hearing aid entrepreneurs whom audiologists love to hate.

In conversation with BlameySaunders Hears founder Elaine Saunders, it became clear how resilient she and the start-up is and the fact that it is growing and doing extremely well bears out their ability to manage short-term shocks and continue to pursue long-term goals and objectives.

“Most CEO’s of companies (particularly one’s that didn’t own the company), would have checked out at that point. Whereas, we didn’t. I thought, ‘Oh, damn. Our supplier has gone bankrupt. Better get on the road and find another one.’ Things are going to happen. Things are going to keep happening. The universe throws things at you. If the wind stops blowing get out the oars.”

Summary

Ultimately what people end up talking about through these 7 factors is organisational culture, specifically how these key elements when grouped together help drive a more supportive culture for innovation.

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If your business or organisation is looking for help to become more innovative or to develop new revenue generating products and services then please get in touch and perhaps together we can help unlock new sources of growth for your business.

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