Five Pitfalls to Avoid When Building Innovation Capabilities
While the term “innovation” has recently been lambasted for both its misuse and its overuse, there is no denying that a strong innovation program is an essential component of long-term organic growth. Despite their importance, innovation programs frequently become sinkholes for employee time and company money. Far too often, these programs become holding pens for pet projects from senior management or high-cost training programs that fail to produce meaningful output. By mining insights from our own capability-building projects and reviewing contemporary case studies from a wide range of industries, we have identified five of the most common mistakes companies make in launching new innovation programs.
1. Focusing on leadership buy-in. Those looking to launch innovation programs often exert substantial effort trying to get senior leaders on board. And, to be fair, a lack of leadership backing can destine an innovation program for a lifetime in low-profile purgatory. The problem, however, is that too little effort is spent getting (mid-level) managers and team members on board. With poorly designed programs, team members often find that working on innovation projects interferes with their ability to do their “day jobs.” Similarly, managers find that working on innovation projects makes it more difficult to meet their existing performance targets. If innovation is meant to be anything more than a few big-bet projects carried out by a dedicated innovation team, then innovation efforts need to be closely aligned with corporate objectives, and performance evaluations need to reflect the company’s focus on innovation.
2. Providing training in isolation. Too often, employees are thrust through an innovation training mill that provides consistent training, but a complete lack of follow-through. Companies spend exorbitant sums of money on one-off training sessions that do little more than ensure that a large portion of the workforce has achieved a baseline competency in innovation. On occasion, employees even turn around and leverage their new qualifications for better jobs at other organizations. By tying innovation training to ongoing project work, companies can combat the innovation vs. day job mentality, reduce employee defection rates, and foster a deeper understanding of innovative behaviors. Moreover, as project teams continue their work throughout the organization, innovation lessons are spread at a faster rate, and team members are forced to continue using the methods they learned, rather than treating their training as a one-and-done experience.
3. Layering new programs over old ones. When helping clients launch new innovation programs, one of the most common questions we get asked is how this program relates to the countless other programs employees have been introduced to. Over the long run, employees wonder which of their 15 methodologies should be applied to a particular challenge, or they assume that the newest program simply replaces those from prior years. At the outset, companies need to spend time creating alignment on why the new capability is important for the organization, how it differs from existing initiatives, and when employees should use any new tools or learnings. If the answers to these questions are not clear, leadership will be unwilling to invest in the program, and employees will be unwilling to embrace it.
4. Reinventing the wheel. Innovation often gets treated as an ethereal specter, just beyond the grasp of mere mortals. Because of its unusual status, managers often combine ad-hoc practices in an unstructured fashion, hoping that innovative ideas will get captured along the way. Innovation never seems to be attempted the same way twice. In reality, innovation is a managed process built around established business fundamentals. Many of innovation’s core elements — ideation, business planning, prototyping, and scaling, for example — have been practiced throughout the organization and perfected over the years. Rather than reinventing the innovation process every time, companies need to create a consistent program that preserves institutional knowledge. A good innovation program combines best practices with internal lessons on what works and what does not. It celebrates internal innovation successes and captures lessons from innovation failures. While the output from an innovation program may be outside the box, the process for getting there can be fairly concrete.
5. Using the wrong metrics. Measuring innovation is difficult. Companies often make the mistake of judging innovation projects under the same criteria they use for the core business, causing new ventures to fail before they ever have a chance to breathe. Many companies focus on ROI calculations that unwittingly prioritize measurable markets over high-potential (but difficult to measure) new markets. Companies might also give excess weight to a “freshness index” that measures the percentage of sales from new products without evaluating how innovative those products are or how they might cannibalize older offerings. Instead of trying to find the right innovation metric, companies need to create a set of criteria that match the innovation program’s overall mandate. For example, it may be useful in the short term to track the number of ideas being gathered, how broad participation is, and how far experimentation stretches beyond core competencies. Over time, longer-term metrics can evaluate concept development speed, portfolio plan fit, and profits from new customers. While the right combination of metrics varies based on the company, its industry, and its aspirations, it is important to use a comprehensive set of metrics specifically designed for innovation.
Although launching a new innovation program can be both challenging and intimidating, there are plenty of companies that have done so successfully. Even better, the companies that have made a concerted effort to launch their programs the right way have mined significant value from the resulting innovation. Avoiding the most common pitfalls in capability building requires taking five key steps: (1) ensure that project manager performance goals are tied to innovation goals; (2) link innovation training to ongoing project work; (3) clarify how the innovation program relates to existing initiatives; (4) leverage institutional knowledge and best practices; and (5) design new metrics that fit the organization’s innovation goals. By following these guidelines, companies lay the foundation for years of innovation.
Story by Dave Farber.
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