The leadership should be willing to change the DNA of the organization and evolve to a new nature of the organization altogether
Every successful organization has a ‘once upon a time’ entrepreneurial story where it was a startup with new ideas, a great appetite for risk, energetic teams, milestones to achieve, ‘mission impossible’, lean processes, a never-ending quest for resources, etc. The organization then figured out what really works for them and the market/target customers. It successfully created the processes that worked, mastered and repeated them. ‘Being effective’ was the original quest and then with success, came the need to ‘be efficient’, the need for optimization and the need of being right every time.
Then one fine fateful day the leadership voiced in a meeting that “Time has changed. Everything has changed – the competitive landscape, consumers, regulations, almost everything, but us. We need to do something soon”. The organization finds itself trapped in ‘path dependency’ mode where the organization is doing the same thing time and over again, while it also knows that it needs to change, and change soon.
Doesn’t it sound like every adult’s story? As we grow, we do not find ourselves as inquisitive, curious, risk-taking, experimenting, observant, or as creative as we were during our childhood. We find ourselves doing what almost the whole world around us is doing, but deep down, we want to be different and excel at the same time. The case for most organizations unfortunately is no different.
Change is inevitable. However, organizations today are not only facing changes but also disruptions that are much more than incremental changes occurring around them, around their stakeholders, technologies, channels, competitors and value chain actors/processes. It’s happening all across, around them and on them, all at once. It is quite obvious that a typical organization performing well in the past would find its structure, system, processes, policies, technologies and strategies not agile enough to face such challenges.
In many cases, organizations may need to change their entire business model. But, many of them, in the name of innovation, resort to small incremental changes in their products and processes. Some even make the mistake of coming up with small variations and extensions of their products/ services and brands in the name of innovation, thus, ending up complicating their operations and confusing the consumers. These organizations know they need to change, but often the solution they come up with is a compromised quick fix, an inefficacious attempt at trying to knock out the problems as they emerge without understanding their root cause. They try to treat the symptoms rather than the cause.
The quest to be innovative is not so much about plans, policies and processes, as much as it is about the mindset and culture. The leadership should be willing to change the DNA of the organization and evolve to a new nature of the organization altogether. But, it should, first of all, be aware of what not to do. Otherwise, it will be spending its time, effort and resources in futile exercises while trying to be innovative.
Following are the mistakes and flawed concepts leadership needs to avoid while trying to make one’s organization innovative:
Being innovative does not mean trying to find out new ways and methods of tackling the changes occurring in the aspects of the external business environment. The biggest obstacles in the way of being innovative organization lie within the organization and internal dynamics. Unless leadership is willing to change its mindset, organizational culture and integrate ‘innovation’ within its value system, nothing effective will result.
‘Being innovative’ should not be dealt with as an objective or goal of the organization. It’s not a project that leadership initiates and successfully ends. Building an innovative organization is not a sprint, but a never-ending marathon. The finish line should shift continuously as the organization needs to move ahead of the changes and challenges it faces in the future. More than developing repeatable actions and processes that make an organization innovative, it’s about genome editing of the organization; which may even call for the change of value system and leadership style of the organization.
Do not make the mistake of forming a unit or giving formal responsibility to the unit or some team of an organization to transform the organization into an innovative one. It’s not the task of some person or unit. That way, the leadership will be creating another silo within the organization; we can call it an ‘innovation silo’, which in itself is an oxymoron phrase. Nor should leadership think that there are certain layers, positions, or people within the organization who are more capable and responsible for innovation than others. Innovation should be regarded as a matter of everybody’s ability and responsibility. Leadership should find ways to unlock such abilities in all and infuse the willingness and motivation to take such responsibility.
Trying to build an innovative organization without being willing to change the core processes and process-focused doctrine of business would be an unavailing effort. Processes are tools, techniques and actions which would allow the business to scale up the repeatable execution. Typically, a once successful organization would have set rules, regulations and processes related to various functions like finance, HR, production, legal, product development, marketing/promotion, etc. Processes work and yield results when the condition is of known problems and known solutions. They help you deliver solutions without breaking other aspects and parts of the business. It helps you exploit the knowledge, skills and abilities you’ve already acquired. But, at the same time, it is an anti-current to the wave of exploration, through which the organization was originally formed. Innovative organization perfectly balances ‘exploitation’ and ‘exploration’. Set processes and exploitation reduce risk, but each layer of the process reduces the ability of the organization to take risks, be responsive to new opportunities and threats and be agile and lean. It does not mean that the leadership should disrupt the entire business for being innovative. It’s about finding that correct balance where you are continuing to do what you do better, and at the same time continuing to explore new ways of being better.
Bringing external consultants to develop an innovation strategy and help the leadership in devising the ways to be innovative organization can work. However, in most cases, the solution consultant manifests are re-organization and re-structuring of the activities and processes. Such efforts, in short term, can give a sense of change within the organization, but would be an inadequate response to the need of ‘being an innovative organization’. The same goes with the short-term HR training on ‘ways to be innovative’. Such training might be helpful in building the understanding of innovation in the short term but would ultimately turn out to be a half-hearted effort in absence of supporting continuity, mentorship, leadership at every level and a conducive environment (culture, policies, incentives, etc.).
Adopting typical activities like idea-sharing sessions, ideathons, hackathons, design thinking sessions, innovation workshops, brainstorming sessions, etc. may shape up the culture of thinking and sharing but fails to create a long-lasting impact on the innovativeness of the organization in absence of answers to all sorts of ‘Wh’ questions around such efforts. Why should anybody think and share their ideas? What will happen once the idea is shared or some innovative solutions to the existing problems are arrived at? When will it be executed? What kind of other required changes will be made? The answers to such questions should be ready with the leadership. A clear innovation strategy in congruence with the business strategy would be required. Similarly, mechanisms of incentivization, integration, implementation and how the organization captures business value from such efforts and how such value gets translated to the personal and professional growth of each employee should be set forthright.
While innovation should be everybody’s responsibility, every individual in the organization has different mindsets and abilities to innovate. The ‘One size fits all’ approach towards sourcing innovative ideas and executions does not work. Personnel in the sales department may have a process-oriented mind and be good with numbers and may suggest something innovative related to the problems in the production department, which had been the source of the problem in their department. The key is to break silos and create an environment where cross-pollination of ideas can take place across the organization. Learning should be shared across the organization and contributions should cross departmental boundaries.
Thinking that innovative abilities are innate among the employees and it’s just a matter of unlocking them is another flawed concept leadership commonly holds. While everybody is creative in one way or other and can be innovative and leadership just needs to create a proper and conducive organizational environment is true; it’s equally true that there should be a proper strategy and mechanism to capture business value out of such individual creativity and innovative capability. The key is to systematize innovative capability within the organization rather than just unlocking individual creativity. For that, leadership should invest in enhancing HR capabilities and convert such capabilities into business value. Being able to create such a sustainable innovative engine requires strategy, leadership and mechanism for which, the organization should actively shed off some financial and non-financial resources.
Innovation is not only about a product or something tangible, nor is it only about some fascinating technology. It’s about technique than technology. More than half of the innovations we see in the commercial and social arena are not technological but built around the business/ project model. Leadership should think through the perspective of how individual innovations in various dimensions fits into the existing business model delivering new results or creating a new business model. Similarly, apart from product innovations are also possible in organizational processes, market positioning and business paradigm. One can even innovate around customer experience. A multitude of innovations is actually some combination of all of these dimensions of innovation complementing one other.
The source of innovation is not always internal to the organizational stakeholders. While working in the ‘internal aspects’ of the organization is important, it is equally important for leadership to recognize that the source of innovation can also come from entities that are out of the organizational boundaries. Consumers, entrepreneurs, educational institutes, research labs, open source ideas and IPR platforms, social media, dealers/ distributors, suppliers and even competitors can be the source of innovation. The concept is called ‘open innovation’. It’s not about outsourcing the innovation engine but sourcing the ideas and capabilities from outside in order to convert them into something innovative and of business value by using the organizational innovative capabilities.
In sum, the once-successful organization lacks the acumen to continue being innovative and when the need is perceived, it might be too late. In desperation and limited understanding of the leader about innovativeness, they start devising tactics like taking process views, changing procedures, reorganizing and restructuring. However, what they really should work on is creating a shared belief, validated principles and an agile innovation engine within their organization in order to systematize the process of innovation within the organization. They should change the mindset, culture and processes at the same time to fix the problem of falling into the ‘success trap’ and ‘path dependency’. It’s almost doing genome editing, and for that, the leadership needs to avoid certain orthodoxies and common misconceptions around ‘being innovative’. Innovation should be taken as a shifting destination where collaborative problem-solving among people of different expertise and different point of view becomes an integral part of the value system of the organization.
Khatri is a Management Consultant and Educator.