10 August 2011
John Linney, Linney Strategies
According to Peter Drucker: “Innovation is organised, systematic, rational work”. This article is about innovation as a business priority – a way to enhance organisational value and business growth by creating new systems, services or products through the harnessing of the firm’s organisational knowledge in more efficient and effective ways.
No standard blueprint exists for innovation, but with the evidence being irrefutable that considerable benefits flow from the inculcation of a culture of innovation, it is perplexing to me that the opportunity seems more a case of hit-and-miss in many businesses. It takes courage to be innovative and any opportunity brings with it inherent risks.
Innovation is a crucial source of productivity growth. Over recent years in Australia, there has been considerable debate over our productive performance as a nation. When we look at it from business to business and workforce to workforce, the perspective I take is that innovation is the enabler and productivity is the outcome. For innovation to be an effective enabler, you need to create an environment, a capability, a mindset that is supportive of and conducive to innovation as integral to the way business is done. This requires a longer term view of the journey the business is embarking on and a capacity to articulate the benefit that will result.
Innovation is hard work and it doesn’t exist in a vacuum. Innovation is delivered through people. People have doubts, fears and prejudices. Successful innovation requires an understanding of the forces and ramifications brought about by the implementation of change. Innovation is about change at two levels – strategic and tactical. Value is created for the organisation at these two levels.
Strategic change is the change required to create an environment conducive to innovation triggered by a company’s conscious decision at senior management level to promote innovation as a business priority. The second level is about the changes that the innovation creates that need to be executed and made effective. Here, value is created each time there is something new created and systemised. I describe this as tactical change. Both of these change dimensions are integral to the successful creation of an innovation culture.
The strategic dimension: a conscious decision to innovate
What is required to deliver innovation? What are the critical managerial factors that impact and influence an organisation’s innovation capability?
In a joint study produced by the Australian Business Foundation and Deloitte entitled “The Reality of Innovation Unzipped”, a key finding was that innovation is worthwhile only if executed as a disciplined, structured and sustainable process. A conscious decision needs to be made by senior management and communicated effectively across the organisation that innovation is a priority and is supported in tangible, visible ways.
It needs to be evident in the behaviour and actions of senior leaders that the commitment, focus and level of resolve characterises innovation as a sustainable investment by the business. Ongoing leadership is critical to ongoing innovation.
Innovation needs to be hard-wired – there needs to be an innovation framework which explains the constituent elements of the strategy including the resources that will be committed and the supporting infrastructure that will contribute to the success of the strategy.
There needs to be a clear understanding by the workforce of the rationale behind the adoption of a strategy of innovation and how it is linked to better business outcomes and business growth. The strategy will incorporate a realistic assessment of the current situation, a coherent vision of the future and an explanation of the transition required to bridge across to the desired end objective.
These elements, when extrapolated at the tactical level, will also support good decision making around prioritising the innovations that are eventually accepted and executed.
People need to be given the freedom to be innovative. This entails the freedom to bring ideas forward in the expectation that they will be given due and balanced consideration.
It entails the freedom to experiment without adverse repercussions. It entails the freedom to challenge the status quo as part of the way business is routinely conducted.
Innovation cannot, however, detract from the importance of existing disciplines around processes and costs. It is the mutually beneficial co-existence of these two (potentially conflicting) elements that has to be considered as part of the innovation strategy and incorporated in the innovation culture and framework.
The tactical dimension: making innovation deliver
The tactical level of innovation is about developing the innovative ideas, assessing their value, and making them happen. Most innovations are executed in the face of uncertainty and the major barriers to innovation at the enterprise level are internal.
In my direct consulting experience across a diverse range of corporate environments, the capability of managers with a direct interface with employees is a pivotal factor in successful business initiatives. Yet all too often they are under-resourced, undervalued and under fire. Employees will make sense of a significant change by how that change is processed and dealt with by their manager. How does the manager in word and deed demonstrate his support for the new business direction and how does he identify and help remove barriers that will impede success?
Fear is the other side of the coin to innovation. How will these changes affect me? What am I expected to do differently? Amongst employees, factors that can erode the effectiveness of the change include a perceived lack of appreciation of the effort being applied to make the change work, major accomplishments along the way not recognised or celebrated, limited communication on the “why” and the “what”, inadequate skill-building for managers, and lack of presence of senior management to provide answers and reinforce the objectives.
The more ingrained are the habits and routines underpinning existing organisational behaviour, the higher the resistance to change. In an innovative environment, everyone must display the leadership qualities appropriate to their level and purpose – leadership of thought, leadership of behaviour, and leadership of business practices.
Communication and engagement are essential for any change to be effective. Be clear and straightforward on what you are communicating. Be very clear on your purpose. We still don’t have the execution genie tamed. There are still too many projects which run under scope, over time and over budget. Do we have the right execution model and the right people working on them?
Dealing with the constraining factors
Internal roadblocks can derail innovation. The most common constraining factors in my experience are:
The challenges that businesses face today demand a concentrated focus on innovation. Organisations that I have been associated with that have unleashed the creative potential of its workforce through a culture of innovation have delivered significant returns to shareholders and have markedly improved their competitiveness.
John Linney is the Director and Principal of Linney Strategies, a boutique consultancy that specialises in forging ‘enlightened business solutions through people’. The company provides advice on workplace relations and business restructuring to many of Australia’s leading corporations.”
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