Thursday, March 29, 2012

Innovation - It takes a "Culture"

This past Sunday, my 4+ hour plane ride to the Gartner CIO Leadership Forum in Phoenix, AZ, gave me the chance to catch up on some of my long overdue reading. One item on that list was the Winter 2011 edition of the Strategy+Business publication by Booz & Company. The highlight of that issue is "The Global Innovation 1000 - Why Culture is Key." Those of you familiar with my recent book, Living in the Innovation Age, might recognize just why I had to read this article... Chapter Seven of my book says pretty much the same thing; it's about the importance of "instilling a culture of innovation" within your organization.  

As I read  through the article, I couldn't help but completely agree with the message it was communicating very loud and clear - Successful innovation requires two key alignments: an Innovation Strategy that is aligned with the overall Corporate Strategy and an organizational culture that is aligned with the Innovation Strategy. Of course, this assumes that you even have an Innovation Strategy. Based on the authors' research, nearly 20% of the companies surveyed did not have an Innovation Strategy at all! Research has shown that a key reason why companies flounder at innovation is not because of a lack of quality ideas but an inadequate structure to follow through on the idea with the resources and commitment to implementation. A proper Innovation strategy fills that void by defining the principles, policies, procedures, and implementation structures to help get ideas through from an abstract concept to a concrete implementation.

As expected, the research showed no statistically significant relationship between the size of "R&D budgets" and the success of innovation efforts with only one top 20 spender, Roche Holding, claiming a spot on the top 20 innovators list.

The author's research reveals that companies who get the necessary alignment between their Innovation Strategy and Cultures are in for a treat with 30% higher Enterprise Value growth and 17% higher Profit growth than their peers with a low degree of alignment or a missing Innovation Strategy.

The research also revealed that successful innovators followed a fairly similar approach - connect with the customer, understand their true needs, and then determine which existing services and products could be leveraged to solve the customer's problem in a unique, proprietary, and sustainable way.

The Bottom Line - Innovation requires a strong alignment between a robust, well-grounded Innovation Strategy and the organizational culture. This alignment not only supports innovation but accelerates its execution and is ultimately the responsibility of the top leaders of the company. To gain traction, the alignment must be actualized with a tangible action plan clearly linked to a short list of focused, core capabilities (current or to be developed) that will differentiate you in the market.

Interested in learning more about spurring innovation in your organization? Part 3 of my book goes into quite a bit of detail on this topic with Chapter 7 dedicated to instilling a culture of innovation and a sound Innovation Strategy.

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