By Contributor,John M. Bremen
Copyright forbes
Despite the opportunities created in today’s dynamic business environment, many organizations fall short of their innovation goals
Boards and senior leadership teams increasingly are focused on what makes innovation possible at their organizations. Yet despite the opportunities created in today’s dynamic business environment, many organizations fall short of their innovation goals. Effective leaders find that success in innovation requires three components: leadership commitment, a supportive culture and the right innovation portfolio.
Elastic innovation disrupts innovation itself. The mindset and supporting processes continually respond to market changes in real time while managing innovation pipelines for the long term. With increasingly agile management models, effective innovation capitalizes on both centralized and decentralized processes, with many of the best ideas coming from deep within the organization.
Using the elastic innovation mindset, leaders see the big picture while managing details. They consider and prepare for multiple scenarios, understand and manage complexity, ambiguity and paradoxes while balancing opposing views. They build teams that have the mindset, culture and portfolio of ideas to support elastic innovation.
In The critical role of leadership and culture in innovation and How to create a portfolio of innovations that’s right for your business, WTW’s Amy DeVylder Levanat and Oliver Narraway outline what sets successful organizations apart when it comes to innovation.
How do leaders foster innovation?
Effective leaders embed experimentation, trust and collaboration within their organization’s values, culture and daily operations, creating a supportive work environment that fosters creativity and everyday ideation. They promote innovation by providing strategic direction, aligning innovation efforts with the company’s business priorities and goals and securing the organization’s commitment to pursue ambitious and forward-looking projects. Leadership advocacy and innovation sponsorship also help overcome internal resistance and promote a culture that encourages creative thinking and collaboration across all levels of the organization.
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Additionally, effective leaders support innovation projects by championing innovation at the highest levels, creating an environment that encourages idea sharing and experimentation while managing overall risk. They advocate for innovation by ensuring that employees feel involved in the process and understand their role in contributing to ideation and breakthrough ideas. Stressing the importance of early testing to assess viability, marketability, feasibility and adaptability, they also seek external input. They celebrate efforts, focusing on collaboration and collective success.
How to create a culture of innovation
Effective leaders create a culture of innovation centered around the following characteristics:
Openness to change and experimentation. Effective leaders promote a culture where change, continual learning and experimentation are welcome. They support openness, encourage discussion, recognize employee ideas and lead by example to drive innovation and adaptability.
Trust. Effective leaders create a culture that accepts failure as a part of the innovation process. They remove the stigma of failure, encouraging teams to contribute ideas, fail fast and focus on learning from their mistakes to refine and improve future projects – vital for successful innovation projects that drive growth. They view failure as learning as opposed to learning as failure.
Collaboration and open communication. Effective leaders foster a collaborative environment by promoting open communication and idea sharing and by recognizing and valuing multiple perspectives. They maintain a collegial organizational culture that supports the integration of different perspectives, which is essential for understanding problems more deeply and developing viable solutions.
The right innovation portfolio
Effective leaders understand that successful innovation portfolios generally consist of a blend of higher risk/higher impact, lower risk/lower potential impact innovation, and those in between on the continuum. Typically, an effective portfolio comprises three types of innovation:
Core/Incremental: Small but meaningful improvements to existing products and services for existing customers
Adjacent: New solutions that complement the company’s existing suite of products and services to address a new problem or a new buyer
Breakthrough: Radical new products or technologies addressing new problems for new or existing customers
Effective leaders go beyond simply categorizing projects in terms of risk and reward, taking steps to understand the specific attributes and needs of their organization. They consider risks such as:
Regulation that could limit which risks can be taken
A long testing cycle that may force more extreme risk-taking
Customer resistance to substantial change
A lack of required skills for innovation leadership or execution
New technologies that could rapidly disrupt the status quo, necessitating a fast response
Effective leaders consider their company’s business, its geography and country strategies to understand where and how the organization is targeting growth. They consider customer feedback, financial performance and hard “outcome” data to understand whether they are delivering the necessary impact. They analyze key factors such as tolerance for risk, industry, investor expectations, competition, regulatory environment, and market conditions.
They create a bottom-up inventory of innovation initiatives, asking questions such as “Where are the ideas coming from and how do they align to the desired blend of risks, impacts and other criteria?” By categorizing initiatives under way, they understand how their pipelines of innovation support their desired portfolio. They look for gaps against the desired blend of innovation types and analyze what might be creating them. They ask whether they need more ideas overall, or additional ones around specific priorities or time periods. They inventory proposals from the past that would be appropriate to reconsider under different and constantly changing circumstances.
Innovation requires dynamic governance and risk management
As AI and other new technologies shape innovation portfolios and activities, effective boards and senior management teams have shifted from relying on traditional risk management and governance protocols to more dynamic models, leveraging innovation’s potential while protecting the organization. The current environment requires elastic governance models that adapt to a constantly changing landscape and enable their organizations to benefit from new technologies while reducing risks and increasing trust and accountability. Guiding governance principles may include transparency, integrity, fairness, accountability, legal/regulatory compliance, safety, privacy, stakeholder engagement and bias management. They also are framed around “responsible” principles that align with organizational purpose and values, while achieving desired business impact in a dynamic manner.
Balancing innovation approaches to build a portfolio is essential for the long-term success and resilience of any organization. Effective leaders combine core, adjacent and transformational innovation using a blended approach that can sustain long-term growth. These leaders embed desired behaviors and priorities across the organization to build a robust and sustainable culture and portfolio of innovation that can drive financial performance and improved business results.
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