Innovation is critically important to success in today’s business world, and leaders across industries are recognizing this. Some companies built their success on innovation — it is the foundation of their mission. Boston Consulting Group (BCG) does an annual report on the most innovative companies and has compiled several great research papers based on surveys to innovation leaders. One of those papers included the most common barriers to successful innovation. Risk aversion, long development cycles, difficulty selecting the best ideas and difficulty measuring performance topped the list. However, there are things you can do to address these challenges.
The Top Reasons Why Innovation Programs Fail
Innovation giants like Google or 3M may find that it comes naturally, but that is not the norm for the rest of the business world. In fact, while most business leaders agree that innovation is important, few know the keys to managing it.
As staff try to accommodate innovation goals set by management, they are often ill-equipped to overcome challenges and communicate effectively enough to see innovations through, leaving many idea programs to fail before they even get off the ground.
Surveys and research into the reasons for why innovation programs fail reveal predictable patterns. If we can predict these pitfalls to innovation, then we can take steps to prevent them. So what are some of the key obstacles to successful innovation?
According to a BCG study on innovation, some of the biggest obstacles for businesses are:
- Risk adverse culture
- Extensive development time
- Difficulty selecting the best ideas
- Inability to measure performance
Fortunately, business and innovation leaders can and have successfully overcome these obstacles.
Risk Adverse Culture
We spoke with Steve Wood, someone who knows a lot about managing and leading innovation, about disruptive innovation. In our conversation, he clearly explains how the wrong culture can sap innovation initiatives. Success has a tendency to drive incremental innovation and safe bets so that an organization can protect its current client base.
We also talked to Ted Graham, who leads innovation at PwC Canada and is now at GE leading their open innovation program. Ted talked about the importance of working with leaders to help them redefine how they view risk within the organization. Too often, risk is seen as negative. It’s a potential downside that should be avoided. The conversation on the upside of risk is missing. For example, one big positive is that with risk comes great personal growth and that’s something that draws the best talent. The top minds in any space want to work on the biggest challenges. So one upside of risk is that it attracts and helps retain top talent.
We wrote a full perspective on our thoughts on risk and innovation. Where it comes from and how to balance the positives and negatives of risk.
To address a risk-averse culture, make sure the right people are part of balanced conversations about the downside AND upside of risk.
Selecting the Best Idea and Extensive Development Time
At SoapBox, we see these barriers as somewhat intertwined because we see ideas and innovation on a spectrum from incremental through to major projects. Business process ideas or new products ideas need different approaches for selecting ideas and different approaches to project management. So, depending on which types of innovation you’re looking to drive, you’ll want to employ a different innovation strategy.
Coming up with the right tools and processes for open innovation requires expertise and careful management. However, we believe you should also have a separate strategy for fast ideas and a bias towards action. We fully explain our thoughts on this in two posts: Leapfrog Disruptive Innovation and Stop Innovating, Start Getting Stuff Done. There are research and case studies that clearly show that there’s a huge potential improvement from empowering your organization to act quickly on small incremental improvements. According to the authors of the Idea-Driven Organization, up to 80% of an organization’s performance improvement potential lies in small, front-line ideas.
Your ground game for driving innovation that drives results should be based on a proper employee idea program. This can also take pressure off your other strategies and processes.
Inability to Measure Performance
Without a doubt, measuring the performance of an innovation program is hard. For large, high-visibility projects, it’s likely that the right measurements are taken into consideration. The size of the project in terms of budget, resources and time invested naturally translates to putting the right focus on understanding return on investment, payback period etc.
But how do you measure a broad innovation program, with many incremental ideas effectively? Our advice is to focus on those things that are easily measurable. It’s a lot of work to measure performance on an idea-by-idea basis with this type of program. Instead, focus on how you’re measuring performance against the business objectives you’re trying to impact. This requires spending time aligning the employee idea program with your business strategy. Driving improvements in customer experience, for example. The second area is to focus on measuring performance through adoption. Ideas, participation rates, ideas acted on, etc. These are all metrics that an idea management software program will easily track and provide reports on. While many of these metrics are leading indicators, we’ve found and studies prove that focusing on adoption provides better results. In an extensive review of research into employee suggestion systems, we found that programs that prioritized participation, the number of ideas and number of ideas acted on significantly outperformed programs that focused on finding big ideas and measuring those.
When you’re looking for software that can help you track performance on larger ideas, we’ve sometimes partnered with McKinsey Wave, which is designed to do exactly that. Small ideas flow through SoapBox with the associated performance metrics measured within the tool. Larger ideas meeting a specific threshold get routed from SoapBox into the Wave product.
Measure performance of large projects on a project by project basis. Measure performance of a company-wide initiative with adoption metrics and business objectives.