By Henra Mayer
The importance of innovation for the longevity of organisations is a topic discussed by CEO’s and industry experts alike. It is a long-term commitment, a commitment that requires a considerable investment in the future. It is certainly a good conversation to have in prosperous times when targets are made and economic conditions seem more predictable, but what happens to the “we are great at innovation” conversation when things go pear-shaped? Do we throw innovation out of the window when we face the first round of turbulent headwinds?
Innovation as a strategic competency is crucial for organisations as disruptive change becomes the new normal. Top organisations manage for innovation success as a rule, but it seems that they do even more so in tough economic times.
Towards the end of 2017, a general turbulent year for global economies and one that saw South Africa downgraded to junk status twice, Innocentrix ran a survey to better understand the innovation behaviour of organisations when the going gets tough. Our “Innovating in Turbulent Times” survey reflected the views of over a hundred CEO’s, C-Suite Executives and Senior Managers while we conducted eight face to face interviews with experts from the Telecommunications, ICT, Manufacturing, Mining and Academic industries.
Does innovation management feature in top organisations?
We know that organisations talk – and write about innovation easily enough. Think innovation as a “company value” or stated in the “vision or mission” of the organisation, but does this translate into real-world innovation success?
Over 70 percent of the organisations surveyed said that innovation management was an intentional activity while 83 percent said that getting better at innovation or “anticipating disruption” was part of a longer-term strategic goal. The intent was therefore clearly demonstrated by most but marrying this aspiration with execution proved difficult as 59 percent admitted that no formal budget was in place to support innovation intent.
The Focus for Growth
Responding to business challenges in shark invested waters certainly brings a new dimension to the debate but according to respondents, remaining relevant in turbulent times required a focus on the following three things first:
1. Creating new value from existing products and services
Leading organisations know what they are good at, they focus on their strengths and find new value for customers and stakeholders. They inherently understand their internal environment, as well as their own capabilities and limitations and then focus their efforts where it matters most.
“Many organisations of our size opt for variety in terms of contracting-in various services to make innovation happen – these services focus on certain expertise like for instance cost-cutting and restructuring, strategic consulting or change management. Winning companies do lose focus in uncertain times and this will have long lasting negative consequences. One should choose two to three core strategies and work on that consistently to really understand what our competitive advantage and core values are, so that we can focus at outperforming others on those values.”
– Divisional Head of Strategy, Innovation and Change at a large Financial Institution
2. Designing totally new offerings or business models
Being aware of industry happenings, finding the next S-Curve and reinventing the old, is an important strategic question for leading organisations. This is a question that they constantly seek answers to in new ways.
“Leaders must look beyond the pain despite major challenges. Reducing costs and retrenchment are immediate knee-jerk reactions and is not sustainable, it is not a well-considered response. True leadership must relook and reorganize but the appetite should always be to create the new, the future of the company and that lies in the realization that an innovation capability must be built that reaches beyond the ordinary.”
– – Mining Organizational Effectiveness Officer at Large Mining House employing over 72 000 people
3. Managing for innovation and differentiation
Organisations that give innovation a home, give people a voice and continuously support process and execution related activities, reap the rewards in terms of a culture that drives differentiated value to the market.
“It’s important to be agile and to be ahead of the wave. This means that we need to build a rapid execution capability and the ability and willingness to invest. Also a willingness to take risks and challenge the status quo. Winning firms innovate constantly and don’t allow themselves to become complacent, but they also understand the need for failure. They experiment and move to adjacencies. A start-up ecosystem and working with our partners ensure impactful collaboration that will deliver on the innovation promise”.
-Chief Digital Officer at a Large Telecommunications Company (Mobile Operator)”
tt100 supports and rewards excellence
The TT1000 Business Innovation Awards supports innovation leadership. It annually recognises those who manage their organisations on a holistic level, considering technology, innovation, people and systems. It rewards companies who link their technology and innovation practices effectively to become more agile. The appropriate linkage of technology and people practices tend to create better alignment to react to changing circumstances and this ensures that the organisation up-skills (by acquisition or development) the appropriate human capabilities to match, and even exceed the technological needs at any one time.
From here the organisation develops, improves and adapts its technology needs and appropriate innovation is applied to generate real market value and profitability. TT100 participants receive intensive, customised feedback on how they manage technology, innovation, people and systems, enabling them to improve the way they operate their organisations. A special benefit of the TT100 awards programme is the feedback participants receive from the adjudicators. This takes the form of the verbal feedback received during each adjudication session and an electronic dashboard that each entrant can download after the awards.
It is about speed to market, response to change and an ability to cope with new world flexibility. But none of this will lead to real-world outputs if people do not make it so.
Organisations also need to match innovation goals with the appropriate investment, building capability, and an innovation pipeline. In a recent piece of research highlighting the gap between innovation aspiration and intent, McKinsey’s talk about the frustration of sustaining innovation to create real value at scale and state that senior executives agree that people and corporate culture are the most important drivers of innovation. They state that the first step is to formally integrate innovation into the strategic-management agenda of senior leaders, to an extent that few companies have done so far. In this way, they say innovation will not only be encouraged but also managed, tracked, and measured as a core element in a company’s growth aspirations. Other steps are to make better use of existing (and often untapped) talent for innovation, without implementing disruptive change programs, by creating the conditions that allow dynamic innovation networks to emerge and flourish. Finally, they can take explicit steps to foster an innovation culture based on trust among employees. In such a culture, people understand that their ideas are valued, trust that it is safe to express those ideas and oversee risk collectively, together with their managers. Such an environment can be more effective than monetary incentives in sustaining innovation.
High growth companies value people and culture, they think ahead and consider agile methodologies that integrate design thinking principles. They know their industries and customers and make innovation a sustainable strategic competency, and this, after all, remains a leadership responsibility.
For more information on the TT100 Business Awards please click here or contact Da Vinci by emailing Sonya@davinci.ac.za. To talk innovation and the Winning in Turbulent Times Survey please contact Innocentrix by emailing firstname.lastname@example.org or by visiting www.innocentrix.co.za.