The innovation engine: Your company’s success may depend on it
(As originally published in the Financial Post, February 2013)
By Daniel Baer, Retail and Consumer Products Leader and Quebec Entrepreneur Of The Year Program Co-director, and Luc Charbonneau, Entrepreneurial Services Leader and Quebec Entrepreneur Of The Year Program Co-director, EY
Innovation is the primary force that can catapult a company to market leadership and keep it ahead of its rivals. But as a business grows, you need to keep the spirit of creativity alive — it’s too easy to snuff out the creative spark with a stifling layer of process and bureaucracy.
Successful companies focus on more than just growth, profit and the bottom line. They build in new capabilities, functions or even departments that centre on creative, disruptive and sustainable ventures. Indeed, leading companies today are creating value by innovating their business models and shaping their execution, despite a complex and challenging environment.
If companies are to organize successfully around an "innovation engine" — be it for a specific business model, product, service or management — they must focus on some key principles:
Tailor your strategy to your company. Leaders must factor in their organization’s heritage and cultural values. Consider which aspects of your innovation agenda should be nurtured as part of your overall structure. Whether innovation happens at the corporate, business unit, category or brand level — and regardless of whether you use a B2C or B2C model — consider which critical heritage components should be preserved in your desired culture and then figure out which aspects of the current structure should evolve over time.
Factor in the human component. Next, look at what degree of organizational commitment your executive team and people possess in terms of innovation. In other words, consider the rate of change your organizational structure has been able to absorb recently. What is the appetite for change among your top leaders, given the number and diversity of current strategic initiatives? How can you complement your existing organizational structure in terms of innovation? The answers will help factor in the human component of your innovation infrastructure.
Pair internal structures with outside capabilities. Top companies don’t operate in vacuums — they welcome and blend outside innovation. There’s a lot of work underway on "open innovation," advocating the creation of external, innovative ecosystems. By considering where innovation interaction points can and should exist between the outside world and internal organizational functions, companies can focus their innovation efforts on high-value projects, while using external resources to their advantage.
Attach rewards to innovation. To help innovation leaders progress, incorporate innovation-based skill sets, values and assets into your organizational structure. By attaching rewards to each new career "step," you can develop an environment of innovation that rewards everyone, from individual professionals to top corporate leaders. And don’t punish those ideas which fall short – creating an innovative environment requires accepting that not every idea will succeed.
What makes fast-growth companies thrive tells us that the margin between success and failure is very slim: getting it right means getting your focus right.
Fast-growth entrepreneurial companies understand innovation better than most. They know that their ability to achieve market leadership is intimately linked to their ability to generate new, profitable ideas. But that doesn’t make innovation any easier.
The rapidity of change in our uncertain business climate, and the connectedness of our global markets, creates a need for continual organizational agility, flexibility and innovation. Your company’s success may depend on it.