> Innovating for growth: a spiral approach to business model innovation
Innovating for growth: a spiral approach to business model innovation
Build the right mindset and culture
KPIs for innovation have to be leading indicators: number of ideas, number of ideas going through the funnel and number of commercialized ideas and their sales figures.
The right leadership mindset is one of the enablers of strategic innovation.
The right leadership mindset leads to an organizational culture that nurtures, guides and supports innovative thinking and practices. Essential elements of this kind of culture include:
“Having our ‘innovation prosperity program’ sponsored by our chairman and group CEO meant that we were able to make decisions and adapt the innovation process according to what we were learning very quickly,” says the Marketing Director of a British-based telecoms provider with operations in Asia.
“Visible leadership also helped. Our leaders talk about the program very confidently, providing company updates on a regular basis. This means we can take people with us as we make changes. Without their support we would not have been successful.”
Collaboration through social networks
Social networks are also an important part of an open organizational culture. “In making the most of social innovation, I would point to two important lessons,” says the Vice President of Technology Management at an automotive company based in the US.
“First, it is essential that people learn from their experience — that’s your number one asset. Second, cross-functional approaches are a success factor. We support this via a technology domain, and in our processes we make sure we foster collaboration between the teams.”
Organizations at the forefront of innovation turn cultural differences to their advantage. John O’Halloran at Suzlon Energy, which has global R&D operations across Europe, India and China, says “It is important to understand and leverage the subtle differences in our culture. Being able to combine different mindsets and harness different approaches gives great richness to the final solutions, and that’s what we are all about.”
Alibaba combines different mindsets by rotating executives within the company. Dr Brian Junling Li says, “We rotate people across different companies and departments, because we believe that the circulation of talent enables communication. Also, people with specific expertise can actually prevent innovation, so we constantly rotate people through finance, marketing, human resources and operations.”
Leading-edge key performance indicators
Traditional methods of assessing financial viability are one of the biggest barriers to innovation. It is only by having different KPIs that organizations can understand the different elements of risk and reward in innovation and how they relate to investment levels and financial viability.
One participant in our research says, “If standard metrics are used, there is simply too strong an argument against innovation. For example, for a large software company introducing 55 updated products annually, the value of five innovative products per year, contributing 1% to 2% of revenue, seems negligible.
“Why invest time and effort in educating the workforce rather than focus attention on the 20% of products that bring in 80% of the revenue?”
The vice president of global innovation and design at a US automotive company shares his experience in implementing new KPIs, saying, “Key performance indicators for innovation can’t just be lagging indicators with operational metrics. They have to be leading indicators, including number of ideas, number of ideas going through the funnel, and number of commercialized ideas and their sales figures.”
“Then we also capture people metrics. How many people are participating in innovation, how many have gone through training and what is the learning component? Those are just a few of the metrics we include.”
For companies that view innovation as a state of being, success is about much more than the pursuit of profit. “Our business is focused on a much wider spectrum of success, where profits are just one of the variables,” says William Bissell, Managing Director of the India-based clothing company Fabindia.
“For us, the enduring success of a business is directly linked to the number of other variables the business delivers on. If you ignore any of them, the business will have no long-term future. This is a strong belief for us and a guiding principle.”
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