Building your Innovation Factory

With tech giants monopolizing the spotlight for high-profile innovation triumphs, other executives are left scratching their heads. What are they missing? The reality is, there is no direct answer. It’s likely a mix of things.

Over the last ten years, a large percentage of innovation teams have been disbanded because they are not structured around the right factors. These organizations often do not have a clear strategy, precise incentives or direct KPIs, which contributes to their failure.

To gain executive support, organizations find growth focused initiatives tend to be prioritized over innovative initiatives, however, the two are closely linked if not synonymous for most businesses. Innovation, when done right, can be used to drive growth and increase revenue. This doesn’t come without challenges, but once you find the right fit for your organization, innovation will always be linked to growth.

Having worked with some of the world’s largest organizations, we’ve seen how innovation can be successful and how it can fail. Some might view failure as an absolute detriment to their innovation goals, however, it’s important to recognize the key learnings that come from these failures and how they are pivotal to success.

We worked with a large information management company and learnt about the key challenges they faced when launching innovative initiatives and setting up innovation teams internally. We’re sharing some key lessons below.

Setting KPIs

The importance of setting specific KPIs to directly measure the impact and success of projects should not go unnoticed. Many organizations tend to set broad KPIs which can be used for a variety of projects, however, do not get to the root of impact. Setting KPIs that are unclear, too broad or too narrow, often leads to loss of significance in the measurement.

We’ve also analyzed how organizations will set KPIs based on other organizations in the industry, failing to recognize that each individual organization has a unique business model, with specific KPIs that should be catered to their business. While there are of course always overlapping metrics, its necessary to establish variables specific to your business and project.

Process & Resourcing

Of course, without resourcing both through human capital and financial capital. Resourcing plays a large role in setting a repeatable process that can be used when jump starting new innovative initiatives. Organizations often struggle to secure a process that works for them.

Often without executive support and the human resources required to set up innovation functions internally, the process to launch these initiatives becomes completely different each time, making it challenging to create a regulated process.

Another one of our previous clients, a Fortune 500, had decided to establish a new innovation team. The intention was to create a team of innovators and trailblazers that could explore new business opportunities undisrupted, engage in the ecosystem and support other business units in adopting similar innovation methodologies.

While the team had done a great job of attracting top talent and building a culture of innovation, the team struggled to execute and hit the objectives they had set due to a few reasons.

Over Researching and Risk Aversion

The team's leadership strengths are their ability to attract top talent and build a culture of innovation. However, they made a mistake by spending too much time in the ideation and prototyping phase and didn't want to go beyond to proof of concept testing and business modeling.

This is a common mistake that teams make when they are first starting out with innovation. It is important to remember that innovation is a process, and it takes time to go from an idea to a successful product or service and it requires making bets.

Promising the World

Eager to prove themselves and with no similar initiative in the firm, the newly-established innovation team was keen to promise multiple products in market on tight deadlines. Every employee can relate to being in a similar position, however, this is a trap that often causes innovation teams to fall for innovation theater or discredit innovation all together within the organization.

Understanding that both C-suite and VPs that you need to impress are also being assessed on the number of products released, new revenue generated - it often looks worse to have promised dedicated streams which struggle to move through the innovation process.

Socializing at the Right Level

The team was very well socialized with operational business units, to run tests they could rely on support from legal, logistics, in-store experience and more. However, while the junior staff were key in supporting operations there was a lack of bridge building and relationship management at the senior level with these specific business units which meant approvals, red tape and most importantly concept hand off or insights sharing was a major challenge.

Through key learnings and repeated failures, large organizations are able to successfully embed innovation throughout their organization and make it part of their brand.

Amazon prides itself on giving employees ownership over their innovative initiatives and leading these initiatives to marketable products. How exactly did Amazon foster such an entrepreneurial culture with a “fail-fast” philosophy? Through agile funding, risk-seeking, and internal challenges, Amazon has become a leader in innovation.

Unlike most large organizations, Amazon embodies a flexible work environment, and this extends to their financial resources. Through this, Amazon has the ability to fully invest in new projects as they come up, without the hurdle of time and funding approval in the upcoming fiscal year. Risk-seeking allows Amazon to venture into new areas, and truly knock down walls in the spaces they operate in. As Jeff Bezos has said, “If you double the number of experiments you do per year, you’re going to double your inventiveness”.

For example, Amazon Web Services and cloud computing, which works to provide server storage technologies and more to customers. Venturing out of their usual services, Amazon was able to provide out of the box services to customers for their industry, and expand their target demographic. In line with risk-taking, Amazon hosts internal challenges and competitions, constantly prototyping and testing new ideas to bring innovative initiatives to fruition.

In order to face challenges head on and build an innovation system that will lead you to success, it is vital to consider the key parts of innovation, which we encompass in our innovation factory.

In our innovation factory, we have mapped out the five key categories of innovation. Think of the way you would build a factory … you need to consider the foundation of the factory; your strategy, the build of the factory and who will govern the building plan; your structure; how the factory will be build; your process, what climate you are building the factory in; the culture and lastly, what you need to build the factory; your resources. These five categories come together to make your factory plan a reality, similar to how innovation will perspire in an organization.

How can you become one of the top innovative companies in the world? This is a question often asked by organizations striving to innovate in their field and grow in the face of disruption.

Leading organizations worldwide have key strategy and structural tactics in place which have led to their success. Developing these key components specific to your organization, coupled with inspiration from global leading organizations, can result in building successful future-proofed roadmaps to growth.