It’s time to overcome innovation theater.

Research by the Boston Consulting Group shows that 75% of executives report that innovation is a top-three priority and driver of growth of their companies. Yet results in terms of growth from innovation rarely live up to expectations, despite an abundance of innovation activities. Furthermore, only 20% of companies are (or feel) ready to scale innovation because very few leaders are satisfied with the skills they have.

There’s a clear gap between innovation aspirations and organizational capabilities.

At our recent Innov8rs Learning Lab on Innovation Strategy, Leadership, Governance & Portfolio Management, Tendayi Viki (Associate Partner at Strategyzer) shared the three pillars companies need to implement to bridge this gap and drive real innovation.

Here’s a summary of his remarks.

Three Pillars To Drive Innovation

According to Tendayi, bridging the gap between innovation theater and real growth is all about having the following three pillars in place:

  • Portfolio of innovation projects: first, companies need to focus on having a balanced portfolio of innovations. And rather than just working on optimizing their current business model, they should also work on sustaining and transformative innovations.
  • High-performance innovation programs: every innovation program - e.g., accelerators, incubators, etc. - must create value.
  • Innovation Culture: both innovation portfolio and programs need to be supported by a true innovation culture.

A diversified portfolio, strategically-integrated innovation programs, and a culture in which innovation has power and enables initiatives are key to making innovation success repeatable and scalable. However, to make this happen, you have to answer nine questions, three per pillar.

1. Portfolio

“Your innovation portfolio should be optimized to help your company grow for decades and not to become irrelevant efficiently”.

To understand if you are going in the right direction, answer these questions:

a. Are your company's innovation efforts mostly focused on R&D and technology versus exploring new value propositions and business models?

A lot of companies measure the quality of their innovation ecosystem by how much they invest in R&D. Yet it has been proved that there's no relationship at all between how much companies spend in R&D and the results they get. You have to figure out the business model too. In fact, we all know that you have to transform those technologies into a value proposition that customers care about and business models that are scalable and prosperous to succeed at innovation.

“It is possible to make stuff that people want and still lose money doing it. Innovation is not just about making products that will deliver value to customers. It is also about ensuring that we can deliver that value in a sustainable way”.

b. Does your company have a balanced portfolio of projects that cover efficiency, sustaining, and transformative innovation?

As a business leader, your journey towards real innovation actually starts with analyzing and shifting your innovation portfolio from being dominated by few large-scale bets on efficiency innovation projects and occasional sustaining innovations to a diversified portfolio with many bets – from efficiency to transformative growth innovation – that systematically produces winners.

c. What is the health of your innovation funnel or pipeline?

Leaders tend to ask their teams to make large bets. But here is another dose of cold reality: you have to make multiple little bets to pick a winning idea. In other words, you need an Innovation Funnel. And when you have a healthy innovation funnel that allows you to make many small bets, you can even start accepting and celebrating failure. You can’t do that if, in your whole innovation pipeline, you've invested millions in a couple of ideas.

“There's no chance that an organization can celebrate an idea failing if they've invested too much money in it".

2. Programs

You don’t want your innovation programs to be mere innovation theater and produce many loosely connected or disconnected innovation activities, programs, and investments. Instead, you want them to create strategically integrated and company-wide innovation activities, programs, and investments that are optimized to collaborate and produce innovation results.

To assess if your programs are producing tangible results or not (and to analyze and redesign your innovation programs accordingly), answer the following questions:

a. Do leaders (and teams) get excited about the wrong innovation programs?

Sometimes the goal is not to create value and innovation but just to be seen and considered as innovative. Other times, the innovation communication between the c-suite and the rest of the organization doesn't flow correctly. As a result, people are told they are part of an innovative company, but they don't understand the purpose of innovation itself.

b. What results are your innovation programs producing?

As mentioned, if you have innovation programs in place, you want them to produce results. And there are two main tangible results innovation programs should drive: value creation (the economic aspect) and cultural change. If your programs aren't creating economic value and aren’t transforming the culture by building the capability to innovate over and over, they aren't the right programs to have and invest in.

c. Are your company's innovation programs connected in a strategic way?

Your innovation programs should be strategically connected within the organization. And so, it doesn’t make any sense to be interested in innovation if your people don’t collaborate with each other, even worse if everybody wants to have their own little fiefdom and have their own little glory. As a leader, you have to figure out what everyone is working on and understand how to integrate their activities strategically.

3. Culture

Innovation shouldn’t lack status and legitimacy and face many blockers in your organizational culture. All you need is a culture in which innovation has power and influence and can enable initiatives. The questions to ask about culture are:

a. How much time do leaders spend on innovation?

Leadership support really matters. And if leaders don’t spend time on innovation, it's hard to get things done. “I used to be a believer in the grassroots movement. But eventually, the grassroots movement has to hit the mainstream and be supported by leaders to transform the organization”, adds Tendayi.

b. Where does innovation live in your organization and how much power does it have?

Innovation should be a function inside organizations just like finance, marketing, and HR. Furthermore, chief innovation officers should be part of the C-suite.

c. What is your kill rate for innovation projects?

When driving an innovation process, it’s important to be ready and willing to accept failure. Killing projects that don't create value is a wise choice.

In Summary

As a business leader, you probably acknowledge innovation as a top priority in your company. Most likely, though, you recognize your company is not ready to innovate because it lacks key capabilities. But it’s up to you to put your organization “in the right shape”. Assessing the following three areas can help you with this:

  • Assess your current innovation portfolio and how you make investment decisions. Where do you focus your innovation efforts? Are you mainly focused on efficiency innovation and sustaining innovation? Do you sufficiently invest in transformative innovation? Do you make evidence-based investments that reduce risk and uncertainty? Or is it still unclear which ideas get resources and which ones don’t?
  • Assess whether your innovation programs create substantial value for your company or not. How strong are your innovation results in terms of growth or cost savings? Evaluate if your innovation programs change mindsets and create an authentic innovation culture. Make sure that your programs reinforce each other and align with company strategy.
  • Assess your innovation culture in terms of leadership support, organization design, and innovation practice. Ask if they enable or block the establishment of a true innovation culture.