Innovation in business – in 2020 and after.

With this article we would like share our insights on Innovation – aiming to zoom into competences shared by people whom have generated disruptive outcomes in Innovation contexts.

In the year 2020, “Innovation” should be an increasingly popular C-table topic of discussion. Being it as a short-term vs long-term strategic challenge for some and still one big grey area for others. The urge to do innovate, as well as the exact how-to, differs amongst an organization’s industry and market position. However, considering innovation’s disruptive impact on both business and society, potential threats and opportunities can no longer be ignored in 2020.

Many companies have once been traditionally built upon one core capability and expanded their business around that. Often, research and developments have been noted as “Innovative” as they improved business, making it more efficient (cost-saving) or more valuable (money-making). And up to today, some of these organizations still run profitable. Yet, times are a-changing – and they do so fast. Past performance is no guarantee of future returns. The ones that aren’t hungry for the new risk to be eaten themselves.

The struggle.

Following the McKinsey Innovation Horizons, for organizations to innovate it requires them to continuously evaluate core competences (H1), while extending to potential new clients, partners or markets (H2) and creating new capabilities to drive (or respond to) future disruptive innovation (H3). Each horizon holds a different focus regarding timing, resources and goals – therefore, requires different kind of professionals on both strategic and executional level.

Doing what you have always done in a better way (H1) is all about blending the new with the old, complementing on traditional strengths. It requires fresh perspectives, problem-solving and opportunity seeking skills. There are many success cases of specialised Innovation teams operating through the organizational matrix horizontally, consulting on how to challenge the status quo and where to improve. The same holds for intrapreneur programs or incubator initiatives. Although there are many bottlenecks to name in the H1 contexts, the bigger struggles arise in H2 and H3 issues.

We have touched upon “Digital Transformation” before, emphasizing on new technologies to constantly emerge and radically reshape industries, markets and competitive environments. The costs and effort for starting a business are low, which makes new competition arrise quickly. Merging businesses flourish, business models are reinvented and business processes are reimagined due to the opportunities digital technologies unlock. This brings H2 and H3 innovation way closer ahead than McKinsey´s model originally expected. To keep up with market dynamics and stay ahead or at least on par with competition and new market players, organizations should (at least prepare to) innovate disruptively on H2 and H3 level. To safeguard today’s revenue – but surely tomorrow’s reason for existing.

Organizations must drive or respond to innovation to safeguard today’s revenue – but surely tomorrow’s reason for existing.

STEPHANIE STUIT Digital Specialist at Batenborch International.

H2 and H3 are more complex as these types of innovations require different people, management and structures resulting in more disruptive outcomes. Yet, many organizations are strongly process-oriented – business strategies are translated to clear organizational tactics, to short term goals per department and KPI´s per individual. Add a structured, almost fully optimized, way of working in reaching those numbers fast and there will be no room for (among others) creativity, out-of-the-box thinking and experimenting anymore. Besides that, corporate cultures are driven by (individual) results. By the end of the day, it´s about reaching targets and overperforming on those targets to earn some convenient extra´s – so why spend time thinking about the future of tomorrow?

The bigger the organization, the more it´s organized, the bigger the struggles on how to manage and embed Innovation initiatives. Because of the differences with the current way of doing business, we see these initiatives often being organized separately. By building external corporate start-ups, innovation labs or even acquiring, investing or partnering up with young, disruptive scale-ups, organizations prepare for tomorrow without disturbing today´s daily operations. These Innovation set-ups take a forward-thinking leadership team, with an open mind to creativity and managed expectations towards short term profitability. It requires them to delegate and decentralize, allowing for entrepreneurial spirits to flourish (creativity) and for time and resources to be invested under different ROI settings (profitability). It requires guts, alongside with patience, to do so. Trust the hockey stick curve and await long term impact. That trust, however, should only be given on the right grounds.

The solution.

 The concept of innovation is there to align with or even accelerate (future) business objectives – not to finance an experimental playing garden. It requires more than putting smart, creative brains together in an open, creative space with fancy coffee machines and ping-pong tables. As obvious as that may sound, we have seen many innovation labs or start up initiatives fail due to misalignment with corporate strategies or insufficient attention to building a solid business case. With a specialization in propositions from mid-to top management level, and an extensive network of specialists, managers and leaders in the field of Innovation and Change, we could fill a book with cases of success and failure. The reason for success or failure is multiplex – as it always is within the context of digital transformation or innovation. Yet again, there has been a highly impactful role for the People component in every context we have seen so far.

For the matter of innovation, we distinguish two groups of people too. The people on leadership level who will drive innovation, design innovation processes, hire, manage and coach innovation talent and, above all, guarantee a solid connection between the current and the new. On the other hand, there are the creative minds, the out-of-the-box thinkers, with strong knowledge of (future) digital technologies, trends and market developments. Together, these people are the engine for innovative ideas and initiatives.

Competences.

Leaders bring solid strategic agility – translating all creative ideas and initiatives to possibilities, matching the overall strategic company framework. Being able to oversee both strategic and detailed, operational levels is crucial in managing a wide scope of stakeholders. Stakeholder management duties require the innovation leader to be able to understand all perspectives of all different stakeholder involved, while adjusting his speech to the business relevance and emotional mindset of each individual case.

For innovative talent to make a sustainable, impactful contribution to business objectives, creativity is balanced with being action oriented. Surely it is about coming up with new and unique ideas and easily making connections amongst previously unrelated notions. About not being afraid to question habits and current methods and generating new alternatives against the odds. Yet, innovation goes beyond shooting great ideas and requires for talent to initiate action and activities without being told to do so, while being determined to successful results, contributing to the bigger strategic whole.

To support you in assessing these competences during interview or evaluation processes, we have developed some easy to use tools including example areas to explore and example questions to ask regarding considering the competence Strategic Agility, Creativity and Action Orientation.

Download Innovation Competence Cards