Innovation can be built into a Corporate Culture. By incorporating eight key components, you will be able to build a highly focused, pragmatic Perpetual Innovation Machine that will help your organization continually achieve breakthrough performance.
Here’s a quick rundown.
1) A sharp focus on your top business priority. Let’s face it. All of the result measures you track—including revenue, profit before tax and cost—are vitally important. But you can’t work effectively on everything at once. So one of the smartest moves you can make as you try to build an innovative culture is to focus on the one result measure that will have the biggest impact on your business in the shortest timeframe.
2) A daring goal. You can’t drive a business breakthrough with incremental progress and modest aspirations. So set a sky-high goal that will require you to invent a new solution. It’s exactly what you need to jumpstart the Perpetual Innovation Machine.
- These goals have to make an organization uncomfortable. They have to force the organization to look beyond the same old solutions offered by industry insiders. History is filled with examples of breakthroughs that originated from outside an industry.
- How you incentivize and reward employees to achieve these stretch goals is a hotly debated topic, but it is ultimately solvable with good design. The fear of poorly implemented stretch goals in past organizations is not a reason to avoid setting them in the first place.
3) Identification of the major factors that drive performance. You’ve identified the result measure you’re going to focus on. You’ve established the goal. Now you need to know the specific performance factors that will push the needle forward on that particular gauge.So what do you do? You dig into the data to find the Key Drivers and Sub-level Drivers of performance. In a very real sense, these Key Drivers are the levers you will pull with help from your innovations. So this is the critical step in the process.
- For fans of baseball or the movie by the same name, think Moneyball. Every team wants to win (result measure). In order to win you need runs (key driver). To get runs, you need to get people on base (sub level driver). So the key to winning revolves around buying players that get on base. The Breakthrough: The players you are looking for may not have the highest batting average or hit the most home runs.
- While at a large Financial Institution, I had a similar conversation with the head of the Consumer Bank. Our discussion went something like this – “You want to increase Deposits (result measure) by reducing attrition and increasing referrals and cross selling. To do that you have to increase Customer Delight (key driver) and that requires adjusted staffing levels at the branch (sub level driver)”. His reply, “so an investment in tellers will lead to billions in additional deposits? I don’t believe it”. Even though he didn’t believe it at first, he did allow a pilot that ultimately proved the point (The Bank Case Study).
4) Fast, efficient, highly focused innovation. Once you know the Key Drivers, you’ll be ready to develop focused innovations that will address the key driver and help you close the gap to your goal. Sometimes additional research and data analysis is necessary. And sometimes you can use logical analysis, expert thinking and common sense to expedite development. But no matter what approach you take, this is where the rubber meets the road.
- One of my favorite scenes in the movie Apollo 13 is when a smart engineer identifies “power” as the key driver to bringing the crew home safely. Everyone quickly focuses on closing the “power” gap in very innovative ways (like building an air filtration system out of odds and ends!).
5) Predictive Lift Analysis. All the data-driven work you put into identifying and prioritizing your Key Drivers should help you predict the quantifiable impact you can achieve with each innovation. And that will help you determine if you have enough innovations in the pipeline to make a breakthrough and achieve your overall goal.
- Predictive Lift Analysis also gives you the quantifiable, results-oriented information you need to develop a strong business case for your work. And that’s a political necessity in an age when organizational resources are always constrained.
6) Tools for managing innovation development and deployment. When you’re managing a complex process with a lot on the line, it’s easy to have too many gauges in the cockpit and too many tools in the toolbox. And that leads to paralysis by analysis. When you don’t have time for extensive research and data analysis, you can speed up the process with a simple tool set and disciplined questioning that probes beyond easy answers and challenges the conventional wisdom.
- As an engineer and a certified Lean Six Sigma practitioner, I have been exposed to many tools – some that are really complex. What I have found helpful is to become really proficient at a small number of simple tools. I use these tools in every engagement and they have helped me get to the bottom of a situation in a hurry. See my list of “Power Tools”.
7) Nonstop employee engagement. The data will lead you in the right direction. But to successfully implement an innovation and achieve a business breakthrough, you need an exceptional effort from every member of your team.
- So how do you motivate people to reach a higher gear? You have to work hard to get them to understand and accept your strategy and tactics. You have to empower them to put your plans into action. And you have to launch a continuous, energizing communications campaign.
- I learned a long time ago that knowing what to do is not even half of the problem. The biggest challenge is getting your organization to follow you. No question about it. Leaders of the Perpetual Innovation Machine have to be masters at managing data. They have to be great leaders and communicators, too.
8) Once you make a breakthrough, take a deep breath. Celebrate. Then set another goal. In business, the whistle never blows. So resting on your laurels is a terrible mistake. Instead, you want to keep moving forward by big, bold leaps. So set another goal. Work on the rest of your result measures. Develop the next set of innovations. And keep that jet flying at a supersonic speed.
If you do that, you will earn your stripes as an official operator of The Perpetual Innovation Machine. You will have built an Innovative Culture and you will be rewarded with an engaged workforce that delivers one breakthrough after another.