We love innovation, don’t we? It’s fun, it’s sexy, it’s headline grabbing and customer pleasing. And of course we know globalization and commoditization is forcing companies to innovate continuously or get left in the proverbial dust. Yet there’s another aspect to success that, at first blush, seems to be the opposite of the creative impulse: discipline, or (said another way) execution. Put this buttoned-up concept together with its dreamy-eyed sibling and you have “innovation governance”—something that according to Patrick Stroh is sorely needed in many organizations.
“Innovation governance sounds like an oxymoron, but in fact it’s an extremely powerful concept,” asserts Stroh, author of Advancing Innovation: Galvanizing, Enabling & Measuring for Innovation Value! (Institute of Management Accountants, 2015, ISBN: 978-0-9967293-07, www.imanet.org/ivs). “It’s the yin and yang for innovation impact—meaning apparently contradictory forces that are actually complementary, that create synergy. It’s this elusive quality that helps organizations achieve more volume and value in their innovation portfolio.”
An organization’s value proposition needs to evolve about every three to five years at today’s pace, Stroh points out. And you simply can’t evolve that quickly without thoughtful, systematic, and disciplined innovation. You need to be creative and ideate new solutions, but you need to execute with discipline to achieve the value. You need both sides of the equation.
Innovation = Creativity & Ideation
Governance = Execution & Discipline
“If you want to thrive and survive in today’s world, you’ll need to innovate—and that doesn’t mean the random lightning bolt idea here and there, but predictable, relentless innovation,” says Stroh. “To get real, repeatable innovation value and impact, you must employ innovation governance. It’s that simple.”
He offers five ideas to help you drive innovation value at your organization:
1. Talk to your CFO—now! Really, my CFO? you may be thinking. Yes—your CFO, confirms Stroh. “Our research shows that in more and more businesses, the CFO is getting tapped to support and drive innovation value creation,” he says. “And when you think about it, CFOs and the office of the CFO are masters at governance already—so aligning and applying their inherent governance discipline of reporting, analysis, and critical thinking to the creativity and ideation side of innovation is logical.”
Many finance and strategy leaders are now being asked to lead and support innovation too, he adds. In fact, 67 percent of senior finance and accounting professionals now support innovation in some fashion versus only 35 percent 10 years ago. This figure is predicted to rise to three out of every four finance leaders within the next three years.
“Keep in mind the CFO doesn’t have to be the key ideator of all innovation concepts and radical thinking, but he or she does need to be the master facilitator and enable the organization to provide ideas, develop those ideas, evaluate them, and, if decided on, implement them to drive innovation value,” he adds.
2. Send this message from the top: It’s okay to fail, but fail fast. You need the CEO in your corner and have to set the right tone in the organization. Yes, you’ve heard this before. It’s a cliché because it’s true: What’s valued by the CEO (and clearly communicated of course) is translated into action throughout the organization. So permission to fail has to come from the top.
“If you have a high-performance organization that is used to achieving results, you may live by the mantra that ‘failure is not an option,'” notes Stroh. “But with innovation, failure has to be an option—sometimes you have to fail at a few things in order to succeed. The CEO needs to clarify, In order to innovate, we have to be willing to try new things or execute differently, and that means that sometimes we will fail. That’s okay—just fail fast, learn something from it, and keep driving to get value!
“If your CEO comes out and says this, you’ve given your rank and file permission to innovate,” he adds. “Of course, he or she needs to follow up by not punishing failure when it happens or the ‘permission’ will ring hollow.”
3. Create multiple innovation channels inside your company. Employees, suppliers, customers, and other constituents will all respond differently to various innovation channels. Whether you employ an Open Submission innovation channel, a Business Challenge channel, or maybe a Crowdsourcing Technology channel—some will relate and thrive in one channel and yet not in others.
“The key is to find a combination of channels that work for your organization and implement multiple channels to engage as many people as possible to solicit, develop, rate, evaluate, and implement ideas,” says Stroh.
4. Don’t just talk about innovation. Measure it. When you talk about innovation, many people struggle with how to measure it. This is one of the big value areas that governance can add to innovation—discipline and measurement. Be careful not to over-engineer that discipline and measurement, but you can’t improve what you can’t measure!
“I outline a measurement and monitoring system extensively in Advancing Innovation, using metrics such as Net Promoter Score, New Product Revenue, and External Ideation percentage—but these metrics are part of a larger categorical system that looks at your strategic archetype and points out specific, strategic relevance,” explains Stroh.
“In the end, you have to be able to measure progress and value, or else you don’t know what results you are achieving by luck and what results you are achieving through leadership and execution and that are repeatable,” he adds. “Plus, measuring sends the clear message that you are serious about innovation—especially when metrics are linked to evaluations and rewards. It’s true that what gets measured gets done.”
5. Make it clear that innovation comes in all shapes and sizes. Sometimes people talk and write only about the types of innovation that are sexy—new technology and rapid disruptive changes in businesses (think drones and Uber). Is this innovation? Absolutely! But innovation comes in many other forms and should be thought of in a portfolio fashion, advises Stroh.
“Think of innovative ideas and projects as falling into three buckets: Incremental, Distinctive, and Breakthrough,” he says. “This way you are valuing innovation ideas that are smaller and near-term oriented at the same time that you value larger or longer-term innovations. You need both sides of that range and probably a disproportionate amount of ideation focused right in the middle—distinctive ideas that will give you a competitive advantage in your value proposition and be realized in the next three to six months.
“Facilitate and enable innovation in your organization that is conceived and executed across all sizes and timeframes,” he adds. “That way you will always have ideas and projects in the pipeline.”
Innovation is no longer a luxury or something we talk about doing because it sounds fun. All organizations—businesses, agencies, government, public, private—need to always be evolving their value proposition to keep pace with change.
“A good strong marriage of creativity and execution is required to survive and to thrive,” says Stroh. “The organizations that figure out both the yin and the yang of innovation, and nurture and structure their companies in ways that allow this synergy to play out, are the organizations that will be able to compete in an ever-more-changing world.”
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About the Author:
Patrick Stroh is president of Mercury Business Advisors, providing management advisory services in business strategy, innovation, and product development, and author of Advancing Innovation: Galvanizing, Enabling & Measuring for Innovation Value! and Business Strategy: Plan, Execute, Win! He serves on the board of directors for the Institute of Management Accountants and was also appointed as a fellow in Palladium’s Positive Impact Research Institute.
About the Book:
Advancing Innovation: Galvanizing, Enabling & Measuring for Innovation Value! (Institute of Management Accountants, 2015, ISBN: 978-0-9967293-07, www.imanet.org/ivs) is a must-read how-to guide for fostering innovation in your organization. The book explains the significance and undeniable need for a yin and yang relationship referred to as “innovation governance.” Patrick Stroh outlines practical execution steps, downloadable forms, innovation insights, and introduces Innovation Value Score® (IVS), a proprietary measurement system to calculate, compare, and improve innovation value creation—which is now a must-have for organizational survival. The book is available atwww.imanet.org/ivs.