?WhatIF! IMPACT EXPERTISE PEOPLE ABOUT CONTACT the greenhouse Five Client Questions, Answered C ompanies are eager to build their in-house innovation capability, but often have serious concerns about getting started. Here, ?What If!’s New York-based Capability & Culture team shares some quick responses to the questions they’re asked on innovation’s front lines. 1. “Meeting our corporate growth objectives demand more and better innovation—and fast. How do I even begin to confront this challenge?” First, it’s important to get clear on your innovation ambition and agenda before setting new initiatives in motion. So carefully and specifically define the role innovation needs to play in delivering growth. Where should innovation investments be focused? Is innovation needed to defend or recharge key brands or categories? Do you seek to capture adjacencies and/or move into white spaces? How much disruptive thinking do you have the need—and appetite—for encouraging in the organization? Once you have the goal well-defined, it’s helpful to examine the current state of play: What kind of innovation pipeline is already in place? How much capability and capacity for innovation currently exists in the organization? What kinds of things block innovation in your company? Look back to look forward: When you recognize which barriers have slowed you down in the past, you can begin to strip them away. With the pathway cleared, the leadership team can identify and then begin to mobilize the company’s most creative, innovative employees. To get them started, it’s often better to choose small, focused projects—not ones that will take years to produce an outcome. It’s essential to create a protected enclave for them, a zone where ideas are nurtured and experimentation is encouraged. We sometimes call these “pocket universes” to suggest a space where the laws that govern the current business don’t apply. Now it’s time to launch efforts! The sooner your people start pursuing more ambitious innovation initiatives, the sooner you uncover the challenges unique to your organization. Achieving a result quickly delivers new learning and establishes success stories—and starts building an organization-wide belief that innovation is the way forward. 2. “We’ve begun the hard work of building our own innovation capability, but we’re still learning and in need of a lot of support. How long will it take for us to have a self-sufficient, sustainable culture of innovation in place?” It’s virtually impossible to predict in advance how long it will take to get the full results from building innovation capability. But the good news is that companies usually notice some changes immediately. Innovation is generally something people want to do. So we often see the impact of releasing and harnessing their initiative and energy right away. We find that many individual employees embrace innovation tools and creative behaviors immediately. More complex and challenging initiatives obviously take time to complete. But depending on how well they are scoped and focused, initial projects will begin to produce results in just a few months. There are a number of things that can be done to accelerate progress. First, if the leadership team shares a common agenda and fully supports innovation efforts, their alignment can pre-empt unnecessary organizational toing and froing. Second, dedicated SWAT teams can be put on the most critical initiatives. Third, innovation education can be put in an action-learning format that allows for scaling of skills and projects in tandem. It’s vital to recognize that organizational transformation doesn’t happen overnight. This is a journey that will require time—to place the right people in the right positions, to develop new expansive behaviors and refine processes, and to instill a company-wide thirst for innovation. 3. “We’ve tried a lot of different things, but innovation just doesn’t seem to come naturally to our organization. Why is this so frustrating?” Many large companies—that sometimes feel like “supertankers” from the inside—struggle with innovation. Innovation is always at some level about change. And change is by definition uncomfortable. Most large businesses have historically focused most of the enterprise on meeting quarterly performance targets, improving operational efficiency, and driving costs down over time. Innovation was the purview of a relative few––the full-time occupation of some members of the R&D staff and a part-time occupation of the marketing department, which was largely focused on messaging and communication. To innovate, companies have to build a whole new set of muscles. Leaders need to tolerate a bit more risk (and yes, a bit of failure) and adopt a longer-term perspective with regard to goals around organizational development. Conventional planning and decision processes need to be adapted to make resources available for innovation investments. Leaders and employees with the potential to innovate need to be identified and in some cases recruited—people with entrepreneurial drive, creative talent, and relative fearlessness when it comes to championing new ideas. If innovation were easy, everyone would be doing it. The truth is it’s difficult. But precisely because innovation is rare, those who manage to crack the code will achieve big wins for their organizations. Patience and commitment will be richly rewarded over time. 4. “As a leader, I’m not accustomed to failing myself and I’m not comfortable with tolerating failure in the organization. But I keep being told that failure is a vital part of innovation. Why? How should I handle?” Embracing failure is counter-intuitive. It flies in the face of accountability. It can feel like you’re encouraging the wasting of resources. And it sometimes forces you to make difficult explanations to shareholders. But innovation is about leaping into the unknown and making uncommon, unexpected connections. Many creative ideas won’t pan out. Leaders need to accept the possibility of failure and then react supportively when failure happens. Tracking failures is just as important as tracking successes. The total equation demonstrates how committed a company is to innovation. Some of the world’s greatest innovators also have produced some of the world’s greatest flops. There are some things only leaders can do. One is to set the tone for the organization. If leaders don’t create a climate that encourages risk, innovation simply can’t happen. Of course, you should never tolerate making the same mistake twice. Keep moving forward and gaining wisdom. In the end, chances are you’ll find you learn more from your failures than from your successes. 5. “Which business metrics should I be using to measure innovation? How do I know if it’s working?” This is probably the most frequently asked question by our clients, and in some ways has become the “holy grail” of innovation. We wish there was a simple list of the right metrics, but there isn’t. What we do know is that the same old business metrics that govern standard operations won’t always be the best way to measure innovation. You’ll need to evolve new metrics that, over time, become tailored to your specific innovation goals. You need to make sure you are measuring the right things and creating a set of benchmarks that are actually useful. Most organizations carefully track the pipeline—by stage of development, by expected timeframe to launch, by amount of investment required, and by level of investment risk. All of these commercial factors help to establish the sustainability and health of the new product pipeline, and make sure resources are effectively allocated to a portfolio of initiatives. But there are also a whole set of metrics around capability and culture that are often more forward-looking indicators of innovation, starting with employee engagement, which is a well-known prerequisite for innovation. It can also be helpful to track progress on training and tools, such as the percentage of people trained in innovation techniques, usage of specific innovation practices, etc. We strongly believe that developing innovation metrics is a journey much like innovation itself. Many companies try to measure too much too soon, often killing fragile innovation efforts before they ever really have a chance to succeed. We find that early on companies should focus on more forward-looking, leading indicators or proxies for innovation that will tell them whether they are executing on the right activities—for example, training people, delivering on some projects, etc. Only down the road can you rely on more backward-looking, lagging indicators to measure the commercial success of your innovation efforts. The timeframe for innovation, from capability-building through to commercialization, can take several years. Alongside this transformation journey, establishing and capturing innovation metrics is a separate long-haul journey of its own! 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