How to Drive In­no­va­tion Through Your Or­gan­i­sa­tion

Build­ing a Cre­ative Ecol­ogy fa­cil­i­tates in­no­va­tion in your or­gan­i­sa­tion

Insurance - - MANAGEMENT - by Dr Norman Chorn

In­no­va­tion is Im­por­tant

We all know how im­por­tant in­no­va­tion is to suc­ceed in a com­pet­i­tive en­vi­ron­ment. Re­spon­dents to the IBM Global CEO study of 2010 iden­ti­fied it as the “sin­gle most im­por­tant lead­er­ship com­pe­tency” for or­gan­i­sa­tions seek­ing to cope ef­fec­tively with the chal­lenges of the cur­rent global en­vi­ron­ment.

This is not news to lead­ers. We have read much about the cre­ativ­ity of peo­ple and the abil­ity of or­gan­i­sa­tions to spawn in­no­va­tion. Peo­ple like Maslow, de Bono, Her­rmann and Pink have all shown the pro­cesses and ben­e­fits of in­no­va­tive peo­ple and or­gan­i­sa­tions.

At the out­set, how­ever, it is worth point­ing out the dis­tinc­tion be­tween the cre­ative be­hav­iour of an in­di­vid­ual, and a leader that fa­cil­i­tates in­no­va­tion in their or­gan­i­sa­tion. In­deed, the leader in ques­tion may not be a cre­ative in­di­vid­ual in her own right, but she is cer­tainly able to de­velop a cre­ative ecol­ogy in her or­gan­i­sa­tion!

Gary Hamel2 sug­gests that man­age­ment in­no­va­tion is the high­est and most pow­er­ful of in­no­va­tion in or­gan­i­sa­tions – more pow­er­ful than process in­no­va­tion, pro­duc­tion in­no­va­tion and even strat­egy in­no­va­tion. But what is man­age­ment in­no­va­tion?

Man­age­ment in­no­va­tion is prac­tices by lead­ers when they de­velop the pre-con­di­tions nec­es­sary for wide­spread in­no­va­tion in their or­gan­i­sa­tion. It is the for­ma­tion of a cre­ative ecol­ogy in­side the or­gan­i­sa­tion – the lever­age that al­lows the or­gan­i­sa­tion to har­ness the cre­ative tal­ents of all staff and stake­hold­ers.

Be­fore out­lin­ing the process whereby we can de­velop a cre­ative ecol­ogy in­side your own or­gan­i­sa­tion, it is worth not­ing one star­tling piece of Aus­tralian re­search. In a re­mark­able study con­ducted by Ralph Kerle, he dis­cov­ered that some 64% of Aus­tralian man­agers had un­der­taken some cre­ativ­ity and in­no­va­tion train­ing in their or­gan­i­sa­tion. But 75% of this train­ing was de­scribed as in­ef­fec­tive be­cause it did not ad­dress the

or­gan­i­sa­tional con­text in which the cre­ativ­ity was ex­pected to oc­cur! In other words, he found that the or­gan­i­sa­tion, as a work­ing en­tity, of­ten acts as an im­ped­i­ment to cre­ativ­ity and in­no­va­tion. The cre­ative ecol­ogy was non-ex­is­tent. Lead­ers had not prac­ticed man­age­ment in­no­va­tion.

What is a Cre­ative Ecol­ogy?

A cre­ative ecol­ogy is the ar­chi­tec­ture within the or­gan­i­sa­tion that ac­tively pro­motes and sup­ports the cre­ative and in­no­va­tive ac­tiv­i­ties of all staff and man­age­ment. This is the fo­cus of man­age­ment in­no­va­tion, and it con­sists of four key el­e­ments: Our re­search has iden­ti­fied a se­ries of prac­tices that you can fol­low as you build the cre­ative ecol­ogy in your or­gan­i­sa­tion. This is the busi­ness of man­age­ment in­no­va­tion.

De­vel­op­ing Your Or­gan­i­sa­tion’s Cre­ative Ecol­ogy

Each of the fu­ture el­e­ments of the cre­ative ecol­ogy is worth an ar­ti­cle in its own right. How­ever, in the in­ter­est of brevity, we have fo­cused on a se­ries of ac­tion­able sug­ges­tions that you can use to drive in­no­va­tion through your or­gan­i­sa­tion.

Your own at­ti­tudes and be­liefs It all starts with you. Although you’re not ex­pected to be the pri­mary source of cre­ativ­ity or in­no­va­tion, you do have a sig­nif­i­cant role to play in de­vel­op­ing the right con­di­tions for it to oc­cur: Recog­nise that it’s ok to be an in­com­plete leader3: You can­not and are un­likely to have all the ca­pa­bil­i­ties nec­es­sary to run the busi­ness. The best lead­ers are those who recog­nise and ac­cept this – and cre­ate the space for oth­ers to fill the gaps. Un­der­stand that you can in­flu­ence your own fu­ture: The fu­ture is not pre-de­ter­mined. While there are many other forces shap­ing it, you can in­flu­ence it with our own ac­tions and de­ci­sions. You are also a player!

Don’t try to pre­dict the fu­ture: Be­cause there are mul­ti­ple forces at play in shap­ing the fu­ture, it may un­fold in dif­fer­ent ways. Ac­cept that you and your or­gan­i­sa­tion face alternative fu­tures, and fo­cus your ef­forts on pre­par­ing the ca­pa­bil­i­ties nec­es­sary to deal with th­ese.

Ac­cept that a monar­chy will not fo­ment its own over­throw: Be­cause se­nior ex­ec­u­tives have a stake in the sta­tus quo, it is dif­fi­cult for them to en­vis­age alternative fu­tures for the or­gan­i­sa­tion. In­stead, use younger, smart peo­ple who are close to the cus­tomers and are not in­vested in the way things are. We call them “pathfind­ers.”

Use your strate­gic in­tu­ition4: Don’t rush into mak­ing a de­ci­sion when faced with an un­fa­mil­iar sit­u­a­tion. Re­flect on the prob­lem and the in­sight will emerge in time. Learn to trust your in­tu­ition – af­ter all, it is the sum to­tal of all you have learned and ex­pe­ri­enced over the years!

Your or­gan­i­sa­tion’s pur­pose and strat­egy

This is the way you de­fine the busi­ness of your or­gan­i­sa­tion and chart the way ahead:

Al­ways be­gin with “why”: The start­ing point is strat­egy is to be clear about the or­gan­i­sa­tion’s pur­pose – the “why.” We spend much of our time talk­ing about the “what” and the “how,” but it’s the “why” that en­gages peo­ple – both cus­tomers and staff5. And the pur­pose is not prof­itabil­ity – most peo­ple don’t get out of bed to cre­ate share­holder re­turns!

Re­mem­ber that one size does not fit all: Healthy or­gan­i­sa­tions do NOT have a sin­gle cul­ture – rather, they are made up of mul­ti­ple, cross-cut­ting cul­tures. A sin­gle cul­ture is not only dif­fi­cult to achieve – it may be quite counter-pro­duc­tive!

Fo­cus on strat­egy as “love”: Most strat­egy uses the metaphor of war – i.e. we want to beat the com­pe­ti­tion, we want to win this bat­tle for mar­ket share. But this gen­er­ally fo­cuses more at­ten­tion on your com­peti­tors that your cus­tomers. And the bench­mark­ing that re­sults, usu­ally pro­duces same­ness, in­stead of dif­fer­ence. Fo­cus on adding value to your cus­tomers as the key thrust of your strat­egy6 – this is more likely to spawn in­no­va­tion.

Seg­ment your cus­tomers by their be­hav­iour7: All too of­ten we seg­ment our cus­tomers and mar­kets based on de­mo­graph­ics – where they are and how big they are etc. But this doesn’t re­veal much about the way they want to be served or the prob­lems they need solved. By us­ing be­havioural seg­men­ta­tion, we can seg­ment the mar­ket by how we need to add value to the dif­fer­ent seg­ments. And that fo­cuses our in­no­va­tive en­ergy!

De­velop a clear value propo­si­tion for each cus­tomer seg­ment: Be­cause we have seg­mented our cus­tomers ac­cord­ing to their real needs or prob­lems, we can now de­velop a value propo­si­tion (i.e. how are we go­ing to add value to solve their prob­lems) for each seg­ment. And re­mem­ber, a value propo­si­tion talks to the way we solve their prob­lem – not the prod­uct we plant to sell them!

Use strat­egy as well as plan­ning: Plan­ning is a se­ries of ob­jec­tives and ini­tia­tives de­signed to achieve an over­all goal. Strat­egy, on the other hand, is about po­si­tion­ing the or­gan­i­sa­tion for the fu­ture – it en­com­passes learn­ing and adap­ta­tion. Strat­egy avoids set­ting up ex­plicit ob­jec­tives at the be­gin­ning of the process, be­cause – by def­i­ni­tion – we don’t know what we will learn along the way. Plan­ning can in­hibit in­no­va­tion. Strat­egy is best for sit­u­a­tions of un­cer­tainty and change – it will al­low the learn­ing and adap­ta­tion that is the lifeblood of cre­ativ­ity and in­no­va­tion. So, use plan­ning for struc­tured projects in sta­ble con­di­tions. Use strat­egy where you want cre­ativ­ity and in­no­va­tion to flour­ish!

Your or­gan­i­sa­tion’s de­sign and cul­ture

This is the way you de­sign your or­gan­i­sa­tion to de­liver its busi­ness – and the cul­ture you seek to cre­ate:

Seek to en­gage your peo­ple rather than sim­ply align­ing them: En­gag­ing your peo­ple means that you mo­bilise them, ex­ploit their di­ver­sity and draw out their nat­u­ral cre­ativ­ity. You en­gage peo­ple by fo­cus­ing re­lent­lessly on clar­ity of pur­pose – the “why” of your or­gan­i­sa­tion. En­cour­age them to un­der­stand that they are both the prob­lem and the so­lu­tion – they need to take re­spon­si­bil­ity them­selves for solv­ing prob­lems. And en­cour­age them to ex­per­i­ment and learn – but re­mem­ber to pro­vide some air-cover for them if mis­takes are made!

Re­mem­ber that one size does not fit all: Healthy or­gan­i­sa­tions do NOT have a sin­gle cul­ture – rather, they are made up of mul­ti­ple, cross-cut­ting cul­tures. A sin­gle cul­ture is not only dif­fi­cult to achieve – it may be quite counter-pro­duc­tive!

View your or­gan­i­sa­tion as a port­fo­lio: Each or­gan­i­sa­tion is a port­fo­lio of ac­tiv­i­ties, strate­gies and cul­tures. Be­cause of this, the dif­fer­ent parts (busi­ness units) of the or­gan­i­sa­tion need to be man­aged dif­fer­ently. Dif­fer­ent ex­pec­ta­tions of per­for­mance, dif­fer­ent KPIs and dif­fer­ent styles are all ev­i­dence of a mod­ern or­gan­i­sa­tion fac­ing a range of dif­fer­ence chal­lenges.

Align cul­tures, strate­gies and mar­kets: Each part of your or­gan­i­sa­tion’s port­fo­lio

should have in­ter­nal align­ment – i.e. the cul­ture of each busi­ness unit should match the strat­egy/value propo­si­tion be­ing of­fered to its re­spec­tive mar­ket. So, if you face a range of dif­fer­ent mar­ket seg­ments, the strat­egy and cul­ture of the busi­ness unit that ad­dresses each of th­ese mar­kets will be dif­fer­ent. Again, the con­cept of a port­fo­lio.

Boost the Knowl­edge Quo­tient in your or­gan­i­sa­tion: En­cour­age the cre­ation, use and flow of new knowl­edge through the or­gan­i­sa­tion. Treat it like a mar­ket – i.e. en­cour­age peo­ple to gen­er­ate new knowl­edge through their ex­per­i­men­ta­tion and learn­ing; boost the use of new knowl­edge by a fo­cus on con­tin­u­ous im­prove­ment; and fa­cil­i­tate the ex­change of this knowl­edge by mak­ing the ex­change valu­able. Re­ward the cre­ators and users of new knowl­edge.

Your or­gan­i­sa­tion’s prac­tices and pro­cesses

Th­ese are the or­gan­i­sa­tional guide­lines you put into place to fa­cil­i­tate cre­ativ­ity and in­no­va­tion:

Recog­nise the dif­fer­ent hori­zons in­volved in in­no­va­tion: It is use­ful to dis­tin­guish be­tween in­no­va­tion that re­fines and im­proves ex­ist­ing pro­cesses and prod­ucts, and that which in­tro­duces more rad­i­cal change by cre­at­ing a com­pletely new process or of­fer­ing to the mar­ket.

In­tro­duce con­tin­u­ous im­prove­ment prac­tice into all parts of the or­gan­i­sa­tion: Each unit in the or­gan­i­sa­tion should be tasked with mak­ing con­tin­u­ous im­prove­ments to what they do and how they do it. This is best man­aged by mak­ing it a re­quire­ment of their on­go­ing busi­ness plan­ning – i.e. they have to demon­strate some change and im­prove­ment dur­ing each cy­cle of the plan.

Dis­tin­guish be­tween rebels and mav­er­icks: Both rebels and mav­er­icks will chal­lenge the way your or­gan­i­sa­tion goes about it busi­ness. The dif­fer­ence is that mav­er­icks are aligned with the over­all pur­pose and vi­sion for the or­gan­i­sa­tion, while the rebels of­ten have their own (out­side) agenda. You will need to weed out the rebels and en­cour­age the mav­er­icks – most or­gan­i­sa­tions have only a few mav­er­icks, and they are valu­able for fa­cil­i­tat­ing real in­no­va­tion. Nur­ture the in­no­va­tion and al­ways pro­vide air-cover: Cre­ativ­ity and in­no­va­tion in­volve try­ing news ways of do­ing things – and they al­most al­ways carry the risk of fail­ure. This is the na­ture of learn­ing and you will need to pro­vide some “per­mis­sion” for this to oc­cur. But don’t be lais­sez-faire – you can use well es­tab­lished pro­cesses such as stage-gat­ing to man­age the risk and give you good vis­i­bil­ity of the in­no­va­tion process.

Have you put in place the prac­tices and pro­cesses that le­git­imise the mav­er­ick be­hav­iour in your or­gan­i­sa­tion? Are you pro­vid­ing their air-cover to pro­tect those who are le­git­i­mately en­gage in seek­ing cre­ative and in­no­va­tive ways of do­ing things? i

Dr Norman Chorn founded the Cen­tre for Strat­egy Devel­op­ment to fo­cus on strat­egy and or­gan­i­sa­tion devel­op­ment. He a strat­egy and or­gan­i­sa­tion devel­op­ment prac­ti­tioner with more than 20 years ex­pe­ri­ence in Aus­tralia, UK, New Zealand and South Africa. His work has three pri­mary ar­eas of fo­cus: cre­at­ing strat­egy for com­pet­i­tive ad­van­tage, de­vel­op­ing ef­fec­tive or­ga­ni­za­tions and struc­tures, and de­vel­op­ing lead­er­ship skills with par­tic­u­lar ref­er­ence to strate­gic lead­er­ship. Cen­tre for Strat­egy Devel­op­ment web­site: www.centstrat.com.

Key ques­tions to ask your­self as you drive in­no­va­tion through your or­gan­i­sa­tion

So, what are the key is­sues to con­sider as you drive in­no­va­tion through your or­gan­i­sa­tion?

1. Are you try­ing to do it all your­self? Are you seek­ing to be the com­plete leader who di­rectly cre­ates and in­no­vates? Re­mem­ber that you only need to fa­cil­i­tate the in­no­va­tion by de­vel­op­ing the ap­pro­pri­ate cre­ative ecol­ogy in your or­gan­i­sa­tion.

2. Are you fun­da­men­tally con­vinced that in­no­va­tion is a key to your or­gan­i­sa­tion’s com­pet­i­tive­ness? If you don’t be­lieve that you can in­flu­ence your own fu­ture, you are un­likely to pro­mote real in­no­va­tion in your or­gan­i­sa­tion.

3. Are you really clear about the pur­pose of your or­gan­i­sa­tion? Can you pro­vide a com­pelling “why” to de­scribe the core strat­egy of your or­gan­i­sa­tion? This clar­ity of pur­pose is what di­rects and spawns the cre­ative ef­fort in the or­gan­i­sa­tion.

4. Have you em­braced and al­lowed the no­tion of di­ver­sity to flour­ish in your or­gan­i­sa­tion? The di­ver­sity in the gene pool of your or­gan­i­sa­tion is di­rectly re­lated to its abil­ity to adapt to chang­ing con­di­tions through cre­ativ­ity and in­no­va­tion.

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