"Business innovation" doesn't have to be an oxymoron. As managers, we can easily consume all of our organisation's resources on operational or tactical issues, with the budgets typically based on that assumption. However, real improvement and long-term success depend on creative solutions to both customer and internal opportunities. Our job as leaders is to create an environment that properly balances daily needs with new opportunities.
It is a difficult balancing act. Managing an existing business requires different strategies, processes, structures and skills than nourishing a new opportunity.
Whether managing a company or an organisation, the leader needs to outline the innovation strategy. As firms mature, the less likely it is that innovative ideas will develop through the normal course of business. Resources are applied to extending the current business model - to the detriment of innovative ideas.
Innovation is a process and should be managed in a systematic way. One successful approach is to organise the innovation portfolio as a pyramid. At the top of the pyramid are the few, potentially business- or market-changing ideas. In the middle, we have projects that are being explored and developed. At the base, we have a larger pool of ideas that are still in their infancy or will have smaller impact on the business.
The predominance of the investment occurs at the top of the pyramid and resources are still allocated to the base as well. These actions will assist in generating a larger number of incremental innovations that will lead to competitive advantage.
The business processes used to manage the innovation portfolio must also be different.
Rather than focusing on performance to budget, the reviews need to be tailored around idea exploration and project milestones.
All too often, new projects are managed against the traditional operational metrics. That approach will stop new ideas before they can get started. New ideas, by definition, have a higher level or risk. Many will fail or the project will move in a different direction than originally intended. The leadership and business processes must support that ambiguity.
The linkage between the innovation project and the core business must be maintained. The focus should be on relationship building and not common process controls. The two must view each other as equally important to the company's success. The rewards and recognition should be tailored around that philosophy. If the core business is competing with the innovation project, cross-functional opportunities will be missed. And, very likely, the core business will do everything in its power to halt the project.
Innovation projects require leaders with strong interpersonal skills to communicate effectively, both within the team and throughout the company. To bring an innovative idea from concept to implementation requires time and commitment. Within the team, it's important to communicate effectively with each other. Developing those relationships takes time. Therefore, preferably the team should be kept together through the development process. Outside the team, the leader must connect with the core business, leveraging cross-functional opportunities and garnering support.
Jeffrey Nygaard is vice president and country manager for Seagate Technology. Follow his articles every fourth Monday of the month.
