No executive team wants to experience its own ‘Kodak moment’, whereby a tried and trusted business model is rendered obsolete. That’s why incremental innovation, where a company invests in improving products and services, won’t be enough to protect its long-term market position. The real alchemy lies in creating a culture which provides a continual stream of fresh ideas that have the potential to transform an entire industry.
“Breakthrough innovation is about changing the paradigm.” says Colin Hatfield, Founder of communications specialist Visible Leaders. “It’s about leaders coming up with new models, looking to new markets, breaking through with new consumers and actually doing things in a very disruptive and different way.”
Once corporates reach a certain size, the focus on margins and process can extinguish that entrepreneurial spark which is crucial for genuine invention. So, how can large businesses recapture their innovation mojo?
Bal Samra, BBC Commercial Director and Managing Director of BBC Television, has led innovative projects like BBC Online, Radio 5 Live, the iPlayer, and BBC Store, an online commercial service for audiences to buy and keep BBC programmes which is due to launch next year. “It’s important to be open about change, what it means for the organisation, how to think about it and how people can get involved,” he says.
“For example, rather than convincing everyone that moving forward with BBC Store isn’t going to be too disruptive, you almost do the reverse – you openly communicate as a leader that it probably will disrupt the conventional model and what we really need to think about is how we manage that. Too often as leaders we don’t have an open dialogue with our teams and our organisation about what disruptive change actually means... Equally, we don't do enough to talk about what the opportunities are for people in terms of developing new skills and new experiences.”
Steve Muylle, Professor and Partner at Vlerick Business School and a Criticaleye Thought Leader, provides the example of BNP Paribas, which launched its mobile retail bank venture, Hello Bank, in 2013: “[Its launch] was communicated from the group level at BNP Paribas by the Chief Operating Officer, then rolled out at country level by each of the regional CEOs.
“The messaging was important because the leadership said they believe in the potential of both models... [While] they believe the disruptive business, mobile, is the source of future growth... they are still innovating in the core model, even though it is more incremental innovation... [Leaders need to consider how] solutions in one model reinforce the other, without undermining it or developing a conflicting situation.”
Deciding where to house your innovation team often presents a dilemma. Mark Parsons, Chief Customer Officer for the UK and Ireland at DHL Supply Chain, says: “Skunkworks, where you bring all the innovation together in a silo... are appropriate in certain circumstances in which you need to get around something that will impact the overall business substantively.
“How you get that to market is important but you need to work through what the majority of the implications are for the business before you actually launch it... You need that protection and also the ability to focus your attention on trying to develop the end product.”
There’s a risk that, with a siloed approach, you lose sight of what customers actually want. Neil Stephens, Managing Director for the UK and Ireland at food company Nestlé Professional, comments: “I get slightly perturbed when I hear [leaders] talk about innovation in isolation because it's not an end in its own right; it's a means to an end. For me, the end is always in creating disruptive services or solutions that customers are delighted by...
“The narrative I always put around the need for breakthrough innovation is that the customer is constantly changing and they are always eager to find new ways to enrich their lives... [That’s why] we are trying to bring our customers into the innovation loop as early as possible so that, by the time we go to market, we already have customers who are attuned to the opportunities and who have been part of the process from the beginning.”
For Bal, creating teams that work across business divisions helps to encourage an innovative mindset: “Creating smaller teams that work in collaboration is the way forward and co-location is a big part of that. Innovation is actually delivered through that serendipity, where you have people bouncing off each other’s ideas; those connections are really what you are trying to promote.”
Leaders will often talk about innovative companies building a culture where people are allowed to fail. Ideas will be piloted, tested and experimentation actively encouraged, although of course results will be expected at certain intervals. Aimie Chapple, Chief Innovation Officer in the UK and Ireland for Accenture, says: “It is important to be transparent and to expect both great successes… and great failures, where we have more to learn or to try something new.”
“[It’s about making it acceptable for employees] to risk doing something amazing. The barrier for getting it wrong... [can’t be] so high that it stifles the very people who may be able to see the best new ideas around them.”
Koray Gul, Vice President for General Merchandise, Hardlines, George, and GM Sourcing and Quality at supermarket chain Asda, comments: “The first rule of innovation is allowing teams to make mistakes. This is always hard in what is a very competitive business environment, but if people play safe there is absolutely no room for fresh thinking.
“Innovation takes courage and as leaders we need to support it. Trial and error is an essential part of the innovation process and, rather than calling the trials ‘failures’, we should call them ‘learning opportunities’ and share [what comes] out of them.”
Having brilliant people will certainly be important, but a heavy responsibility falls on the senior executive team to communicate why disruptive innovation is necessary. Mark says: “Leadership makes all the difference because when a leader says, ‘I really want to get behind this idea’ and ‘this is important to me’, it focuses attention.
“They’ve got to be selective because they can’t burn up too much of their political capital, so it’s about choosing which ideas to back... then visibly promoting them.”
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