If established firms want to be truly innovative they need to be able to balance the twin engines of execution and innovation and create a culture where everyone focuses on these two imperatives simultaneously. This involves breaking down silos and creating psychological safety for employees to suggest and develop new ideas.
These are among the observations of INSEAD management professor Ben Bensaou in his new book Built to Innovate. Bensaou, whose work focuses on how to build innovative capabilities in organisations, says that there is latent innovative capability in all firms that managers need to unlock and the often-maligned layer of middle managers in particular should be rewarded for doing it.
“People are generally interested in innovating. The problem is that often they don’t think their ideas are welcome or, worse, they are afraid to bring them forward. Organisations need to give their people permission to innovate and ensure they are motivated to do so,” he tells The Irish Times.
In execution mode, he explains, bosses can tell whether their employees are succeeding against established key metrics. When people are operating in the innovation space that certainty no longer exists so playing safe is often an attractive option. A useful tactic to combat this that he learned from one of his graduates, who had deployed it at his workplace in Japan, is the simple act of saying “thank you” to anyone coming forward with innovative ideas.
In a book that matches business model concepts with detailed case studies, Bensaou presents interesting examples of how leading organisations encourage more innovative practices and the tangible results that consequently flow.
At the multinational firm W.L Gore, best known for developing a range of breathable fabrics, early-stage ideas are given the chance to germinate freely without being subject to economic or other tests of viability. The most promising ideas are then driven through an innovation funnel.
Three key questions are addressed under the headings of real, win and worth. Does this represent a real business opportunity? If we follow his into the marketplace do we have the potential to win in that space? Are the potential financial rewards worth investing the company’s time, money and other resources?
One newcomer at Gore who was unable to figure out what she should do kept asking colleagues “who’s my boss?” before someone finally told her to stop using the “b” word. She eventually figured out that she was expected to define her own work and join a team of colleagues who were engaged in projects she found compelling. Ultimately she became a high performing team member.
“It took a while to understand and accept that she was supposed to innovate as well as execute. That’s understandable since the dual mindset required is not commonly understood or encouraged in most businesses which helps to explain why so many businesses struggle to innovate,” he says.
Aligning customer needs with corporate goals is the key. Bensaou suggests a Value Test Framework. This asks three questions. Will this idea increase customers willingness to pay for a product or service? Will this lower the cost of producing the goods or delivering the service? And, finally, is this a good idea that deserves further exploration?
“Simply asking these questions consistently whenever an innovative idea is presented will have an impact on the way your team members think. Soon they will be asking themselves the same questions almost automatically, thus training themselves to become more highly skilled evaluators of an innovating idea’s potential.”
So called “dabble time” has been famously institutionalised in innovative firms such as Google, where employees are given time to work on their own projects. Bensaou says the guiding principles here are freedom, fairness, commitment and waterline, the last referring to the principle that no innovation plans should jeopardise the entire enterprise.
Employees should feel they have permission to experiment but two other ingredients are vital, he notes. They need to have training and tools to know how to innovative purposefully and they also need to feel a high level of motivation given the challenges associated with developing new ideas.
Structure is important but serendipity has a role too.
Consider the story of Boost, a ground-breaking foam used in the soles of high-performance running shoes. The key element in the foam, thermoplastic polyurethan (TPU for short), was long used by the German conglomerate BASF in a variety of applications. One day a scientist called Frank Prissok, working in one of the firm’s labs, noticed in that by applying pressure and heat the material could be expanded into a foam filled with tiny air pockets.
It was an interesting discovery with no obvious application but he solicited input from colleagues and circulated videos. A colleague who had been working on regular shoe soles saw a potential application and reached out to executives he knew at Adidas.
A co-creation process began between the two firms to exploit the idea, leading to the launch of the Boost brand of running shoes in 2013. It caused an immediate sensation in the world of competitive running.
Within a year a new world record for the marathon of 2:02:57 was set by Kenyan Dennis Kimetto using a pair of Adidas shoes fitted with the Boost soles.
Boost is also an example of innovative collaboration that takes place beyond the boundaries of the company, an increasingly common practice where cross-functional teams de-camp to customers to gain deep insights into their needs.
But sometimes innovative insights can be captured simply by listening to people inside the organisation, especially those working in customer-serving roles. The process needs to be encouraged and ideally formalised.
Take Starwood Hotels (now part of the Marriott group). It created a cadre of so-called ambassadors to provide a channel for turning customer needs and preferences into innovative thinking. Through repeated contact the ambassadors got to know a variety of customers intimately, from globe-trotting business travellers, families with small children to young budget backpackers. In fortnightly meetings ambassadors reported their observations and suggested innovative ideas, many of which were implemented.
A culture where innovation is encouraged pays dividends. Domino’s Pizza provides another good example. When Covid-19 necessitated contactless home deliveries one frontline innovator, knowing customers dislike finding their pizza lying on the ground, fashioned a cardboard pizza pedestal to hold the box containing the hot pizza off the ground. Within weeks pizza pedestals were widely in use throughout the chain.
BENSAOU’S THREE-STEP INNOVATION PROCESS
Creation – the process of continuously generating new ideas through an innovation engine. This includes new or improved products or services; ideas for identifying and servicing new customers or markets; or ideas for making processes more efficient, faster or safer. When an organisation builds an innovation engine the process of creating happens in every department of the company
Integration – the process where the dispersed innovation capabilities are brought together – a connecting of the dots. This connects people in the organisation in a social network which may also extend beyond the boundaries of the organisation to include customers, suppliers, academic partners and start-ups.
Reframing – To prepare for the future every organisation needs to question its existing strategies and accepted ideas even when implementing them. Organisations should pause and benchmark innovative ideas against current norms as this opens up new and potentially better options.