The Invisible Advantage – Soren Kaplan
Culture is the collection of unwritten rules, norms, and values that influence people’s behavior. When it comes to innovation, especially disruptive innovation, an organization’s culture can be either the rocket fuel or death knell of its ability to grow and thrive.
A culture of innovation is an environment that promotes freethinking, an entrepreneurial spirit, and sustainable value creation at all levels and across all functions of an organization.
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Competitive Advantage Is Temporary
Products, services, and even business models become commodities over time. If organizations do not continually invent and reinvent their competitive advantage, they risk being disrupted into obsolescence.
Culture is the only sustainable competitive advantage. It’s the invisible secret sauce that drives employee engagement, innovation, business growth, and continuous reinvention.
Unlocking The Right Kind of Innovation Culture
Every organization must unlock its innovation culture in its own unique way.
What works for Google and Apple might actually kill innovation in other companies. Effective best practices must be artfully adapted to the unique personality of your organization.
For many companies, coming up with ideas often isn’t the problem. The challenge is turning ideas into something real that delivers an impact. This is where metrics can make the difference between no ideas, lots of ideas that go nowhere, and real innovatio
Measure What’s Meaningful
Metrics give us direction. Leaders set goals and measure progress; often, this focuses on easily measured metrics like speed, efficiency, accuracy, or profits.
Innovative behaviors are difficult to quantify, and most companies don’t have innovation metrics. What we decide to measure determines what we get. If we don’t measure innovation, we won’t get it.
To create an innovative culture, we need to promote and measure inventive behaviors in leadership, employees, and customers. Establishing these metrics is a process unique to each company; there are no standards.
Define the Outputs
Measuring profitability and the support of your customers is important, but it doesn’t tell you what specific behaviors will lead to more profits and more satisfied clients in the future. Your metrics need to define the end goal and encourage innovative practices.
Innovation metrics that define the end goal may include the number of clients who trade up to next-generation products or services, the business generated in new customer segments, or revenue from new markets. Metrics like these define goals, identify opportunities and promote innovation.
Define the Inputs
Once you have defined the end goal, you need to give people specific goals to achieve our larger goals. Every employee should be aware of the importance they play in achieving the company’s goals and how they share responsibility for innovation.
Communicate trust and acceptance of new ideas. Policy and business practices should align with words that encourage trust, learning, creativity, and innovation.
On a leadership level, you should set goals that support innovation by focusing on the future instead of on daily operations.
Measuring innovation also involves setting specific goals that will help fuel the process—the things you do internally to help you hit your targets. When you give people targets, they take on responsibility for hitting them. And in the process, they produce experiences and success stories that then reinforce more experiences. The goal is to jump-start this kind of positive feedback loop
The Three Types of Innovation
Apply to define its definition of innovation and allocate its time and resources using a portfolio approach:
- 70% Incremental innovation: small changes in processes, products, services, strategies, etc.
- 20% Sustaining innovation: major advances in the core business for existing customers and markets.
- 10% Disruptive innovation: breakthroughs that change the game (new biz models, products, services).
Every Function Should Have Its Own Definition of Innovation
Innovation intent statements that can do just that include:
Finance: To deliver financial insight that drives strategic business decisions, new market opportunities, and the innovation process.
HR: To recruit and grow top talent that shapes the future of our company and transforms the industry.
IT: To provide tools and services that deliver insight for employees that accelerate innovation and optimize the customer experience.
How Innovation Intent Shapes Culture
Without the focus an innovation intent provides, people tend to think innovation belongs to someone else (such as Research and Development) and assume it isn’t part of their job.
The lack of a thoughtfully defined innovation intent also makes it difficult for leaders to create specific programs, processes, metrics, and rewards that shape values and behaviour, because specific expectations and measures of success usually aren’t clear beyond the call for “more ideas.”