Establishing the Foundations for a Balanced Innovation Portfolio

By: Colin Nelson

Corporate innovation programs can’t fulfill their potential without the right foundations in place. Many organizations are taking their programs across the enterprise. In this article we consider three key foundations and how they can be boosted to improve corporate innovation: the linkage between every day innovation and corporate targets, the levels of openness, trust and acceptance of diverse opinions.

No matter where you are on your innovation journey, working from solid foundations is crucial to the sustainable and effective growth of your innovation activities.

Many organizations are systematizing significant parts of their innovation programs. There’s a trend to increase the number of people that can contribute to innovation dramatically and involving those people in a broader range of innovation activities. Often this is in reaction to one or both of the following factors:

• The strategic portfolio is too small to match growth ambitions or to adapt to changes in market conditions.
• The expected return on investment (ROI) of the existing portfolio is currently realized primarily through long term projects, yet business value is needed now.

These challenges lead to a widening of the innovation net:

• Involving more people to find different sources of idea, to increase the size of the portfolio and improve its diversity
• Ensure there’s a channel for radical ideas that may transform or disrupt the business
• Add a tactical focus for general business improvement and quicker wins

What most are looking for is balance: i.e. having the right amount of projects and concepts to deliver:

• Small improvements to maintain momentum, creating near-term returns, helping to fund more strategic innovation investments
• Regular strategic innovations to help grow the business
• Break-through innovations that could provide a step change in growth or disrupt the market

The desire for balance isn’t new, it’s referred to in the HBR article ‘The Ambidextrous Organization’ back in 2004. Perhaps part of the answer lies within creating an effective way to widen the innovation net.

Before you systemize and expand your program, what are the key areas of consideration before you head out on this path? How does your existing program, culture and company structure affect the path to success?

To make a step towards a more balanced portfolio, first you need to ensure your foundations are solid and offer a firm base from which to build.  In our experience, we see the following as crucial building blocks in developing a successful and sustainable program:

1. Business focus – A clear linkage between core daily innovation initiatives and long term corporate targets
2. Openness – A culture that’s happy to share, collaborate and trusts the innovation process
3. Inclusiveness – A program that’s inclusive of a broad range of opinions, skill sets and experience at every level and fringe of your organization

In this article, I’ll discuss why these foundations are important and help guide readers towards simple initiatives that help establish these foundations.

What’s driving a more systemized approach to building a balanced portfolio?

Programs usually expand or change approach in reaction to changes in circumstances or objectives.  Perhaps you’re considering whether social technologies can offer a competitive advantage. In addition, whether a more systemized approach where more people can contribute and collaborate could improve the value of their portfolio.

For example, you can address:

• An effective way to manage smaller innovations that can be implemented quickly and show financial returns far quicker than longer term strategic initiatives.
• An active path to scout and manage breakthroughs that may have previously failed to get themselves established within the company
• Increasing the diversity of those involved in innovation, helping to build a more robust strategic innovation portfolio

Software can be incredibly helpful when it comes to bringing more people into the process, ensuring content is managed effectively, and tracking it through appropriate steps depending on the type of innovation.

Common challenges

Organization wide innovation (and innovation from beyond the organization) is very different to local, team or department based innovation. As soon as the focus switches to engaging thousands or even tens of thousands there are a range of additional considerations:

For example:

• Ensuring the process is visible to all is crucial to keeping people engaged
• It’s much harder to know what may motivate those furthest from you to participate
• More local guidance may be required as different divisions work in different ways
• You may be less aware of how a division far from you is structured and the types of expertise it includes.

It can be hard to know whether attempts to broaden your insights will be received with cynicism or apathy.  Building a culture that’s engaged and offers high-value contributions often takes time and requires careful steps and an adaptive approach.

The foundations

Business focused – the first building block

The first crucial building block is to have a solid business focus. There should be a clear linkage between daily innovation initiatives and long term corporate objectives.

In my experience, online corporate projects have to be closely associated with existing business challenges or the longer term ambitions of the company to generate long term, sustainable interest.

Middle management will always encourage a focus on things that deliver business value; therefore the linkage between innovation and corporate objectives needs to be apparent to all.  Senior and middle management will continue to back employees spending time on activities away from their core day job if there are wider benefits that everyone can see and believe in.

Practical considerations:

Organizations may have a range of objectives, it’s crucial to have absolute clarity of what they are and the timeframes you’re working towards.  Three common initiatives are listed below which often form part of the balanced portfolio you’re pursuing.

Often there’s an aim to boost tactical innovations, ideas that can be implemented quickly so that you can show the value of the program as a whole whilst strategic innovations take their natural time to mature.  Tactical innovation campaigns bring in a broader range of insights from people new to corporate innovation.  They may not consider themselves innovators, but if they understand the challenge they can therefore contribute.

Recommendations for to improve this foundation:

• Consider smaller innovation activities with a very tight focus that look for incremental improvements
• Implement quickly and communicate success and progress
• Run idea campaigns on a wide variety of different challenges and opportunities to see which find most traction
• Ensure there’s senior sponsor support to endorse the program.

This type of campaign provides evidence points for the process as a whole; success stories will materialize faster than through core product innovation. They’re practical and often appeal to a wider audience that may struggle to engage with more strategic topics initially.

A common need is to improve quality and quantity within existing strategic portfolio.  By tapping into a wider group of expertise, you can boost your core innovation program by increasing the diversity of insights and ideas.

Recommendations for early stage strategic innovation programs:

• Be sponsor led. High-level, high-profile sponsors will help bring in the right people and key non-experts.
• Consider the audience for every challenge carefully; try to look at touch-points between divisions or activities where non-experts are likely to have a view on what you do.

Identifying and then effectively managing those ideas categorized as radical, or with the potential to disrupt the market is much easier with a systemized approach where perhaps you have clear metrics for ideas that should be classified as such (for example, market impact or revenue potential). You can also ensure those ideas that may have previously been dismissed are processed effectively.

Recommendations for early stage radical innovation programs:

• Look to establish a process to track and monitor ideas that fit into this category which are generated from activities with other ambitions.
• Radical innovations often need to bypass the conventional methods of assessment and treated differently by groups that look beyond what the organization can achieve now. Ensure the rigor doesn’t dismiss ideas that look and feel different to the norm.
• Express requests for ideas that fit into this category can fall flat without having the correct foundations in place, so be careful running idea campaigns in this area too early.

Openness – the second building block

It’s important to consider your company culture when looking to harness ideas and innovation from the wider organization. Employees need to be happy to share, collaborate and have trust in the innovation process.

Most organizations feel there are at least some areas of their business that lack openness and trust. Building this foundation may take time, especially in complex large companies.  Given diversity of opinion has a crucial role in innovation, you have to ensure that those with the diverse opinions trust the innovation process, are happy to share their ideas and then collaborate with others.

Most companies will also have pockets of employee groups that will readily participate in a new initiative, harnessing this enthusiasm will help the initial growth of the program. You can show some success, advertise this to others, and then repeat to a larger group of engaged employees as more and more see the benefits.

Practical considerations:

Engineers and accountants will collaborate and innovate differently.  Traditional innovation professionals see things differently to those used to delivering projects.  It’d be easy to make assumptions about which groups will participate first and how, but the only way to really tell who’s engaged and which communities will require more support is to watch how people respond carefully.

It may be tempting to try and prove the principle of collaborative innovation on your strategic aims, many organizations do, and successfully.  However, if your culture is reticent, skeptical of new initiatives, closed and lacking trust, it’s unlikely a ‘big bang’ approach will work.  Instead, it’s better to build confidence in the process and communicate success.  This will help establish a set of behaviors you can leverage later against the larger challenges and opportunities for your corporation.

Recommendations to improve this foundation:

• Look to understand your culture on lower risk activities, consider running cross divisional idea campaigns between groups that may struggle to collaborate normally on tactical challenges.
• Look closely at which groups participate most readily at first then adjust your approach.

Ask any groups (countries or skill sets) that don’t participate – why?  You may learn a lot from those conversations, whether people feel excluded from the corporation, perhaps they don’t see it as their role to innovate. No matter what the answer, it’ll help you learn how to get people involved.

Try a range of different approaches to see which groups respond to which approach:

• Consider innovation challenges that appeal to large groups to see who engages.
• Perhaps run some more technical challenge in parallel to encourage participants from one activity to investigate the other.

Once you’ve witnessed who participates and how, which groups aren’t responding to the question and why, you’ll have a much better idea as to how to begin to build a culture that shares and trusts each other.

Inclusiveness – the third building block

Ensuring the program is as inclusive as possible will help ensure that the best expertise and knowledge is shared when necessary and people do not feel excluded due to seniority, language or skill set.

History is littered with examples of perceived non-experts disrupting the market (Easyjet, Dyson, 99Designs.com etc.) as they look at the challenge from a different perspective, ensuring that those non-experts have a voice and continue to speak up time and time again can only help.  You also need to accept that non-experts will provide you with things you may not want to see, initiatives already in place, ideas previously dismissed, and solutions that simply aren’t practical.  This content needs to be managed without discouraging the audience as a whole.

Practical considerations:

All organizations are structured differently, some are centralized, and others have distributed accountabilities.  Some are the result of mergers and acquisitions, yet others have grown organically.  These structures may feel constraining when it comes to organization wide innovation, yet they also present us with significant opportunities.

Consider the extra expertise that’s absorbed after a merger; think about the opportunities for sharing best practices between divisions with different management structures.  Alternative company structures certainly present practical challenges, but if you can tap into diversity of knowledge and experience, you should expect a wider range of innovations.

Recommendations for early stage programs:

• Ensure you have the correct sponsorship that’s visible company wide.  Tailor your communications messages for divisions that are very different in nature
• Focus on tactical innovation campaigns first such as common problem resolution, best practice sharing and risk reduction.  These activities have a relatively common language and the outcomes could benefit all divisions.
• Consider geographical diversity. Often there is no easy way to bring together people in different time zones or countries unless it’s done so online. Also consider groups that work within the same supply chain but for within different locations.
• Try to find innovation coaches, moderators or supporters within divisions you know less well; they can help adjust the message, get communications to the right people and adapt the program to local considerations.

Instilling the right beliefs

Everything discussed has been focused on specific types of innovation activity to help you understand your culture, fine-tune your approach and most importantly build those foundations within your organization.

It’s helpful to consider what you want the audience to feel at the most basic level from the outset, so you can adjust your messages accordingly.

The audience should:

• Believe in the process, so they take part in a constructive way
• Connect with those that have innovation challenges and want to help
• Be happy to share their ideas with others
• Understand that collaborating is valued and a crucial part in innovation
• Know that the program has corporate support and that their participation is welcomed by all
• Feel that this is a successful process, something that they want to be part of.

Your communications and messages can reinforce these principles.  If your audience has this understanding of your program, you’re a long way towards having the foundations in place.

Guidelines for readers

Developing each foundation may take time and persistence.  You may find that some are well developed yet others require close attention.  Innovation activities such as idea campaigns can help improve more than one foundation at once. For example, a campaign looking for best practices in one division that can be replicated in another can:

• Deliver business value
• Connect disparate divisions that wouldn’t normally collaborate
• Create new views on the best way to do things

Consider combing some of the activities recommended, to build two or more foundations at once:

No matter the maturity level of your program, it’s good to have some activities that deliver business value quickly; this will increase confidence and belief in your program.

Take a close look at who responds to your innovation challenges and how. You can learn a lot about your culture by looking at how people react to business focused campaigns.  You should always be prepared to adapt and adjust to increase inclusivity and ensure participants stay focused on the need.

Effective communications is a key tool to build and maintain momentum. Advertise your success and progress; people like to be part of activities that make a difference.

By Colin Nelson