It was June 1st, my first day in my new role as Head of Innovation for a large B2B company. Before I joined the organisation, the role did not exist, so I had a beautiful, (quite) blank piece of paper to create the framework, the mechanisms, the set up and the teams to meet the company’s ambition to be recognised as a leader in innovation in the industry. After having spent more than 16 years in B2C, it was exciting to start a new adventure and work where your customers are other companies rather than individual shoppers and consumers.
My first 90 days were all about getting quickly up to speed on the main elements of the business, while in parallel drafting the plan.
The meeting with the CEO to share the outcome of those first 90 days was quickly set up and blocked in our calendars, and I started my journey.
If I had to do it all over again, I would do it very differently. And in fact, 3 years into the role, I took a step back and on some areas started all over. Now, I feel we are in a much better place. The learning journey was hard, yet very precious and fundamental to get where I am today.
Let me share with you what I did the first time around, and also highlight what I have corrected, trashed and added the 2nd time around.
Start with WHY
Innovation has become in many companies an obsessive subject of discussion! The ability to innovate, to continuously bring new products and solutions to the market; to make the headlines; to be the most spoken subject in the corridors of your customers and your competitors – all of these expectations are keeping senior management up at night and wondering what they need to do differently to accelerate their capability to innovate.
You will have heard many leaders saying that Innovation is a fundamental piece for the company’s survival and, given the pace of change, this is more pressing than ever. Innovation is the easy word people use when asked about what you would expect from your vendor/supplier.
But that question that I challenge you to ask is: Is it true?
Is it true that every company has to innovate all the time? And do all companies really innovate continuously? And does it mean to innovate? Do we all understand the same thing with the word INNOVATION?
Let us first set a stone here and agree on what we actually mean by Innovation.
At its core, innovation is about solving a new problem or an old problem with a new solution. For an idea to come to life and be considered an Innovation it has to create value to a customer, and that customer needs to be willing to pay for it. Else, it stays at the level of an invention.
Having worked in different industries, I experienced situations where hardly any new product would ever make it to the market (e.g. tobacco industry – no communication, so nobody would know about it); whereas in another industry (i.e. food) the trade pretended to see something new from its suppliers every 3 or 6 months! And therefore the new product launches were hardly anything innovative in my books – at best some line extensions.
I was lucky enough to actually work in the tobacco industry, and in a specific division, during a time where we were asked to redefine the category, and explore customers’ needs around the products of today, to design products for them for tomorrow. We drove an entire generation of product developers to design and prototype reduced-harm tobacco products that smokers could choose over the more hazardous yet popular cigarettes.
That was working on disrupting a category and bringing news-value to the industry and beyond!
In the case of the food industry, the need was coming from the customer side (the retailer) who had promised their customer (the shopper) to bring new and exciting products on their shelves regularly! The retailer clearly was ignoring the fact that most of the shoppers are in a coma state when in a retail environment and will have laser-focus on the usual products and totally ignore the new launch. Which will cause the brand owner to believe the product was not successful and withdraw it from the market only 6 months in… What an unhealthy vicious loop…!
Different industries, different needs in terms of coming up with news will determine the appetite, the commitment and the resources to fuel new product development.
Whatever the ambition level, the motivation for a company to engage in Innovation activities needs to be grounded and profound to be able to result in success. Because the journey won’t be easy; there will be sweat and hard moments on the way, and you can only succeed with persistency and strong belief.
“Success is going from failure to failure without loss of enthusiasm.”
Being clear on the ambition and having the innovation strategy intrinsically living within the broader company strategy is what i learned the hard way to be necessary. I did not have to question when working in the tobacco world: it was obvious that the commitment was coming from the top and that our efforts and strategy was completely aligned with the broader long term company’s ambition.
In the case of the food industry, it was clear that there was no strong appetite for long term development and there was hardly any discussion around projects that would be new to the market and new to the company; and all the focus was on developing short term renovations that would keep the brands relevant and alive without jeopardising the core.
But in my more recent case… I underestimated the importance of assessing, validating and confirming the management’s commitment towards a broader long term agenda; and, the only fact they had brought me in, gave me reason to believe that the ambition and the vision was there. I have to smile now thinking about it.
I have to learn to ask more questions and expect clear answers to make sure there is alignment on the direction of travel and on the timing to get there. So, big take away for me here: check for the commitment level, check for the deeper why; have it in writing if possible. Don’t give it for granted.
This is what I have done the second time around; when I re-started by building a ‘COHERENT INNOVATION STRATEGY’.
What is a Coherent Innovation Strategy and what do I mean with ‘coherent’?
Build Your Coherent Innovation Strategy
The main principle here is that, to be successful, the Innovation Strategy will take into account a multitude of factors. So, if in my first attempt, I mainly focused on a) the areas & themes of Innovation agreed with my manager and b) I built a system for innovation to happen.
I realised that I had overlooked a few other key factors that, ultimately, became barriers to our success.
Let’s look at all the key factors that should be taken into account when drafting the Innovation Strategy:
- The Company’s Purpose & Mission. This is where every company states and affirms its broader reason to be. Who do you want to serve and why. What do you want to achieve and what is your broad ambition.
- The Corporate Plan -. This is a plan that covers your next 3 to 5 years (in my experience). It will outline your company’s key areas of investment; top strategic challenges and key priorities you will focus on within each challenge. It is a document that is revised once a year although the main direction of travel (the strategic challenges) will stay broadly the same, but the key priorities will be revisited.
- The Growth Goal. The growth gap between what the core business will deliver over the next 3-5 years and the business plan ambition.
- Internal skill sets and the organisations’ core competencies. Here it is about understanding the company’s DNA. The real authentic drivers of today’s success. What needs are being served and what is the value proposition. What is the role of technology in the company’s strategy.
- External Outlook. What forces and drivers of mega-trends that could have an impact on the business. You can look at trends within the political and regulatory arena, economic trends, demographic changes, social & consumption behaviour, etc. – screening them for what is relevant to your business today or tomorrow.
This is a really interesting and powerful exercise to complete, as it forces you to stay grounded on what the company’s core assets are, and still allows to project the company towards different futures.
Let’s look at these key 5 factors in greater detail one by one…
Key Factor #1 | Purpose & Vision
Your company’s reason to be.
The Company’s Purpose is your powerful and impactful statement on who you, are as well as who you want to be. It is that inspiring and strong affirmation attempting to influence how the world sees you, how your customers see you and why you employees are happy to come to work every day. The values that drive your business are a fundamental piece of what the purpose is; and the values should always accompany your purpose and mission.
My challenge is that too often we see big words, big statement written on these boards; but how do you know if this is really what the company stands for? If the company really walks their talk and that these words are not just beautiful yet empty sentences.
In the context of what we are trying to achieve here, i.e. making sure our Innovation Strategy is aligned with the company’s purpose and direction of travelling, it is even more important to challenge the boards on the wall and ask the question: do people really operate under these values? What is the company’s culture and what are its driving principles?
A Company’s culture is defined as the shared values, attitudes and practices that characterise an organisation. It’s the personality of your company and it plays a large part in your employees’ overall satisfaction.
Having done a bit of research about company’s culture, I landed on a neat classification into 4 types of cultures that I would like to share here with you.
Company Culture Type #1
The Clan Culture
This type of company culture is about a widespread feeling of being a family. It is a highly collaborative work environment, where every individual is valued and communication is easy and is a priority. Clan cultures are often paired with a flat structure, which helps break down barriers between the management and the employees, and encourage mentorship opportunities, open dialogue with honest feedback loops and a desire to make things happen and grow. This culture tends to typically live and strive in companies that are small in size.
The level of engagement of each employee in this type of culture is very high. The company is action-oriented and embrace easily change to improve things.
This is a great culture to foster innovation activities; however, the flip-side is that it is difficult to maintain when the company grows and the flat structure might bring some clutter and could result in lack of clear direction.
Company Culture Type #12
The Adhoc-racy Culture
Google, Facebook or Apple — These are companies that embrace the Ad-hoc-racy culture. They are companies that are risk-taking, that are on the cutting-edge of their industry. They run on creative energy to develop ground-braking products and services; they aim at doing what hasn’t been done before by anyone. To do so, they need to accept to take considerable risks.
This culture type values individuality in the sense that employee is encouraged to think creatively and bring ideas to the table.
These culture is externally focused in the sense that the new ideas developed and launched bring in market growth and company’s success.
These company culture can foster competition between employees and, because of the high level of risk it runs with, things don’t always turn out well.
Company Culture Type #13
The Market Culture
Market culture prioritises profitability: every decision is taken with the bottom line in mind. These are results-oriented organisations that focus on external success rather than internal satisfaction. A market culture stresses the importance of meeting quotas, reaching targets and getting results.
In these cultures it is more difficult for individuals to be engaged and there is less room to express your individuality.
However, these companies tend to be successful and profitable. Objectives for each employees are clearly set and individuals can get behind them and deliver their contribution.
Because of the strong focus on bottom line, it can be difficult for innovation to be fostered: given the nature of uncertainty and the need for establishing healthy test-and-learn loops in the early stages of the innovation process, the need to bring back result often allows only for sustaining innovation to happen, and there is no space for disruption.
Company Culture Type #14
The Hierarchy Culture
The Hierarchy Culture
This type of company culture mainly focuses on stability & control. Companies that embrace this type of culture focus on internal organisation by way of a clear chain of command. You find multiple management tiers between employees and leadership. Hierarchy cultures have an established way of doing things, which makes them stable and risk-averse.
Hierarchy cultures have clear direction and internal communication. There are well-defined processes that enable the company to reach its main objectives.
The rigid structure – not surprisingly – does not leave much room for creativity, which results in high resistance to change. Employees feedback is encouraged in a structured way rather than in a spontaneous and continuous manner.
This classification and types of culture is not exhaustive, but I think it help in getting a sense of where the company is; and it helps having as a context on how to tackle the innovation agenda – i.e. what is possible and what is not.
Key Factor #2 | The Corporate Plan
Your company’s Medium / Long Term Strategy
Most large corporations run the Strategy Planning once per year. The objective of this exercise is to clearly define what the company’s strategy should be, in light of the shared company’s purpose and mission. In fact, the Corporate Plan is the key strategic planning document demonstrating how a company will deliver on the purpose over the next few years. The first year is then your next year’s budget and the Plan usually covers 3 to 5 years. Once per year you won’t revise your strategic priorities; however, the yearly process gives you the opportunity to revise your key deliverables under each strategic priority.
Despite the fact that Corporate Planning is mostly associated with large organisations, the principles apply to any size of organisation. In fact, you might argue that having a written down strategy will help the entrepreneur stay focused on its strategy when he/she is busy dealing with day-to-day operations.
In fact, at the operational level, the purpose of the corporate plan is exactly to identify and prepare the resources needed to deliver on the company’s objectives.
An important part of the Corporate Plan is the inclusion of key indicators to measure how you are doing against your objectives. Ideally this document should be a working tool that gets shared internally and externally in the organisation; it should provide the compass for managers to set their objectives and keep employees focused on driving towards the larger business ambition and be confident on the direction of travelling.
I believe that an effective, meaningful and actionable corporate plan has to look at the business from a variety of perspective:
- Customer : What do you want your customers to say about your organisation?
- Internal: What processes are most critical for your success?
- Learning & Development: What can you focus on to make your employees more effective?
- Financial: What are your key financial goals?
When you start with this framework in mind, it will be easier to get a sense of where Innovation fits in, and if there is room to run and implement innovation practices. I don’t believe Innovation should be a Strategic Priority in itself as it dilutes its impact and because an intangible and empty theme instead of being a way of thinking and operating.
Since here we are discussing the Corporate Plan with the aim at drawing your Coherent Innovation Strategy, I believe that reading in between the lines to understand the role of Innovation and what is expected to deliver will give you a precious context to work from.
Key Factor #3 | The Growth Gap
Where is the growth going to come from
The Growth Gap is the difference between what the company’s current business model will be delivering over the coming years and what the Corporate Plan states in terms of growth target.
What needs to be taken into account are the following indicators:
- Is your market expanding or contracting?
- Is your market share stable / growing / declining?
- What economic factor have an impact in your business that you need to take into account?
- Is there a risk of significant disruption in your market driven by technology or competitors’ moves?
- What other factors might affect your business as usual to continue?
The result of the analysis from the points above gives you the framework on what the innovation muscle should focus in terms of areas and territories; it will guide you determine what organisation should focus on to successfully fill the growth gap.
The growth can come from difference sources: M&A, geographical expansion, market share growth,… innovation being one area of contribution. How much innovation
result in the development of new ways through which your organisation can create and/or capture value by developing new products, services, business models, processes,
One of the drivers of growth can and should be Product & Service Offering Innovation. This analysis helps you decide on the level and resources needed to fill the gap with your innovation portfolio.
Key Factor #4 | Internal Skills & Your USP
The company’s DNA.
This is about spending some analysing and understanding what in how you do what you, drives your success today. This is your USP (Unique Selling Proposition). I can think of 4 distinctive drivers:
- Your value proposition. What you offer to your customers that they value, your sales capabilities. How you interact with your customers. How is your portfolio structured and how does it evolve over time?
- Internal operations: what systems you have in place to run the business. What is the role of HR? How important is IT in your organisation? What is the role of technology in the company’s strategy?
- Profit: How does the company make money? large volume low margin? low cost structure? High margin low(er) volume?
- Growth: How does the company grow. For example does your company grow mainly through acquisitions; or does it grow through geographical expansion; or does it gain market share from competitors. Who is in charge of growth in the organisation: R&D and/or M&A?
This analysis has been an incredible eye opener for me! I did underestimate in my early days the importance of really taking the time to understand the peculiarity of the industry I was starting in and how it operates. In particular, we developed some beautiful solutions for new customer base, only to realise that this industry rarely acquires new customers and that all the sales force is busy maintaining the current business and the relationships with current customers. The broader sales force was not trained nor equipped, nor had the time, to go and hunt for new businesses; and this was one of the reasons our new product did not meet the targets we had set for ourselves. Big learning there!
Key Factor #5 | External Forces
What is happening in the outside world and how will it affect your business
The External Outlook is about looking and discussing social, technical, economic, environmental and political trends, and identify driving forces that could have an impact today or tomorrow for your business.
Predicting the future is not something business people are very good at and this is why exercises like Scenario Planning come in handy. Have you ever done or participated in a Scenario Planning exercise? It is about looking at your strategy for the coming years and stress testing that strategy agains some those driving forces that I have just introduced. Think about buying an apartment: before putting down the money you test different scenarios: will the interest rates go up? will I still be able to afford it in that case? Can you take public transport or do you need a car? Is the building well insulated to protect you against rising heating costs? Is there a motorway planned to go through the neighbourhood? how would you need to react to these changes? That is the point of scenario planning.
The scenarios depend on a solid foundation of expertise on the trends and technology of today, extrapolated for the future. To build that foundation you want to bring together as much expertise from within your organisation, as well as experts from outside, to share their knowledge.
Of all the drivers identified, you will have to do a thorough screening according to these criteria: you want to have drivers with high uncertainty and high impact on the company’s future.
- High uncertainty – because the drivers that will definitely occur should already be taken into account in your strategy
- High influence – because there is no point in focusing your efforts on drivers that will have a minor impact on your business
To create actual scenarios, you will then start looking at the different drivers and put them together to create specific combinations. The resulting scenarios should be used to stress test your long term strategy against these plausible scenarios to make sure that the strategy drafted today is equipped to respond to how the world might look in just a few years.
The world’s smartest organisation use scenarios to stress-test their strategies and understand the powerful forces set to shape industry in the years to come. Everybody should do take the time to do it.
In the context of this article, for the definition of the Coherent Innovation Strategy, this exercise of rehearsing the future is particularly relevant: nobody wants to work on Innovation Projects that are meant for today and will be totally obsolete already tomorrow!
We made it! I walked you through the main factors to consider and analyse when you draft your Innovation Strategy. We have looked at both external and internal factors, at the company long term vision and mission, at its long term strategy, as well as its core strength; and now you should be able to see what the strategic initiatives of your Innovation Strategy should be. There should be recurrent themes that you have identified. You will also find yourself questioning if some projects or themes that you had in your Innovation pipeline should actually not be there!
The way I did this exercise is start writing down the themes that had emerged from the analysis. I also listed all the initiatives that were already ongoing and, for each one of them, I questioned if and how that initiative belonged there.
The outcome of this exercise was a list of Strategic Initiatives that I felt confident about being consistent & coherent both with the company’s present and future.
As I told you in the beginning, the journey was a bumpy road for me and I hoped somebody did advise me in my early days about not taking shortcuts or not give things for granted.
But on the other hand learnings are so much deeper when experienced on your own skin!
Some jobs are easier to do plug and play from one industry to the next, from one company to the other. This is not the case of Innovation Management, where the roots of the company, of the industry it operates and the culture within have such a fundamental relevance; and this is why I am advocating in favour of taking some factors into account, in order to avoid to fall and fail more often than needed!
Nothing dramatic, you would just need to get up and try again before before doing it, finally, right.
Failure only occurs when you quit. Everything else is gathering information.
I hope you find this helpful. And leave me a comment here below, share with me your story.
Bye for now,
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