Innovation makes sense only when you can derive business value out of it. There are times when innovative ideas don’t see the face of reality due to a lacking handoff plan or failure to loop in business users when needed. A working Proof of Concept (PoC) or pilot is never a guarantor of scaling innovation. Your innovation becomes meaningless if you couldn’t scale it.
Nicholas Evans, Research Vice President in Gartner’s Strategy, Innovation & CIO Role Practice, believes, “Scaling promising ideas to proven solutions, i.e. moving across the innovation pipeline, has been the topmost challenge for CIOs”. They fail at realizing the business value, as they scale concept to achieve innovation.
In fact, success rates of traditional innovation programs and methods are as low as 17-45%, according to a 2019 Gartner survey, “The State of Global Innovation as the Main Obstacle to Innovation Success”. But why the Chief Innovation Officer (CINO) fail at their innovation programs? What are a few of the common pitfalls to an organization’s innovation success? Most importantly, how can you overcome these challenges to scaling innovation, to accomplish the aim of digital business transformation?
Lack of Adequate Funds
As ideas transition through the innovation pipeline to generate business value, lack of investment emerges to be one of the major challenges faced by CINOs.
Though innovation may require just a dollar, execution needs about 7 times of the investment. There are chances that your business lacks enough budget to deploy and commercialize the idea in the marketplace.
To deal with the issue of inadequate funds, it is fundamental to develop a venture capitalist mindset. Find someone who believes investing in your project will bring in revenues and ultimately, profits. The scale is unlikely to happen, in case funding is ad hoc. Ascertain groups that fund innovation and to which stages of commercial development.
It is recommended to create a portfolio of strategic themes and investments for optimal distribution of funds. As a practice, you can use deployments and case studies to boost larger strategic investments later.
Business innovation activities should align with the overall corporate as well as digital strategy. Remember if innovation accelerators, intrapreneurship programs, and sprints couldn’t contribute to long-term business goals, they are removed from the priority list sooner than later.
Almost 45% of respondents in KPMG’s Innovation Leader report, “Benchmarking Innovation Impact 2020”, believed that their innovation efforts were just somewhat aligned or not aligned at all to the overall digital transformation strategy.
To avoid strategic misalignment and make your project highly successful, you need to:
- Create an Innovation Charter that defines Innovation Profile.
- Share the Innovation Charter with stakeholders to better align innovation and business goals.
- Gain clarity towards accomplishing business goals to ensure better chances of sponsorship and funding. This is especially important for IT Instigators.
- Experiment how technology enables you to meet real-world business challenges, in alignment with the overall corporate strategy.
A Schematic Representation of the Innovation Profile
Disconnect Between Strategy & Execution
Coming up with great ideas is not as difficult as implementing them. Entrepreneurs spend countless hours creating and re-creating comprehensive business and strategic plans. But often this effort goes wasted, as entrepreneurs fail to follow through these well-thought-out plans. They cannot attain strategic goals in the absence of a planned, dedicated approach to execution.
Execution of your strategic plans can only be possible when innovation and digital business strategy teams collaborate to accomplish business goals. Strategy and innovation should be inter-connected and so do the elements in both, such as strategic plan – innovation charter, market trends – innovation ideas, and strategic themes – results out of experiments.
- Ensure close collaboration between innovation and business strategy teams.
- Share valuable deliverables, research, and findings in innovation.
- Ascertain continuous feedback loops to bring about high-cadence interactions.
- Build a connection between the innovation program and business strategy to fuel digital transformation.
- Leverage forums like digital steering committees to strengthen connections between business strategy and innovation teams.
Risk Aversion & Politics Within the Organization
One of the major pitfalls to innovation success arises when businesses don’t want to face unknown risks in the expectation of higher returns. When enterprises become overly risk-averse, while making decisions, they squander reasonable growth opportunities and their ability to accomplish business objectives.
Besides, unhealthy internal politics diverts employees’ attention to other issues. They are compelled to look for personal gains without considering organizational goals. Politics within an organization even affects information flow. Employees tend to receive wrong information from those engaging in workplace politics.
Nurturing an innovation culture is detrimental to scaling innovation. Execute culture hacks, such as “white space” time, to make employees think about innovation. You should allow them to shift their mindset from “success-failure” to experimentation.
Socializing hypothesize and test mindsets is the best practice to overcome cultural pitfalls. In addition, organizations should closely work with HR to guarantee that KPIs, incentives, and bonuses show the true value of innovation.
The Not-Invented-Here (NIH) Syndrome
Your business performance is negatively affected due to the NIH syndrome and can happen even within the most innovative organizations. It is a corporate mindset that favors internally developed products and services over those developed externally. The external solution, in this case, maybe superior to that developed internally.
Overcoming this challenge of the NIH syndrome is possible only when you break the status quo and mix things up. Teams within your organization should collaborate, irrespective of their location, hierarchical levels, and functional areas. Innovation activities, such as workshops, brainstorming sessions, hackathons, etc. enable knowledge exchange. You should even introduce new team members to the old ones and put them in charge.
Another way is to broaden your horizon; looking to partners and customers outside immediate project teams. Engage them in the strategy and evaluation phases of your projects to receive fresh perspectives. They act as sources of open innovation too.
Lack of Diversity
Your organization may face another culture pitfall and that is “no diversification” in people and ideas. In non-diverse organizations, “Group Think” reigns and different perspectives that might lead to breakthrough innovations, are lost. Diverse organizations maximize innovation and this, in turn, boosts business growth. Remember diversity isn’t only about race or gender, but also interest and background.
Build 2-D diversity within your enterprise. Companies whose leaders show a minimum of 3 acquired and 3 inherent diversity traits are known to have 2-D diversity. Employees of organizations with acquired and inherent diversity are 45% likelier to report a growth in market share over the last year. While 70% are more likely to report that their organization captured a new market”, according to HBR research.
- Collaborate with HR to meet inherent and acquired diversity targets.
- Welcome varied views externally by nurturing open innovation.
- Foster a culture wherein employees operating from different continents and having worked across industries can come together.
- Gaining access to different ideas and scaling them to proven solutions is the ultimate objective here.
Gaps in the Process
One of the major challenges businesses faces while translating ideas into business value is process gaps. Such gaps may happen due to unclear handoffs in ownership, roles and responsibilities.
The most common process gap erupts when ideas are left untreated and there is no prototyping of these ideas. There shouldn’t even be a gap between prototyping and commercial deployment. There are times when prototypes are built, but your business model is on the look-out for buy-in or funding for commercial deployment.
Moving from a pioneering mindset to a professional mindset is the ultimate solution to overcome the challenge of process gaps. Only then can you smoothen the transition from idea to value across the innovation pipeline. An idea can be translated into a business case or a PoC, provided you get rid of the common drop points between ideation and prototyping as well as prototyping and commercial deployment.
- Make an explicit shift from ideation to commercial deployment.
- Ensure that increasing financial constraints are pre-defined and agreed upon.
- Make it a point to recruit experts early so that there are no chances of gaps.
- Check that proven ideas are not hard-wired quite early.
Absence of Customer Centricity
Why do enterprises struggle with a lack of customer-centricity? The variety, velocity, and volume of customer data overwhelm these enterprises. They may not have adequate systems and technology for customer segmentation and profiling.
Enterprises may even lack effective processes and operational capabilities to target customers with personalized experience and communication. But the absence of a customer-centric organizational culture is the greatest obstacle to customer-centricity.
Lack of customer-centricity can result in ideas not getting commercialized or failing to scale. This failure may occur owning to limited market demand or less customer adoption. The idea may not be a proper product fit or it may lack a compelling value proposition.
Businesses can overcome this challenge to scaling innovation at any stage of the innovation lifecycle. You should use metrics post commercial deployment of the idea to gauge traction in the marketplace. You need to keep an eye on customer adoption of the product and its usage.
The right product should hit the market, which is why, there shouldn’t be any gaps between ideation and prototyping, and prototyping and commercial deployment. In addition, pull customers into the design thinking process. Involving customers early helps you work backward, envisioning future solutions with a delightful customer experience mindset.
Enterprises may focus on the wrong objectives and this happens when they don’t consider the right metrics. Remember measurement can wield a business’s best intentions against it.
Metrics are quite important as they enable us to quantify results. But not every metric is useful. Besides, metrics need to be used correctly.
Metrics you consider should address three primary areas of innovation pipeline measurement. These include innovation input and mix, innovation health and efficiency, and innovation results. Innovation input and mix refer to the different types of ideas that are in the queue and ready to pass through the innovation pipeline.
Innovation health and efficiency may be defined as the flow-rate through this pipeline; how fast are the ideas getting vetted, built into prototypes, and funded. Innovation outcomes measure the health of your innovation post-deployment. As a business, you need to gauge return on innovation in terms of commercialized innovations.
Key Metrics to Innovation Pipeline Measurement
1. Innovation Input and Mix – Total innovation potential (TIP), Open Innovation, Total innovation reach (TIR)2. Innovation Health and Efficiency – Throughput, Conversion rate, and Prototype total3. Innovation Outcomes – Financial, Learning, and Operational
While revolutionary innovations are a rare scenario, meaningful innovations delivering incremental improvement and their end-to-end impact can radically change your organization. Innovation moves across the pipeline and ideas materialize only when you succeed in overcoming strategy, process, and culture pitfalls. Enterprises need to adopt these varied techniques and approaches across the board. As a CINO, you should scale the best idea to a proven solution. Only then can you take a step ahead in your business transformation journey.
Are you ready to overcome the challenges to scaling innovation?