Aligning the Forces that Drive Innovation
The one thing that comes with digital transformation is hype. There is always new technology that dominates discussions and the fear of disruption if an organisation is unable to respond quickly to emerging business threats. As a result, it is very easy for teams leading transformation programs to become distracted and tactically focused. Agile ways of working may help improve the speed to market when addressing existing customer issues although without a focus on future market needs value can be easily lost. Executional excellence does not always result in innovation excellence.
In today’s rapidly changing world almost every project is expected to leverage opportunities driven by changing customer needs. As a result digital transformation programs must look beyond execution and for new ways to extract new value from their innovation activities.
Innovation Needs a Dynamic Culture
A cornerstone of most digital transformation programs today is the establishment of cross functional teams. Through interweaving diversity of thinking into a team’s way of working we believe that the combination of ideas and opinions will help identify new ways to solve complex problems whilst setting the project up on the right path to deliver positive outcomes for the business. Even with diverse teams many organisations struggle to connect their activities to expected value. The solution most take to solve this problem is to increase output by building bigger backlogs and finding new ways to deliver faster through more sophisticated agile programs. Momentum now becomes the benchmark for success which drives teams to adopt an incremental approach to delivery. The challenge is that reconfiguring delivery alone will not provide the platform to rethink solutions, making it harder to keep up with the expectations of digital first consumers.
To drive innovation, the smarter organisations are not just pulling together a diverse group of people with the expectation they will make a creative leap when presented with a problem to solve. They are exploring different approaches to create a more dynamic culture where teams feel safe to explore, collaborate, challenge and critique and are more connected to the purpose of their work.
A Framework to Measure the Forces of Innovation
To build a more dynamic culture that fosters innovative thinking I have found that a team has a higher chance of delivering a successful outcome if those in leadership are able to measure and manage the following 3 variables
The motivation of teams and the impact of controls set up to manage risk
How knowledge has been sourced and utilised and
The context in which key decisions have been made.
Innovation is usually divided into two broad categories: Incremental and disruptive. Incremental innovation focuses on continually making existing products or services more competitive. It is by far the most popular form of innovation as it is usually seen as a way to deliver benefits with lower risks. Disruptive innovation is characterised by high levels of risk and uncertainty as it usually more complex, takes more time and prone to many cycles of success and failure. It is critical for teams to be able to find the right innovation balance knowing when to be opportunistic and take chances and when to follow a safer more predictable pathway. There is no value achieved when a team delivering incremental outcomes adopts an approach better suited to disruptive innovation. It is also just as important to understand when teams tasked to deliver new market innovations are being constrained by tactical business objectives, or controls set up to manage risk.
Motivation can be measured through polling team members at various points in time with a series of questions focused on connecting their work to the value they are driving for the organisation, their ability to influence decisions and their accountability for the outcomes they drive. A team that is driven by purpose is usually more productive particularly when asked to solve more complex problems but on the flip side can be too slow when asked to deliver a program of incremental improvements. Teams that are deliberate struggle when asked to make a creative leap to more innovative outcomes.
The objective of any innovation program is to translate knowledge into business value. The process where teams source knowledge needed to undertake innovation activities and transform this knowledge into solutions is critical to the success of any project. Governance forums or sponsors need to be able to validate how knowledge is being sourced and utilised from within the organisations and outside to determine if the approach teams are taking is suitable to achieve the desired business objective. As team’s explore opportunities and design solutions, they access knowledge from a number of different sources. In the quest to design the perfect product or service there is no exact science behind identifying the right combination of sources and time team’s should spend on each activity. Although knowing when to explore and when to exploit knowledge impacts the speed at which a team operates and the quality of outcomes they deliver.
Throughout every project there are key decisions that need to be made by individuals or groups and behavioural economics has shown that people do not always make rational choices even when presented with good information. The more disruptive the innovation program the more decisions that need to be made with many potentially having a big impact on the organisation. Decisions are hard work and influenced by biases, leaders can be under pressure to make decision without the right information and without the appropriate level of collaboration just to move forward. It is important to understand how information is being used when making decisions. Knowing when teams are proceeding without adequate insights and relying on instinct or when they have cherry-picked data to validate assumptions provides the context necessary to understand if knowledge and expertise of teams are being used effectively. This can usually be accessed through polling team members at regular intervals to collect insights into the involvement of individuals in key decisions and alignment of the group.
Governing Your Innovation Activities
No matter how big or small, a project, program or an initiative will always follow a pathway of problem solving, solutions identification and delivery. The first key milestone is usually the framing of the problem. This is a critical stage of any project and teams are usually under pressure to move through this phase as quickly and efficiently as possible. As team’s race to design solutions and quantify the benefits so they can progress to build, they make a number of critical decisions. The transparency of these decisions usually does not make its way inside governance frameworks.
The bigger the investments the more importance an organisation puts around their processes of governance. The problem is that governance only start to add value once the business benefit of the preferred solution has been defined. The reason is at this point in time stakeholders gain access to structured sets of data that help them analyse progress. The approach a team has taken through the fuzzy stages of solution identification where data is usually less organised does not fit well into governance frameworks. As a result, the outputs delivered is in many cases rarely analysed or critiqued by people outside the core team or from within governance forums. This needs to change.
Understanding the context in which decisions have been made during the design phases provide valuable insights into the viability of the proposed product or solution as well as highlighting potential problems that may emerge at a later point in time. Measures aligned to motivation, knowledge management and decision diversity provides a platform to surface debate on team dynamics and solution design within governance forums.
In todays dynamic, ever changing world more and more organisations are attempting to scale their digital transformation programs tasked with the objective to solve some of their toughest problems or tapping into new opportunities driven by future customer needs. Improving speed to market, or investing in the latest technology is not enough to help team’s make a creative leap. Organisations need to find ways to build a more dynamic culture where cross functional teams feel safe to explore, collaborate, challenge and critique and are more connected to the purpose of their work. A framework that helps teams understand how the forces that drive their innovation activities impact the quality of the products and services they design provides a foundation for improving process and outcomes.
Baromtr Innovation Index
To improve the effectiveness of digital teams so they deliver value through an accountable approach to innovation I have developed the Baromtr Innovation Index. Through the data collected we are able to map the forces that influence cross functional teams. The results provide transparency for teams and governance forums beyond the traditional performance measures of adherence to budget, risk management and delivery milestones. This supports leaders better align teams to a common purpose as well as recalibrate their approach to knowledge management and decision making so that they become more effective when designing digital products and solutions.