While innovation is a strategic mandate for most organisations today, there is often a disconnect between teams tasked with innovation and other leadership and strategy units. This can be overcome by aligning the language, culture and frameworks that drive both disciplines, and creating opportunities for collaboration and peer support. IBM, Netflix and Amazon are examined as success stories.
An innovation paradox can often be seen in organisations today; while the pursuit of innovation is viewed as a strategic imperative, there is a lack of alignment between the teams tasked with driving innovation and other strategic units within the organisation. This could stem from the disconnect in the language, culture and frameworks used by innovation teams versus the C-suite and other strategic disciplines. As per the latest research by global consulting firm PwC, 54% of organisations struggle to align their innovation and corporate strategy goals.1
Let’s start with the fundamentals; language is generally accepted as the basis for understanding, collaboration and knowledge sharing. However, a recent study highlights stark differences in the phrases and key terminology used by innovation versus strategic leadership departments within an organisation.2 The language of innovation is generally more open-ended, focussing on exploration, co-creation and divergent thinking, whereas the language of strategy is more structured and target-oriented, focussing on mutually exclusive and completely exhaustive (MECE) expressions and phrases. It’s interesting to note how popular tools used within these disciplines reflect these differences, such as an innovation customer journey or design thinking versus a strategic matrix or competitive benchmark. The language of success differs significantly as well; there is a strong variance in the key performance indicators (KPIs) of innovation and strategic teams. The KPIs for innovation often focus more on initiation – projects launched, trainings completed, skills developed or discoveries made, whereas strategic KPIs focus on growth measured in terms of revenue, market share, awareness and other factors. Ultimately, this shifts the sense of purpose for both teams, with strategy teams focussing more on quantifiable wins and plausible futures, and innovation teams focussing on “moonshots” and potential disruption.[ms-protect-content id=”9932″]
As a result, team cultures can also vary considerably; the culture of innovation teams focusses on flat governance, experimentation and collaboration, whereas strategic and operational teams thrive on a top-down approach with a strong leader often functioning as a beacon that guides the team forward. Business units rely on efficiency and productivity as core metrics to ensure the smooth progress of day-to-day operations and near-term objectives. As a result, innovation teams tend to function in an independent silo, far removed from the business development, strategy and operational departments within an organisation. This could explain the rise in “innovation theatre” in many organisations worldwide, with corporate incubators, hackathons and labs failing to make a significant impact to the core business.3
Another differentiation lies in the processes, tools and systems used by both disciplines to guide their projects forward. Innovation at its core is about finding novel solutions to important problems, whereas strategy focusses on plans of action to achieve a long-term or overall aim.4 This is reflective of the history of the two disciplines; the origins of strategy lie in the military world as a tool to achieve competitive advantages and formulate winning tactics, whereas innovation can be described as a “late-blooming incarnation” of the concepts of invention, intellectual creativity and change.5 While innovation models deal with experimentation and discovery, strategic frameworks concentrate on forecasting, risk analysis and goal setting.
So, how can we bridge this gap? As a start, I encourage innovators to apply their exploratory mindset to help strategic teams with the front-end aspects of their discipline: customer insight, environmental scanning and fact-finding. For instance, it would be interesting to see how a competitive market analysis could be supplemented with in-depth customer empathy maps or VUCA frameworks to provide a keener insight into the problem. Innovators could also benefit from selecting the right frameworks to bring their agenda to the strategic table; McKinsey’s three horizons of growth model is a great example of this concept.6 The framework focusses on categorising growth initiatives within three categories: maintaining core businesses, processes and systems, nurturing emerging or adjacent businesses and creating disruptive, radical businesses. This classification of innovation efforts as engines of growth could help innovation teams describe their ideas and solutions in a “language” that is easily understood by other business units.
On the flip side, there are numerous ways in which strategists could provide their expertise to complement the innovation efforts within an organisation; these include the convergent parts of the innovation process, specifically in terms of de-risking new solutions and providing a strong go-to-market approach. Imagine the classic design thinking process of empathise-define-ideate-prototype-test complemented with a strong risk analysis and market study. Strategic teams can also find ways to leverage existing infrastructure, products and resources to repurpose a new solution based on past efforts. Strategic teams lend a strong, multidisciplinary approach to the innovation process by focussing on the economics, policy and competitive movements that surround new ideas or inventions.
Let’s examine some case studies of organisations that have sustained their innovation efforts while maintaining robust corporate growth, using the key parameters of language, culture and frameworks. IBM’s in-house research division comprises 12 labs and 3,000 researchers spread across 6 continents; most of the research conducted within this unit is termed exploratory and future-oriented.7 The assumption is often made that the payoff will take place at a later stage; however, it is interesting to note the metric by which innovation departments are evaluated. Patents are used as a Key Performance Indicator to ensure that original and useful research takes place, and to motivate employees to search for original solutions to important problems. As a result, IBM currently holds the record for the most number of patents developed within a single organisation. On the strategic side, teams work steadily to evaluate patents and decide on commercial viability and the next steps in the process, which could include licensing, corporate partnerships, donations or other approaches. These go-to-market initiatives are ultimately used as KPIs to measure strategic performance and success. By changing the language of measurement, IBM has successfully created a system that integrates both the strategic and innovation units within the organisation.
Netflix is another global powerhouse that is known for disruptive innovation in the corporate world; there is a strong culture of collaboration and diversity that is mandated within the organisation. The human resource policies within the organisation include “hiring, rewarding and tolerating only fully formed adults,” honesty about performance, cross-functional, effective teams and putting the onus of innovation culture on senior leaders to lead by example.8 There is also a special emphasis on human resource professionals to act as business owners and innovators, and prioritise communication and progress over “superficial serenity.”8 By focussing on culture, Netflix has created communities of innovators that are spread across the organisation to drive creativity, productivity and business growth.
And finally, we turn to an example that would resonate with most readers; the masterful customer experience provided by Amazon, the world’s most innovative company as of 2017.9 The center of Amazon’s innovation strategy has been the development of business models that capitalise on new opportunities, trends and technologies. The Amazon approach to innovation can be described through an “Eliminate-Raise-Create-Reduce” framework: “Eliminate: Which elements are taken for granted in your business and can be eliminated? Raise: Which elements can be raised above the industry’s standard? Create: Which elements can be created that the industry has never offered? Reduce: Which elements can be reduced below the industry standard?”10 This focus on business model innovation has led to the creation of various Amazon offerings, including Amazon Web Services (AWS) and the 1-click-checkout option. Focussing on business model innovation brought a common framework to all business units to work on joint innovation efforts within the organisation.
In summary, the innovation and strategic departments within an organisation can achieve better alignment by developing common languages, cultures and frameworks. So, how can you implement these changes within your organisation? As a first step, it would be prudent to conduct an internal evaluation of disparity levels in these areas using basic research methods. Knowledge sharing sessions or informal gatherings can also help to bring this change to life, and break down some of the language and cultural barriers across various business units in the organisation. During these sessions, it can be helpful to use activities that bring out discussions and perspectives from various members. A popular activity is Edward de Bono’s Six Thinking Hats framework, which focusses on parallel thinking styles to approach a particular issue, including fact-based analysis, intuitive or emotion-based thinking, positivity, creativity, planning and critical judgement.11 And finally, encouraging strategy and innovation teams to work together to identify important problems to solve is a surefire way to spark collaboration and alignment. While identifying challenges, be sure to use language and frameworks that are understood and valued by both teams to bring a common understanding to the forefront.[/ms-protect-content]
About the Author
Dipika Mallya is an Innovation and Entrepreneurship Specialist at the Ministry of Education in Dubai, United Arab Emirates. She is also the Founder of Ideation Labs, a non-profit initiative to build creative mindsets and capabilities at work. She holds a Master’s degree in Communication from The University of Texas at Austin, and a Bachelor’s degree in Psychology from the University of Illinois at Urbana-Champaign. Her areas of interest include educational design, innovation policy and social entrepreneurship.
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7. Satell, G. (2017, January 10). IBM’s Patent Leadership Tells You a Lot About Its Strategy. Retrieved from https://www.inc.com/greg-satell/ibms-patent-leadership-tells-you-a-lot-about-its-strategy.html
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9. Robischon, N. (2017, October 11). Why Amazon Is The World’s Most Innovative Company Of 2017. Retrieved from https://www.fastcompany.com/3067455/why-amazon-is-the-worlds-most-innovative-company-of-2017
10. Crawford, K. (2015, August 07). Amazon Innovates With Its Business Model, Not Drones. Retrieved from https://www.wired.com/insights/2014/01/amazon-innovates-business-model-drones/
11. Six Thinking Hats. (n.d.). Retrieved from http://www.debonogroup.com/six_thinking_hats.php