Australia is currently in an innovation frenzy, with governments of all sizes investing in it, and media commentators everywhere talking about it. But what does innovation actually give you? Hint: it’s more than an incubator lab and a new phone app for customers.
A good business listens to its customers all the time, making minor course changes to address short term challenges, and maintaining a flexible longer term view to allow you continue to deliver great products or services. In this context, innovation is simply ‘business as usual’, with an ongoing culture of incremental change that keeps the services fresh and relevant.
The rush to “innovate” is far more challenging for businesses that have been used to stable products and predictable customer behaviour. There is a long roll call of industry sectors that have struggled to adapt to new markets: newspapers, music, manufacturing and energy just to name a few. In all of these industries, big mature businesses have been slow to react when new opportunities have been created with new ideas.
The problem is perhaps more profound for government, where the service offerings are often defined in complex legislation, delivered through long-established channels, and used by a customer base that has no alternative. Although the voice of the customer is heard at the ballot box, there is considerable distance from voter to service delivery. Recent initiatives in government have sought to change this model, and revise the approach taken to delivering services to be more customer-focused. It is a long journey, but a worthwhile one.
In both government business and private enterprise, there is now a strong push to “be innovative”, almost as a panacea for progress. Innovation labs are now scattered throughout industry and government, with new ideas being trialled and evaluated. If these initiatives are to be successful in pushing new thinking into mainstream customer delivery, there must be more commitment than creating a small department or building a mobile app for customers without touching the rest of the business.
Innovation is a mindset, not a product. At its core, the process of innovation allows good ideas to go from concept to delivery in a business. The enabler for innovation is not the lab, it is the culture of the business.
A business that can innovate well has some clear traits:
- A culture of pervasive creativity – good ideas can come from anywhere in the business. Toyota famously encourages its production line workers to innovate and make things more efficient at the coal face of manufacturing wherever they can. Innovation has a thousand commencement points in business; the culture of the organization is what will allow good ideas to go from creativity to productivity.
- A commitment to change – A business that is prepared to change should have no sacred cows in the product portfolio. “Our most famous product? We will replace it without hesitation when we build something better.” The unspoken corollary to this message is somewhat brutal, “because if we don’t build something better, a new competitor will do it instead and take our business.” Apple is a famous example of this – the annual iPhone release bets their whole multi-billion dollar phone business on the new product.
- An appetite for risk – not all ideas turn out to be successful, but it is important that a business seeking to explore new domains encourages thinking that might challenge the status quo. The key is to test and validate in small increments, and to change course when needed. The important support in this area is not to discourage experimenting. The innovation culture is as much finding out what doesn’t work as it is about building the next billion dollar business.
- A bias for action – it is common for big mature industries to be reluctant to react to new competitors, and to then be so late as to be unable to retain their positions. The ride sharing economy, music industry and digital photography are all examples, and the incumbents who have been successful in riding these industry changes have acted quickly, and challenged their own businesses to change. If a new idea is developed, encourage its development.
- Fast on, fast off – the evaluation of a new idea in business has to be fast and simple. No complex business case, no multi-stage approvals process. Adobe has developed a simple kit called Kickbox that allows anybody in the organization to trial new ideas. It is backed with resources to build a prototype but coupled with a culture that encourages “fast failure” to not waste time on an idea that doesn’t hold up.
- An adaptive environment – this can be a stumbling block in large organisations (and government), where a new idea might threaten the status quo or affect the jobs of staff. There can be a tendency toward protecting personal roles at the expense of longer-term change; an adaptive environment encourages change for the better. A recent example of this is the newly-established Digital Transformation Office in Australian Government that allows agencies to retain savings from improved delivery – an incentive for local change that will allow for other new ideas to be funded.
- Customers at the centre – whether as retail shoppers or government service users, the customer is now leading the innovation conversation. Where previous change programmes might have been focused on organisational efficiency, the drive to provide better customer experience through innovation is now the focus.
Companies that can innovate well can sustain their success through changing business conditions. The process of innovation does not require big investments or grand changes – but it does need leadership and commitment. No sacred cows, all ideas welcomed and an environment to try new things are all that is needed to start.
What’s holding your business back?
In our next in the innovation series, we will discuss the challenge in bridging the gap from simple prototype to a market-ready product. Many great ideas never leave the lab – how can you transfer ideas to reality?
