Henra Mayer | CEO | Innocentrix | mail me |
Innovation as a management discipline and its application in everyday work life has become synonymous with growth and sustainability. As advocated by innovation guru Gary Hamel since mid- 2000, there is a good understanding that Innovation in management principles and processes can create long-lasting advantage and produce dramatic shifts in competitive position.
Considering the current COVID-19 pandemic and its effect on companies, it is clear that the world as we know it has irrevocably changed and that it is harder to make ends meet than it ever was before. Organisations need to work twice as hard to just stay afloat and they need to do this amidst shrinking budgets and resources.
Yet, business research seems to suggest that it is getting increasingly important to invest in innovation in turbulent times.
A recent business survey by McKinsey & Company boldly shows that companies that invest in growth projects throughout the economic cycle emerge ahead of the pack, generating almost 17 percent higher total returns to shareholders (TRS) coming out of a downturn, than businesses that hunker down during a crisis.
Figure 1: Companies that invest in innovation in crises times outperform peers (McKinsey& Company 2021)
Making innovation work in a downturn requires a new mindset and a fresh response by leadership, together with a clear understanding that small steps are better than no steps – and that the opportunity cost of not innovating will potentially be a lot deadlier.
According to McKinsey, organisations that use innovation to outperform their peers in times of crisis and beyond focus on a couple of things, they:
- Prioritise speed over precision
- Embrace and manage risk
- Prune tasks and sharpen their focus on value to the market
From my experience, there is a fourth area of focus that separates winners from losers. It is the organisation’s innate ability to find ways to repeatedly add value to customers while continuously looking for new opportunities to build a pipeline of future potential. Innovation is not a once-off project, it calls for repeatability. This inherently points to systems, processes and structures and a good understanding of innovation.
Interestingly, McKinsey’s research hails what they call a proven recipe for sustainable innovation and it is linked to a systems approach. It answers the question often asked by executives: ‘How do we accelerate the pivot to growth?’
In other words – What does our organisation need to do today to ensure that we create new growth quicker? How do we do that more often and with greater success so that we steer the organisation in the direction that it should go as quickly as possible?
The answer to this question, according to the research, lies in the fact that successful innovators invest in building sustainable delivery systems for innovation. A good understanding of the market will drive focused innovation efforts and bring profitability and longevity yields, but it requires careful alignment of organisational resources, plans, operations and an innovative culture to remain relevant and at the forefront of change.
Despite the understanding of strategic advantage when we lead in innovative ways and an emphasis on the use of innovation to build resilience, very few organisations have really taken the time to effectively embed innovation practices. Many have vague, undefined or unrealistic goals and innovation programmes that fail to generate valuable returns.
To be effective, organisations need to build innovation capability and flexible innovation management systems while learning from past mistakes. The question often is where to start?
Innovation as a repeatable capability
Debates can be had on the newly developed ISO 56000 series of innovation management standards and what it means for the organisation of the future. One thing is clear, it does provide relevant guidance on how to be better at innovation. It describes how to effectively build a system that is geared for driving deeper and more impactful results. It underlines the notion that innovation approaches, systems and delivery mechanisms need to be flexible, yet propel the organisation to arrive at more focused innovation outcomes.
Understanding innovation competency better and bringing your people on board to participate and elevate growth in the organisation is a leadership responsibility. It signals future-focused leadership while demonstrating to stakeholders that the organisation is building an innovation premium – i.e. it shows that your organisation can be trusted to continue to drive future growth and relevance in the market beyond your current market offering and assets.
7 key elements when growing innovation
It is for this reason that we align our training and skills development focus areas to certify against the ISO 56002/SANS 56002 innovation management standard. It presents guidance around 7 key elements for…
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Read the full article by Henra Mayer, CEO, Innocentrix, as well as a host of other topical management articles written by professionals, consultants and academics in the August/September 2021 edition of BusinessBrief.
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