The 1 Percent Innovation Solution
Strategic planning is
different from innovation. When developing a strategy, you decide what your
activities will be in the future, and you have to stay true to your
predetermined course to see results. Furthermore, your plan includes a set of
activities that you know how to do. But with innovation, your course of action
is inherently unpredictable, and you know in advance that you’ll have to learn
to do things that you don’t yet know how to do. Only after your innovation
succeeds will you know what those things are.
That’s why your
business strategy and your innovation practice must be kept apart: otherwise,
the consistency of your plans may constrain your creativity and verve, and the
surprises of innovation may distract you from your plan. At the same time, your
strategy and innovation must also be aligned, or your organization will be
incoherent and risk dissipating your efforts. So how can you integrate strategy
and innovation, but still keep them separate?
The answer is simple
in principle, but hard in practice. You probably have an annual strategy cycle
of some kind; in most cases, the corporate office gives guidance to each unit,
and then each unit maps out a strategic plan for the next one to five years. It
is during this strategy cycle that you must ask the leaders of each unit to do
two things:
1. Come up with a plan
over the coming year for what that business unit knows how to do. This will
involve about 99 percent of its time and activity.
2. Identify one or
more innovations that the unit’s team would most like to tackle over that same
year. In the face of their changing industry, what problem would they most like
to solve? What opportunity would they most like to take advantage of? Their
answers could include objectives that the team wants to accomplish, but has
been unable to visualize or achieve in the past. Examples include reviving a declining
product, appealing to younger consumer segments, or breaking through with a
new, environmentally sustainable offering.
At first, putting this
innovation question on the table will be a great relief to everyone
concerned. You admit what you don’t know. You have a whole year to figure
it out. And you are allowing your normal strategic planning process to
proceed separately, on schedule. Moreover, the innovation cycle calls for only a small
portion of time: Studies on time spent on R&D suggest that it
represents about 1 percent of a business unit’s time over the coming year. This
is a savings from previous years without a set cycle, when it spent far more than one percent of
its time talking about innovation and related activities while remaining
unsatisfied with the results.
Having established an
innovation goal, business units now will need to make the most of the 1 percent
of the time they spend on it. This will be new to them, because innovation is a
specialized activity. You need innovation specialists to serve the business
units in the same way that you need accountants – they’re that important. And
there are two types of innovation specialists: method experts and fund
managers.
· Method
experts. To generate
new ideas,
most large companies conduct in-depth research and analysis on their customers’
problems, then brainstorm solutions. This produces strong problem
identification but weak solutions. A method expert can help you move past these
familiar practices to find ideas in unfamiliar places. For example, the method
we developed at Columbia Business School, strategic intuition, uses creative combination: explicitly
seeking examples of similar problems solved in many different fields, and
combining those elements in new ways to spark a new synthesis.
· Fund
managers. These specialists oversee a company-wide implementation fund
for good ideas. Not all units will have a good idea every year; some will have
more than one. The fund managers must figure out where the funding comes from
and how to allocate it for that particular innovation. The best innovations
often require multiple business units to implement them, so a central fund
helps them work together. Additionally, a central fund enables those who
generate innovative ideas to see them through to implementation.
However, although it’s
clearly important to have specialists on board, the most important people
fostering innovation are the people responsible for the outcome. The team will
need senior sponsors: a group of top executives who meet regularly to provide
more seasoned expertise and perspective, and to solve problems that cannot be
addressed at the business-unit or innovation-team level. The CEO or enterprise
leader typically should be a member of this group; if an innovation takes off,
it will affect the entire company.
Though it only takes 1 percent of a business
unit’s time to focus on innovation, it’s a critical and potentially
life-changing fraction of activity. After all, if this group identifies a
company-wide innovation question, it likely will be involved in taking it to
market – and the 1 percent will expand to 99 percent, becoming part of its
strategic plan and a vital source of new revenues and profits. That’s why
innovation deserves so much education, training, and practice: It might not
take up much of your business’s collective time, but for the whole enterprise
to succeed, you need to do it extraordinarily well.
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