"The Big 4"; Why Companies Struggle with Innovation
In our last blog we looked at why companies are being disrupted from outside competitors. As you might recall, it is important for companies to realise where they were on a continuum of innovation (ie. disrupting others or being disrupted themselves).
Today we want to look at the internal forces that are affecting companies and impeding their ability to create the innovations to stop themselves from being disrupted. Having worked with large corporate and government agencies over the last five and a half years, at Inogesis we have seen numerous reasons why companies have been unable to compete in the innovation space.
But if we follow the 80-20 rule, we will see that there really are four main areas as to why companies are not able to innovate, we call these the “The Big 4”. These are, in no particular order, strategy, technology, process, people/culture.
If we unpick the issues around a company’s innovation strategy one word seems to jump out and that is clarity. Is the company clear around where it is being disrupted? Do the employees understand what they can do and how they can help to source the best solutions to help with innovation? Is there clarity in the technology and innovation teams as to where the priorities are ( ie. find the latest ‘shiny toys’ or fix the existing problems). Companies without a clear innovation strategy find themselves chasing the latest fads in technology, wasting valuable resources and time. An organised and focused competitor can make valuable market share gains while a company with a poor strategy seems like a floundering fish on the beach as competitors sail by!
Normally at the root of all innovation lies a new technology, especially as we move further into a world where knowledge is power and having the access to the latest technology a competitive advantage. Knowing where to source technology is obviously important but if the company is unable to evaluate the technology properly, perfect solutions can be killed too early and viable innovators may go to your competitors if they deem you to be too difficult to work with. Lastly, it is no good to be able to find and evaluate technology if you cannot scale it to your full customer base. This is where business cases are realised, millions of costs saved or delivering the growth that the company is looking for.
Many times, companies have an excellent strategy, and they know how to source and test that technology but if the internal processes are moving too slowly then the pace of disruption will still outpace them. These processes tend to lie in areas that have nothing to do with technology nor the front office but are in back-office roles like procurement, legal and security. Normally processes in these areas are built to protect the organisation during normal business as usual operations but are not fit for purpose when it comes to agile test and learn innovation. These cumbersome processes frustrate employees and exacerbate innovators trying to work with large corporates and often lead to projects failing halfway because of exhaustion.
Lastly but certainly not least are the people/culture issues at face all companies. Rarely will you meet an employee of any company who says that “I'm not really interested in helping the company innovate so we can stay ahead of our competition”. If that was the case it would merely be a project to find these people and educate them or remove them from the processes. What exists more typically is situation were passive aggressive employees can throw ‘spanners in the works’ along the process to slow down, create unnecessary work, favour incumbent tools or processes or just stall the processes long enough that people give up. Whatever the reason, the result is that despite a perfect strategy, an excellent technology view and processes that are fit for purpose, people in the end are what enable change to happen. If employees are not brought along the way through the change process needed to implement technology, innovation is bound to fail.
As mentioned at the top of the article these four areas are not the only ones that stifle innovation, but we would wager to say they should cover 80% of the cases. Like identifying where your firm sits in the external space these four internal areas are critical to putting the emphasis in the right place to get an innovation programme working. Like all change programmes, implementing a successful innovation programme requires careful orchestration across the four factors.
In our next article we will delve deeper into why having a clear strategy is critical to drive a successful innovation programme.