The high pace of change we are all forced to embrace means we do not need to ask “Why innovate?” Rather, we need to question what we should change and how we do it. Here are a few tips.
Innovation means different things to different companies; the definition that best suits your organisation depends on what you are trying to achieve.
What sort of new thinking do you need from your people to deliver your strategy? Where does your business need to excel? Is new product or service design critical to your success? Are you entering new markets?
Or maybe it is about simply doing the basics better than your competitors. For some companies, excelling at “continuous improvement” is their lifeblood.
This is the big one. Implementation is impossible without the engagement of those pesky, emotional and unpredictable colleagues who naturally resist change at every level.
As with the development of any corporate culture, success or failure starts (and sometimes ends) at the top. If you and your executive team are not 100 per cent behind the need to innovate – genuinely willing to transform the culture of your organisation into one that embraces change, nurtures new ideas and is honestly willing to regard failure as a necessary and welcome by-product of the journey to success – you should abandon the idea before you even start. Your company is destined to be a “slow follower” and you need to structure its people and finances accordingly.
Say no to the status quo
This requires a degree of honesty and analysis that can be difficult for many long-established organisations to achieve. Leaders must genuinely believe the status quo is not an option and they must be emotionally committed to changing the business.
If the leadership team is up for the challenge, they must create an environment in which innovation can thrive. But rather than describe the key components of an innovation-friendly environment, it may be more revealing to articulate what the opposite looks like.
An anti-innovation culture is risk-averse. It is a culture where people’s competence and professionalism are judged on how few mistakes they make rather than on how many successes they engineer.
It is a blame culture, where people avidly avoid accountability. It is a command-and-control culture peppered with oversized egos and “group think”. It does not seriously question the ideas and decisions of those in power; it rewards the avoidance of conflict rather than encouraging constructive challenge; and it fears failure far more than it prizes success.
As the previous shareholders of Lehmans, RBS, LBG, AIG and Citibank will attest, this is not a culture one should invest in.
Clayton M Christensen’s seminal 1997 book, The Innovator’s Dilemma, makes it very clear it is a genuine challenge for large companies to innovate. In fact, the more successful they are, the harder it is to change.
Logically, the leaders know it would be far better if their company were to come up with the next major innovation in their industry. But it is very difficult to invest in this sort of disruptive change when the status quo is so lucrative.
This is why market leaders can be the worst innovators. They find it much easier to acquire innovative start-ups than to change their company from within (even though they also know that 83 per cent of mergers and acquisitions fail).
Always question your company’s right to be successful
Successful innovators are never complacent. Complacency is the killer disease every CEO needs to inoculate their organisation against. The moment your business becomes number one in its market is the moment you need to work out what you must do differently in future.
Competition is also likely from the most unexpected quarters. For advisers, competition has rarely come from other advice firms; it has not even come from the banks (which, incapable of innovating to cope with the RDR, simply exited the advice part of the industry).
Competition comes from a range of sources including increasingly financially aware investors, DIY investment websites and consumer apathy.
To combat these competitive forces, advisers have had to refocus on the value they add for their customers and adapt their communications, marketing and service delivery accordingly.
Tens of thousands have been unable to make the transition, leaving exciting opportunities for those who have succeeded in making the necessary changes.
Question your industry’s right to exist
Thanks mostly to the web, entire business models are becoming defunct. Yours may be next – so I recommend using rigorous scenario planning to help prepare for the future and work out how to change your business accordingly.
Campbell Macpherson is a former consultant on business innovation