How to start an Innovation Program

Do what you can, with what you have, where you are. – Theodore Roosevelt.

Innovation is on everyone’s mind today. A recent survey conducted by IBM, comprising of more than 1500 CEOs, ranked innovation as the top priority and a requirement for future growth. Organizations are realizing that to survive in today’s market and to attract information rich customers, they must innovate continuously. Companies like Apple and Google have set a new standard for innovation. Their approach to innovation has not only changed the Tech industry, but also the consumer expectation, which is forcing virtually every industry to change. We have also seen many giants like Blockbuster, Borders, United Airlines disappear as they failed to innovate and adapt to changing environment.

My quest started from similar need to determine what customers want and how to grow the company. I am blessed to live in Silicon Valley, and was able to tap into local resources to figure out what made companies like Apple, Google, SalesForce.com and Facebook so successful, but my challenge was how do I apply their principles to service industry where there is no physical product that you can hold, touch or see. I am in insurance industry and we sell a promise. How do you innovate a promise?

It’s often the employees—rather than outside consultants—who know a company’s products and processes best. According to management experts, many of the most innovative companies tend to solicit ideas from staff throughout the organization, not just the executive ranks (Wall Street Journal, 2011).

The answer was rather quite simple and universal: innovation is everyone’s business.

Ideas can come from anywhere, but employees are richest source for generating ideas, and transforming them into profitable products. Unfortunately very few companies capitalize on their greatest source of innovation. This article is intended to help organizations create an innovation program that will promote innovation at all levels and help align workforce with long-term corporate objectives.

Innovation helps companies stay ahead of the competition, but it does not come free. Innovation requires investment of employee time, money and support. Management must be committed to let employees work on non-routine projects, invest money when employees demonstrate potential in an idea, and most importantly help employees articulate or build a business case for their ideas. Studies show that many employees want to do innovative work. They have ideas on how to improve business processes and products, but are often discouraged by the management or the process of suggesting ideas. To create a culture of innovation, management must develop means to solicit ideas, create clear guidelines for time  and capital investment, and when and what kind of ideas they can work on. Above all, give due credit to employees for their.
Steps to create an Innovation Program:

  1. Document the need of innovation: First and foremost step of creating an innovation program is to identify and document the need of innovation. The need of innovation might be very obvious to some but it may not be as clear to others. Therefore the first task is to answer why innovation is important to your organization. The innovation mindset starts from the top management and sets the stage for rest of the organization. Clearly stating the objectives or needs of innovation will not only help jump start the program, but will also help maintain focus and energy in the right direction. It will align the organizational efforts and create a stronger buy-in.
  2. Create structure of the Innovation Program: Studies show that creating a formal Innovation Program doubles the yield of innovation initiatives. It expresses management’s intent, helps channel energy in the right direction and foster culture of innovation. It also acts as a great employee engagement tool. A formal and publicly visible innovation program helps generate more ideas, as well as creative ways to implement those ideas.
    1. Domains of innovation: First step in creating the structure for the Innovation Program is to identify the areas where the company should focus its innovation efforts. These areas or domains can be the business drivers or the value propositions of the company. Defining domains of innovation will ensure that the employees are focusing on inventing the right things and the activities that help improve the business results. For most companies, the innovation domains can be grouped into four major categories:
      1. Revenue Generating: Ideas that generate new revenue for the company. The revenue generators can come in a number of forms depending on the organization. These ideas may include ways to increase top line growth, increase sales, reach new markets, create new products, enhance existing products, improve customer service and increase customer retention.
      2. Cost Saving: Ideas that will reduce operational expenses. Many expenses get labeled as the cost of doing business, but often the business objectives can be accomplished using alternatives means, often made available by advancements in technology, and can done for cheaper. The key is to think in terms of the business objectives and not tasks. Examples include lowering utility bills, paperless communication, changing vendors, re-negotiating contracts and leveraging newer technologies.
      3. Business Process Improvement: It is very common for employees to know what they do and how to their do their job, but many lack the understanding of why they do it. You may have heard the statement before: “but this is how we have always done it”. Focusing on the “why” can liberate employees from the mechanics of what to do, and start thinking about how to deliver the same business value in new ways. This does not mean you have to reinvent the process every time, but rather have an open minded approach to improve. You can slightly alter the process to take advantage of technological advancements and still meet the business objectives. Improving customer facing business processes often yield the higher benefits, but also require more careful planning. Some processes can be completely eliminated using technology, while others can be enhanced to deliver value to the customer or save cost. Examples include reducing customer acquisition time, implementing new customer support tools, inter-departmental collaboration and communication tools and processes.
      4. Business Model Changes: This domain includes methods and processes around acquiring, interacting and servicing the customers. The business model is often very closely aligned with the value company delivers to its customers, so it requires comprehensive planning and should be executed in a phased approach. Business Model is also probably the hardest domain to innovate because any change in the business model will impact customers as well as employee, and must conduct through study whether the new direction is aligned with your customers, as well as the skill set in your organization. Nevertheless, it does not mean that the business model should not be innovated. As a matter of fact this is most important domain to innovate. Companies often lose market share to new competitors because their values propositions are no longer aligned with customers evolving needs. Some examples include introducing new sales and service channels like internet, changing pricing or subscription model, outsourcing a function of your business, and changing the organizational structure to better serve the customers or the organization.
    2. Time Investment: The employee time perhaps is the most important investment into the Innovation Program. Your employees know the organization, business processes and customers; so the most economical way to start an Innovation Program is by asking employees to dedicate some time to think and generate ideas that will improve business results. Companies need to allow employee to set aside some time to contemplate ideas, conduct research, build business case, and ultimately work on implementing those ideas. How to integrate this innovation time into work will depend on the nature of business, organizational culture and what the company can afford.  Some companies like Google, SalesFroce.com and Atlassian set aside dedicated time for innovation and integrate innovation activities into the job responsibilities of all employees, while others use dedicated resources to test and implement new ideas.
    3. Idea Capturing Process: There is no shortage of ideas but rather good ideas. An individual may think their idea will radically improve their productivity and improve customer satisfaction, but little consideration to how much it will cost or if it can be implemented in the current business environment. To ensure that the person submitting the idea has thoroughly thought through their idea, you can include a self-evaluation process into the idea capturing tool. There are many idea capturing tools available in the market, including features like a web-page to submit ideas, vote others ideas, start discussions around an idea, solicit feedback and provide regular updates.  Some manufacturing companies are implementing kiosks in their production plants to get close to the processes. But the idea capturing tool can also be as simple as a web page with a structured web form requiring the following information:
      1. Brief description
      2. Outcome and the business value
      3. Who will be impacted during and after the implementation
      4. How to measure results after implementation
      5. Time and Cost of implementation
    4. Screening process: Self-evaluation process may present a valid business case for an idea, but it may not align with the current organizational focus. To give order to the chaos and focus energy on the right ideas, company should create an Idea Screening Team. This team is responsible for reviewing, prioritizing and recommending ideas for implementation. The Idea Screening Team should include members of management as well as employees. The Screening Team should also maintain an idea screening guidelines document that include priority setting guidelines based on company focus, who is impacted, how they are impacted, capital requirements and return on investment. These priority setting guidelines may change as the company changes its focus, for example during tough economic times the ideas requiring no capital may get the highest priority, while during growth periods priority may change to long term investments. The Idea Screening Team’s ultimate role is to recommend ideas to the executive team or the senior management, who is responsible for deciding which ideas should be implemented and in what order.
    5. Recognition: Once an idea has been accepted by the Idea Screening Team, the next most important task is to recognize the contributors. The recognition is not only important to thank the person but also crucial for survival of the program. Even though a highly motivated team does not need any extrinsic rewards, but let’s be real. We all like to be thanked for a job well done. Recognizing someone for their idea not only improves the contributor’s moral but creates a desire in others to participate and generating ideas. However, there is a catch: the recognition should not be a monetary reward. Rewarding employees with money will create a new set of cultural issues, including the value of the idea. The examples of non-monetary reward could include a pin or prop for every accepted idea, ideally to be posted outside their cubicle or office, and innovator’s award or induction into “Wall of Innovators” for every implemented idea.
    6. Implementation Process: Ideas from an Innovation Program often emerge in a very raw form and require further investigation, testing and refinement. The implementation process is not much different from any project implementation plan, but it should include additional phases to test the idea hypothesis and phased roll outs to avoid any surprises. You can get creative in assembling the project teams, for example the person who came up with the idea becomes the team lead and can select who will work on this project, or a dedicated R&D team that works on special projects. No matter the approach, implementation process must include all phases of standard project management and execution phases.
  3.  Communicate to employees and encourage participation: Once you have created the program structure and acquired buy-in from the top management, you need to put it into action. This is your opportunity to get employees excited about the program and create a desire to participate. You need to harness the power of collective creativity, knowledge and experience to make this program successful. Communicate the organizational focus on innovation, the principles of innovation, how employees can participate, role of the Idea Screening Team, and process for prioritizing ideas. To create a stronger buy-in from employee, solicit interest in participating in the Idea Screening Team. Ask for their feedback on the program and the process. The success of this program depends on employee participation, so make sure you put your inspirational speaker hat on and sell the program to entire company. They have to feel that there is something in it for them.
  4. Create recurring meetings: After you have rolled out the program and assembled your Idea Screening Team, create recurring meetings for the Idea Screening Team to review the submitted ideas. The frequency of these meeting will depend on the number of ideas in the queue. How quickly the program gets adopted will depend on existing culture of the organization, but to kick start the program, you can ask management members and the Idea Screening Team to come up with ideas. Find ways, on an ongoing basis, to showcase the ideas and communicate successfully implemented idea to rest of the organization. This will recognize the contributors as well as boost interest in the program.
  5. Keep refining the program: Creating an Innovation Program is just the beginning. The challenging part is to encourage continuous participation and refinement of the program to keep the ideas flowing. During the process you need to keep a pulse on what types of ideas are being submitted. This will give you a great insight into your company culture and employee mindset. Success of any program depends on continuous improvement, especially when it involves moving people on large scale. We all tend to get bored or lose enthusiasm with time, so it is very important to continuously innovate the Innovation Program.

References:
Jean-Marc Frangos (Managing Director, External Innovation at British Telecom) – Special thanks to Jean-Marc for his contribution of innovation domains
The Ten Faces of Innovation: IDEO’s Strategies for Defeating the Devil’s Advocate and Driving Creativity Throughout Your Organization by Thomas Kelley and Jonathan Littman
The Innovator’s Solution: Creating and Sustaining Successful Growth by Clayton Christensen and Michael Raynor
Empowered: Unleash Your Employees, Energize Your Customers, and Transform Your Business by Josh Bernoff and Ted Schadler
For Bright Ideas, Ask the Staff by Rachel Emma Silverman. Wall Street Journal (Oct, 2011)
Tech Trends 2011: The natural convergence of business and IT. Deloitte’s annual Technology Trends Report

4 thoughts on “How to start an Innovation Program

  1. Thanks Jag for providing a very good insight on the Innovation Management.
    Would it be a good Idea to involve customers in organization innovation process by listening to customer voice and engaging them through a 360 degree feedback system?

    Best,
    – Anup

    • That is a great point Anup. Customer feedback is often the driver of such innovation programs. Companies should always keep a pulse on customer needs and desires, especially during economic downtimes. Week economy changes customers’ needs and buying patterns, so the companies that are more aligned with customer needs and the marketplace are always the ones that emerge as the winners.

  2. whoah this weblog is fantastic i love reading your articles.
    Keep up the great work! You realize, lots of persons are searching around for this information, you
    can aid them greatly.

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