BTS Strategic Execution Blog

The Three Layers of Innovation Alignment

Wednesday, February 18, 2015 | Category :
    • Innovation

Building a Culture of Innovation

By Nick Foster

nickFosterProfile

While it’s certainly important to consider the roles that luck and accident play in inspiring game-changing innovations—Alexander Fleming’s discovery of penicillin, for example, is traditionally seen as resulting from careless error in the lab—businesses can’t afford to rely on luck and happenstance to reveal their next big opportunity. Instead, innovation needs to be as integral a part of a business as human resources or sales departments. Businesses must actively search for new innovations—not to mention new ways in which to innovate—in order to truly differentiate themselves in a busy marketplace. This kind of purposeful innovation, the result of carefully formulated policies and corporate attitudes, is critical to building and sustaining competitive advantage over the long term.

Three-Layers-of-Innovation-Alignment

Lego, Thomson Reuters and 3M—three companies from very different industries—have found tremendous, repeatable success as a result of their commitments to fostering an innovation- and insights-oriented mindset at their respective organizations. Each company’s story is unique, but each exemplifies an important element of a broader goal: instilling an innovation culture at the very highest levels of leadership, all the way down through the organizational structure and down to the employees themselves.

1. Get Executives Excited About Innovation

Building an innovation-focused mindset begins with aligning the company’s business expectations with the imperative to try new things (and likely fail at a few of them along the way). The tone that a company’s executive management sets in regards to the risk-taking inherent to purposeful innovation is critical—the last thing that leaders should want is an attitude amongst their employees that the only path to success is “to never make the same mistake once.” Therefore, the most innovation-centric companies take measures to establish the right mindset at the very top of the organization.

Thomson Reuters, for example, makes a point to incorporate a distinct vocabulary for innovation success into its regular financial metrics, giving managers a clearer lens for evaluating the business impact of innovation projects. Moreover, the firm’s Catalyst Fund,a coveted source of cash for in-house innovators,is administered by several chief executives, which gives them an insider’s point of view on the innovation process itself and fosters in them the same spirit of fun and discovery—so important to the innovation mindset—that also exists on the company’s front lines. The company maintains a running forum for employees to submit new ideas and prototypes to the board, which gives executives a personal stake in investing in innovative projects and motivates the innovators themselves to deliver high-potential projects to their top leaders.

2. Organize the Company Itself Around Innovation Practices

Once the appropriate mindset is in place at the highest levels, the organization itself may need to be slightly (or radically) rearranged in order to better accommodate the needs and expressions of innovators. Purposefully innovative companies rely on a dedicated group of employees exclusively focused on the practice of innovation. These can range from a small team to an entire corporate division, but in any case, they are always populated by “innovation champions” that normalize the idea of innovation at their company and push the conversation, practices and results forward.

Lego’s Future Lab is a deeply creative wing of the company that experiments with new digital products, including an online platform for fans to design new sets, a robotics toolset for adult builders and a line of Fusion sets that sync with an app on the user’s tablet. However, the Future Lab is still only one part of the company’s larger Global Insights team, which uses traditional market research and innovative ethnographic studies in its mission to understand why and how children around the world play and what Lego can provide to meet their needs. The Future Lab is so successful because it plays a crucial role in Lego’s overall business plan, in which the owners and executive managers expect new innovations and insights. In Lego’s view, the point of this kind of insights-focused ideation is to “truly understand the unexpressed needs” of their customers—traditionally children, but now much broader thanks to Future Lab innovations. David Gram, the Lab’s Head of Marketing, echoes his division’s mandate, “Experimentation is something we can’t afford not to do.” Here, then, we can see that the company’s innovation success is powered by its structure and teams, which are themselves supported by an innovation mindset at the very top of the organization.

3. Support Employees’ Engagement in Innovation Process

Finally, after the top management and the organization are aligned to innovation, it’s ultimately up to people themselves to think of new ideas, products and processes. Innovation works best at its most inclusive and fun, so leading companies do everything they can to ensure that their employees are empowered to be innovative, excited by the prospect of breaking new ground and can tolerate or even enjoy their work if it fails.

3M is known for its “15 percent time” rule, which encourages employees at all levels to spend that percentage of their time working on innovative projects of their choosing. Employees are free to use the company’s labs, create new working teams, petition for funding and more. The culture in place around this part of the 3M lifestyle has been shown to pay dividends over the decades, such as when a tinkering engineer thought of a new kind of sandpaper. At the time he presented his work, the technology was not available for peers to accurately evaluate the idea or give feedback, but 15 years later, the same engineer was able to reintroduce the idea and get it approved, thereby launching an entire line of Cubitron II products. If employees were not so dedicated to innovation, it’s unlikely that he or any of his 3M peers would have had the wherewithal to revisit the idea at all.

An Adaptable and Repeatable Model for Success

By aligning their businesses to become more innovative all three levels—amongst top executives, in the organization’s structure and amongst employees themselves—leaders seeking to establish a mindset for purposeful innovation can unlock a bountiful, long-term pipeline of new products, services and ideas. The solution may seem obvious to some, but it is nevertheless an absolutely crucial message.

Any company that does not strive for innovation across the entire breath of its enterprise is bound to either miss out on new opportunities that arise organically—for example, by not having the insight to leverage a happy accident into a game-changer—or to shy away from true innovation because of the risks involved. Fortunately, the three players profiled above provide an adaptable and repeatable model for success that future innovators can adopt for themselves.

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About the Author: Nick Foster is a Research Associate at BTS.

References:

1 Harvard Business Review, “How Thomson Reuters is Creating a Culture of Innovation,” October 2014.

2 Interview in 2008.

3 Fast Company, “How Lego Became the Apple of Toys,” January 2015.

4 Fast Company Magazine, “How 3M Gave Everyone Days Off an Created an Innovation Dynamo,” February 2011.

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