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Innovation's Nine Critical Success Factors:


By Prof. Vijay Govindarajan
Your organization won't innovate productively unless some underlying factors are in good shape. If "10" is outstanding and "1" is poor, how do you rate your organization on each of these? 1. A compelling case for innovation. Unless people understand why innovation is necessary, it always loses to core business or the performance engine in the battle for resources. The performance engine is bigger, is the center of power, and can justify resources based on short term financial results. So the case for innovation has to be made, and it better be compelling. 2. An inspiring, shared vision of the future. Most companies anticipate the future based upon the past. Not surprisingly, the company always looks relevant in that future. However, if the past is suspended and a holistic view of the future is envisioned, then it's easier to recognize tidal forces of change and (surprise!) the company may not look so relevant in that future. For this process, it is best to take a 10-20-year perspective. It is not about predicting the future. It is about developing hypotheses about the future. 3. A fully aligned strategic innovation agenda. As the Cheshire Cat said to Alice, "If you don't know where you're going, any road will get you there." Innovation is a journey into the unknown and there are many paths open to the innovator. Before starting it is essential to know things like: 1) What business are we in now and want to be in going forward? 2) What is our risk tolerance for pursuing big, game-changing ideas? In our experience, the #1 reason why game-changing innovation fails is because time is not invested up front to align the organization behind one strategic innovation agenda. 4. Visible senior management involvement. Incremental innovation can be pushed down into the organization where the strategy is clear, decision metrics are understood, and management models like Stage-Gate create a level playing field. However, for gamechanging innovation it's the opposite. The strategy is fuzzy, and traditional metrics can't be applied early in the process, because that which is truly new has no frame of reference nor benchmark. So Stage-Gate models can unintentionally kill potentially big ideas. The pursuit of game-changing innovation only works when the person who can say yes to big spending visibly sponsors and participates in the work and provides air cover to the work team.
5. A decision-making model that fosters teamwork in support of passionate champions.Breakthroughs cannot survive without a decision-making

model that is different from the one used for incremental innovation. It's not about metrics; it's about "the educated gut." Old models don't work. Autocratic decision-making fails to engage all of the critical stakeholders, while consensus sinks every decision to its lowest possible common denominator. It doesn't work without a passionate champion who can make decisions and engage the team to support those decisions. 6. A creatively resourced, multi-functional dedicated team. The best teams have three ingredients: project champions who can make decisions during working sessions and advocate for them with executive sponsors, relevant capabilities and expertise, and nave, seemingly irrelevant diversity. Most often a breakthrough starts with the nave and then the experts determine how to do it.

7. Open-minded exploration of the marketplace drivers of innovation. Organizational

change is driven by marketplace factors: customers, competition, government regulation, and science and technology. Only by exploring these drivers of change can a company begin to recognize what it must do to be relevant in its envisioned future. 8. Willingness to take risk and see value in absurdity. Albert Einstein once said, "If at first an idea doesn't seem totally absurd there's no hope for it." Innovators understand that you have no choice; you must take risks, often big ones, by moving toward the absurd, the "seemingly" irrelevant, in order to create pre-emptive competitive advantage while competitors move in the "obvious" direction. 9. A well-defined yet flexible execution process. Companies that have been in business for a while are good at executing on small, incremental changes. And that's challenging enough. What they don't know how to do is nurture, support, and modify potentially big new ideas with a more flexible execution process. There are three elements to innovation execution. First, build a dedicated team for innovation. Breakthroughs cannot happen inside the performance engine it is built for efficiency, not for innovation. Second, link the dedicated team to the performance engine so that it can leverage key assets of the core business. Third, evaluate the innovation leader for managing disciplined experiments, not for hitting short-term profit goals. If your personal ratings total more than 70, you work in a pretty innovative environment. If your ratings fall below 70, then you may want to think about how well you are poised for the future.

2. Innovation Management: Creating the Conditions for Success.


by Susan Abbott, of Abbott Research & Consulting for Schulich Executive Education Centre, Schulich. In this first segment of a research program sponsored by Schulich Executive Education Centre and conducted by Poststone and the Glasgow Group, a panel of executives from diverse sectors identified organizational culture and leadership as the necessary and essential foundations of innovative organizations. The home run innovation is less important to business success than continuous innovation that touches all business processes. Too much focus on creating breakthrough product innovations is actually detrimental to building an organization climate where innovation in all its forms can flourish. Innovative organizations create a climate that supports open sharing of ideas as a daily expectation, where there is sufficient transparency, visibility, and support that individuals at all levels are motivated to move the status quo. Executives need to spend more time at all levels of the organization to be informed, and to focus on customer needs and outcomes as a mobilizing force for innovation. The fast pace of business tends to encourage people to stop too soon in the development stage:

executives can support innovation by suggesting the longer time frames necessary to develop substantial improvements. As a label, innovation carries considerable baggage; doing things better in every dimension is a better. description of the path of the innovative organization. Innovation is all about culture Innovation is a hot topic in business today, but it has more to do with culture and discipline, not breakthrough products. At the inaugural session of new research on innovation sponsored by Schulich Executive Education Centre, executives gravitated over and over to the foundational role of organizational culture and leadership in creating the conditions necessary to support innovation. While the business literature is rife with models of innovation the Venn diagrams, as one put it, there is relatively little about how to actually implement. Doing innovation well means getting past the myths, eliminating the organizational barriers, and focusing analysis and attention on the customer. Innovation is much less about the breakthrough idea than it is about evolution and execution. The Innovative Organization: People in Dialogue Asking people to be creative and innovative on demand at special events is not a shortcut to building an innovative enterprise. The challenge for leaders is to get people talking and to keep them talking as part of the day-to-day activity:
Historically, weve seen innovation as a strategy. It should be seen as a dialogue, a process. Peoples ability to think and relate becomes the sustainable competitive advantage, not the specific innovation.

Executives in innovative organizations focus on setting the conditions where people can make their best contribution appropriate to their level in the organization. One executive noted that a side-benefit of his occasional smoking habit was the opportunity to interact informally with all levels of the organization, and learn whats really going on. Walking across the shop floor every day isnt enough there must be real conversations that bring fresh perspectives to leaders. By opening the door to staff to speak off the agenda frequently, a leader can get past the information filters that the organization sets up:
At the end of every meeting, I ask, are there any other conversations we should be having? I always get something.

De-bunking the Myths of Innovation The new product myth There is a strong tendency to focus on product innovations, however executives generally see this type of innovation as highly visible, but not necessarily critical to business success. Much more important is the steady focus on improving all operations, all business functions and all areas of the enterprise in a consistent and sustained fashion. The breakthrough idea myth While creating the environment where your staff will speak and tell you their ideas received considerable emphasis, the idea itself is rarely sufficient. Canada was noted as

the home of many good ideas that have not had enough sustained effort, persistence and resources to achieve results. Adapting to environmental changes, and imitating good ideas found in other domains are more important to successful innovation than thinking of things that have never been done, and more likely to be successful in execution:
A lot of innovation is imitation. You need to think big enough, and then use the tools to get there, not figure out a new way to do things.

The creative chaos myth Many business processes support innovation better when they are consistent and measurable. With a consistent and known process, ideas for change can be implemented in a way that employees can understand and execute successfully. The new process can then be integrated into routine and evaluated. Without a consistent baseline to build on, its difficult to see if a new idea would work, and just as difficult to implement successfully. Measurement is actually central to motivation; by measuring how long processes take, and seeing how much things cost, we are encouraged to seek new ways. The creative individual myth The power of creative individuals with insight is rarely enough to move the organization, regardless of the levTel of seniority. High-potential young managers cannot sally forth as ambassadors for a new order and meet with success. The whole organization needs to be mobilized, through accountability at all levels. Leaders recognize that they themselves may generate exponentially more ideas not all of them good ones than the organization can execute. The critical issue is to select key priorities and resource them appropriately.

What Works
Focusing on Customers Executives acknowledged that business has had to learn these lessons many times, and the need to create a culture where innovation can thrive is not new. A big part of the leaders role is to distract the organization away from itself and its own inner workings and dynamics, and shift the focus to customers, creating the openings where innovative ideas become possible. Allow enough time The rapid pace of business tends to create an overload of initiatives and a rush to complete projects as quickly as possible, and creates a significant barrier to sustainable progress. Business moves too fast; you need tenacity to innovate One approach recommended is for leaders to lengthen the time for goal achievement, and encourage staff to spend the necessary time thinking deeply about a problem, gathering data, and moving forward in a thoughtful way:
People tend to give up when they cant get results quickly. You need to give longer goals, give people time, and ask them to do it slowly and thoughtfully.

Generating good ideas is not always the issue: prioritization and resourcing of a few key initiatives is often more important in making significant progress.

Find the metrics that drive the business An abundance of reporting and data can sometimes mask the important trends and patterns. The ad-hoc measurements that individuals create for themselves often reveal more about key drivers of the business than standardized reports. Pushing for greater sophistication and perspective in data analysis is another way leaders can demonstrate the need for fresh thinking about customers, products and processes. Return on investment (ROI) is not the right measure to drive innovation, and emphasizing ROI can shut down needed investment in innovation. Executive teams must find ways to focus on harder-to-define measures, often customer focused, that are more critical for the future. Keep a sustained focus With so much focus on the cultural underpinnings of innovation, effective management of organizational change was a recurring theme. Senior managers can lose interest in major cultural transformation efforts after a few years, especially if they havent seen much impact. But cultural change efforts can take five to seven years to take hold. Even getting the message out to a large and complex organization can take two to three years just as the change is gaining traction, the temptation to change course is strong. By developing scorecard metrics that measure the culture change desired, leaders can help people stay on course with longer term efforts. Tenure helps sustainability, turnover doesnt Organizations where executives have longer tenure may be able to more consistently stay on a path to success: Tim Hortons and Apple Computer are instances where executives of longer tenure have created cultures that can sustain consistent innovation. By contrast, organizations that habitually move and promote managers within short timeframes can be rife with promotionalism where managers motivated to get promoted aim for visibility rather than sustainability. The governance traditions of military organizations, governments and crown corporations tend to make these organizations exceptionally good at perpetuating the status-quo, and may lack the clarity of metrics that is often used by the private sector to mobilize change. Where leaders think people are waiting them out, they need to address this issue directly. Visibility and accountability One of the remedies for organizational inertia is creating sufficient visibility and accountability for innovation among managers that people feel motivated to take risks:
Anonymity in an organization is not a good environment for innovation

Get gentle, not tough Stereotyped get-tough leadership approaches are a barrier to innovation and effective implementation of change. Enlisting genuine support for new ideas is critical:
Its not enough to tell people; you need to sell them on the strategic thinking behind the change.

One executive described it as leading gently: being clear about the direction, but also providing as much support as possible. Toyota is noteworthy for their ability to return to first principles and rethink basic assumptions, in part because they normally solicit input from all affected levels of an organization in how to make things work better.

Lets stop calling it innovation Innovation is a word with considerable baggage that deflects people away from the central challenge of doing things better and better. Leaders need to provide a new context, a better framing, so that people stop seeking the home run innovation, and have the confidence to move forward. Being attuned to the environment, then molding and melting the organization to adapt to those changes, is the critical organizational skill of innovation.

3. What is Organizational Innovation?


By Ruth Kustoff

Defining Innovation Organizational innovation refers to new ways work can be organized, and accomplished within an organization to encourage and promote competitive advantage. It encompasses how organizations, and individuals specifically, manage work processes in such areas as customer relationships, employee performance and retention, and knowledge management. At the core of organizational innovation is the need to improve or change a product, process or service. All innovation revolves around change - but not all change is innovative. Organizational innovation encourages individuals to think independently and creatively in applying personal knowledge to organizational challenges. Therefore, organizational innovation requires a culture of innovation that supports new ideas, processes and generally new ways of "doing business".

The Benefit of an Innovative Organization:


In promoting a culture of innovation organizations should foster: - Cross functional team building while discouraging silo building - Independent, creative thinking to see things from a new perspective and putting oneself outside of the parameters of a job function - Risk taking by employees while lessening the status quo The value and importance of knowledge and learning within organizational innovation is crucial. If innovation is about change, new ideas, and looking outside of oneself to understand ones environment, then continuous learning is a requirement of organizational innovation success.The value of learning and knowledge can only be realized once put into practice. If new organizational knowledge doesn't result in change, either in processes, business outcomes, or increased customers or revenues, then its value hasn't been translated into success. The road to organizational innovation lies in the ability to impart new knowledge to company employees and in the application of that knowledge. Knowledge should be used for new ways of thinking, and as a stepping stone to creativity and toward change and innovation.

Steps to Innovation

To determine how supportive your current environment is in fostering innovation read the frequently asked questions and answers below, about how to build an organizational culture that encourages innovation. 1) Is a climate of innovation supported by senior management? a. That means, that such activities as risk taking and small ad hoc work groups that brainstorm and talk through ideas need to be promoted, supported and encouraged in the organization. 2) Do managers routinely identify and bring together those individuals more oriented toward innovation those willing to think new ideas and act on them? a. Identifying new thinkers and individuals oriented toward change helps to ensure an outlet for innovation by supporting these individuals and giving them and like-minded colleagues the time and opportunity to think creatively. This is tantamount to becoming an innovative organization. 3) Is there a process in place monitoring innovation teams and identifying what has and hasn't worked as a result of them? a. Maintaining and monitoring innovation is important. This requires checks and balances that identify how innovation is developed and managed and processes that capture what did or didn't work. In order to be able to continue to innovate in a changing environment, continually monitoring the internal and external environment to determine what supports or hinders innovation is a key. 4) How can an organization be strategic and focused on it goals yet build and develop an innovative culture? a. The value of a strategic focus remains important to a company's success. In fact, clear direction and understanding of a company's mission can help fuel innovation - by knowing where in the organization innovation and creativity would provide the most value. An innovative organizational culture creates a balance between strategic focus, and the value of new ideas and processes in reaching them. 5) Is there a single most important variable or ingredient that fuels an organization toward an innovative culture? a. Similar to other successes of an organization, what drives innovation are the people of the organization. First, management must set the expectation of innovation and creativity and then "doing business" is about how to improve processes, products and customer relationships on a day-to-day basis. This mindset itself will create an ongoing culture of innovation. Article Source: http://EzineArticles.com/?expert=Ruth_Kustoff

4. European Foundation for Quality Management (EFQM) Excellence


Model
Primary purpose The European Foundation for Quality Management (EFQM)Excellence Model, is a selfassessment framework for measuring the strengths and areas for improvement of an organisation across all of its activities. The term excellence is used because the Excellence Model focuses on what an organisation does, or could do, to provide an excellent service or product to its customers, service users or stakeholders. While its origins lie in the private sector, public and voluntary sector organisations can also benefit from using theExcellence Model. It is non-prescriptive and does not involve strictly following a set of rules or standards, but provides a broad and coherent set of assumptions about what is required for a good organisation and its management. Each organisation can use it in its own way to manage and develop improvement, under the control of those who use the methods rather than an external evaluato The Model starts with the following premise: Customer 1 Results, People Results and Society results are achieved through Leadership driving Policy and Strategy, People, Partnerships and Resources leading ultimately to excellence in Key Performance Results. Figure 1: The Excellence Model Framework

Source: http://www.bqf.org.uk/ex_framework.htm

There are nine big ideas or criteria in the Model that underpin this premise and attempt to cover all an organisations activities. These nine ideas are separated into Enablers and Results. The Enabler criteria are concerned with how the organisation conducts itself, how it manages its staff and resources, how it plans its strategy and how it reviews and monitors key processes. They are: 1. Leadership 2. People 3. Policy and strategy 4. Partnerships and resources 5. Processes

The organisations Results are what it achieves. These encompass the level of satisfaction among the organisations employees and customers, its impact on the wider community and key performance indicators. They are: 6. People results 7. Customer results 8. Society results 9. Key performance results Each of the nine criteria is subdivided to describe in more detail the concept of Excellence in that area and to examine how well an organisation is doing through a list of practical questions to ask itself. The starting point for most organisations is to gather evidence relevant to the nine criteria of the Model. This involves asking, for each of the criteria, How good are we and how could we improve? Evidence may take a variety of forms depending upon the organization. Fundamental Model Concepts Results Orientation Excellence is dependent upon balancing and satisfying the needs of all relevant stakeholders (this includes the people employed, customers, suppliers and society in general as well as those with financial interests in the organization). Customer Focus The customer is the final arbiter of product and service quality and customer loyalty, retention and market share gains are best optimised through a clear focus on the needs of current and potential customers. Leadership & Constancy of Purpose The behaviour of on organizations leaders creates a clarity and unity of purpose within the organization and an environment in which the organization and its people can excel. Management by Processes & Facts Organizations perform more effectively when all inter-related activities are understood and systematically managed and decisions concerning current operations and planned. improvements are made using reliable information that includes stakeholder perceptions. People Development & Involvement The full potential of an organizations people is best released through shared values and a culture of trust and empowerment, which encourages the involvement of everyone. Continuous Learning, Innovation & Improvement Organizational performance is maximised when it is based on the management and sharing of knowledge within a culture of continuous learning, innovation and improvement. Partnership Development An organization works more effectively when it has mutually beneficial relationships, built on trust, sharing of knowledge and integration, with its Partners.

ENABLERS - how we do things LEADERSHIP - How leaders develop and facilitate the achievement of the mission and vision, develop values required for long term success and implement these via appropriate actions and behaviors, and are personally involved in ensuring that the organization's management system is developed and implemented. POLICY & STRATEGY - How the organization implements its mission and vision via a clear stakeholder focused strategy, supported by relevant policies, plans, objectives, targets and processes. PEOPLE - How the organization manages, develops and releases the knowledge and full potential of its people at an individual, team-based and organization-wide level, and plans these activities in order to support its policy and strategy and the effective operation of its processes. PARNERSHIPS & RESOURCES -How the organization plans and manages its external partnerships and internal resources in order to support its policy and strategy and the effective operation of its processes. PROCESSES - How the organization designs, manages and improves its processes in order to support its policy and strategy and fully satisfy, and generate increasing value for, its customers and other stakeholders.

RESULTS - what we target, measure and achieve CUSTOMER RESULTS - What the organization is achieving in relation to its external customers.

PEOPLE RESULTS - What the organization is achieving in relation to its people SOCIETY RESULTS - What the organization is achieving in relation to local and international society as appropriate.

KEY PERFORMANCE RESULTS What the organization is achieving in relation to its planned performance.

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