Blindness to Innovation Among Top Management

Finally, “2020” is over. As the new year starts, we hope that 2021 will be better. With this in mind, many companies are already working on the implementation of their strategic plans but many still maintain the same planning format as in previous years because they do not want to risk changing the dynamics of their plans.

Unfortunately, many CEOs do not know how to really innovate their strategic planning sessions, and changing the focus of their annual goals often creates fear.

One objective that is listed each year in the strategic planning of any company is innovation/transformation. Many believe that the process of innovating/transforming is simple; that it only requires a certain investment, which is focused on the digitalization of things, on the acquisition of famous brand systems that promise to revolutionize the company. However, before starting to “innovate/transform,” the company's management needs to be clear about what innovation and transformation means for them, how they will measure the return on investment and in what time frame.

Good innovation management starts with alignment and commitment by the company's C level executives, in addition to the need to have a clear and true understanding of the purpose of innovating.

Large corporations, unlike startups, can end up losing sight of what the real innovation and future transformation of their business model is because their goals and the size of their structure are often not aligned and top management lose their sense of the operation.

At the beginning of the year, CEOs should hold a business model alignment session where they list the innovations with short, medium and long-term horizons. The CEO's priority should be the pillars that will sustain these changes and the investments and resources needed to achieve this transformation and innovation in the business model.

It is also necessary to plan the continuous evolution of processes, culture and policies to innovate. This evolution is one of the main elements of innovation management and is part of the manager's commitment, since each company has its particularities.

Considering the structure of the 4Ps of innovation created by Prof. M. Nakagawa, companies must be clear about what innovation means in their particular business model.

Here is my vision on innovation management, using the 4Ps framework.

Purpose to Innovate

Good planning for any company's innovation program starts with where it wants to go in the future. Therefore, it is necessary that the entire C level clearly communicate the vision of the future of the business. Having this direction is essential to prioritize what is really necessary to achieve this innovation, both medium term and disruptive innovations with the greatest potential for impact.

That is why it is mandatory for the company's top management to communicate the vision of the business’ future. This direction will be fundamental to prioritizing innovations, especially those of medium-term maturity and those that are more “disruptive” and with great potential for generating value.

Within this purpose, the CEO must make clear to his directors the context of this vision and what is required in the transformation of the business model, customer journey, processes and culture, always taking into account the use of technology associated with agile processes.

Having a purpose just for the sake of having it is not the key to success when managing innovation and transformation. As Peter Drucker says, "What cannot be measured, cannot be improved." That is, to be successful, all innovation initiatives need to have indicators and objectives that can be measured.

The best way to have a definition of innovation and its indicators for the company is to ask the directors themselves to understand this.

Innovation Processes

The most successful companies in their innovation and transformation programs are those that devote the most time to reviewing and redesigning their processes, training their employees and communicating internally about the continuous evolution of processes.

There is no magic formula when it comes to innovating in processes. What does help to quickly find the appropriate innovation process for your company is to have a methodology built on the basis of trial and error. Once you find the main processes for your innovation program, you should take your next step in search of which structure will be the most suitable to scale and speed up your program. Do this before creating an "innovation lab" or an "acceleration area." Remember that many of the world's largest companies have created their processes uniformly, using the intellectual capacity of 100 percent of their employees.

Another point that I was able to quickly differentiate in the mindset of managers during my career among startups and in the management of large corporations is in the selection and use of tools that will help the development of the company's innovation. Among startups, it is law to use free tools such as Excel, Google Docs, Trello and others at the beginning of the startup’s development, which allows you to move quickly and understand during the construction process what is required as a specific solution. In large companies, there is a prejudice toward the use of such tools and they always want a specific one even before starting their innovation program and understanding what is really needed.

Having this openness to the use of tools and internal construction is vital for the development and validation of prototypes, integration with startups and agile project management, among others.

People to Innovate

Unfortunately, I saw more than once an attempt by companies to outsource innovation. Innovation is not easy to implement, much less those innovation solutions that are available for sale. The CEO, along with his management team, is the person in charge of taking the company toward its future. Wanting to outsource your innovation program is an exercise in futility.

Employees must and can innovate and if they do not have 100% of the skills to perform such a mission, it is the company's responsibility to invest in the training of its employees. Having this discussion and recognizing the skills that are lacking within the team that will run your innovation program should be done as soon as possible.

Innovation Policies

Corporate policies are a big part of defining your culture and your culture is what will encourage or inhibit your innovation process. It is necessary to plan an evolution of corporate policies in order to create a cultural identity that allows a rapid advancement of the innovation and digital transformation program.

The importance of having a policy aligned with innovation comes from the process of selecting a candidate. Many companies look for talent with a disruptive vision, with intrapreneurial characteristics, but if the internal processes and policies do not allow the execution of such skills, it will be a frustrating experience for the employee and also for the company. For this employee profile, a policy of encouraging innovation is necessary.

Within the policies, it is necessary to add innovation criteria with a focus on goals and/or integrate more collaborative and intrapreneurial approaches such as the adoption of OKRs and agile management logic such as squads or tribes.

The company must allow itself to break certain taboos and within its policies, there must be co-innovations with customers, suppliers, startups and even competitors.

Finally, innovation must be measured by horizons, in the short, medium and long term.

Short-term horizon innovation takes place within the company's core business, seeking to differentiate itself from its competitors and improve its operations.

Medium-term innovation is the expansion of the core business to new markets, as my product and service can reach new consumers.

Long-term innovations are more “disruptive” and uncertain, demonstrating similarity with the most visionary startups.

For each horizon, it is necessary to measure. It is easier to find an ROI with those that are short term, proof of concept can be used to measure medium-term innovations and long-term ones can be measured by the results of an MVP.