Innovation is difficult for well-established companies. Generally, they are better executors than innovators, and most succeed less through game-changing creativity than by optimizing their existing businesses.
Since innovation is a complex, company-wide endeavor, it requires a set of practices and processes to structure, organize, and encourage it to change.
Companies must set and prioritize the terms and conditions under which innovation is more likely to thrive within an organization. They need to learn how to deliver and organize themselves for innovation to contribute meaningfully to overall performance. Good leaders must test their organizations on the following strategies to determine how best to innovate.
Do you regard innovation-led growth as critical and do you have targets that reflect this growth? It helps to combine high-level aspirations with estimates of the value that innovation generates to meet financial-growth objectives. These targets need to be individually mapped to the corporate structure to insure that everyone is properly aligned and encouraged to participate.
Do you invest in a time and risk balanced portfolio of initiatives with sufficient resources to win? When asked for ideas, employees typically have plenty of suggestions, but which ideas are proper to scale and embrace. Leaders need to manage risk and determine the right path innovation.
Do you have differentiated business, market and technology insights that translate into winning value propositions? You have to determine if you have a valuable problem to solve, a technology that enables a solution and a business model that generates money from it.
Do you create new business models that provide defensible and scalable profit sources? Where some big companies are reluctant to risk change, they recognize that they must innovate their business model before it is threatened.
Do you beat the competition by developing and launching innovations quickly and effectively? Sometimes, larger companies are slow to enact decisions in a timely manner. This can kill attempts to innovate.
Do you launch innovations at the right scale in the relevant markets and segments? One must consider the appropriate magnitude and reach of a given idea. Scaling up over time may not be the right decision.
Do you win by creating and capitalizing on external networks? Sometimes the flow and knowledge of others can provide a fresh prospective on growth and ideas.
Are your people motivated, rewarded and organized to innovate repeatedly? This is a critical step in the innovation process, as some employees don’t feel it is their responsibility to change the company. They all must be mobilized together to shift the way things are done.
There’s no proven formula for success, particularly when it comes to innovation. These are simple traits that can provide strong indicators on the best way that their own organizational culture can improve the likelihood of innovation.
This piece was written from content featured in the following article McKinsey Quarterly, April 2015.