The 4 Building Blocks of Innovation - Part 2

(Part 1 of this issue appears in the July/August issue of WJManagment Advisor)

The path to a sustainably prosperous organization is not just about leadership and the culture that the leaders at the top promote. It is also about setting up a structure to enable innovation and prosperity to flourish because contrary to popular press articles, managing for more innovation in organizations is not all about letting go. Instead, as Peter Drucker asserted in 1985: "Most of what happens in successful innovations is not the happy occurrence of a blind flash of insight but, rather, the careful implementation of an unspectacular but systematic management discipline." This discipline comes in two forms: processes and metrics that allow for the proper balance of creativity and control.

Building Block #3:Creative Processes

In innovative organizations, robust systems and processes gather timely and relevant information from markets, competitors, customers, employees, vendors, regulators, industry associations, and advisory boards. They also closely monitor changes and trends in this information. Teams from the top of the organization to its lowest levels reflect a mix of problem solving and thinking styles, demographics, long term and short term perspectives, old and new employees, and a variety of functional backgrounds. Since heterogeneous teams by themselves don't always produce innovative solutions and make outstanding decisions, they rely on decision-making and planning processes that cultivate open debate and constructive conflict and facilitate creative idea generation, filtering, tracking, and selection. To ensure that creative efforts are effectively channeled and innovative results are achieved, such teams follow customer-focused and flexible project management and product development processes that are designed to eliminate unnecessary bureaucracy, and at the same time monitor progress and problems. Driven by milestones as opposed to traditional phases, these processes support experimentation and exploration within a structure.

In addition, leaders of innovative organizations recognize, as did the former chairman and CEO of Eli Lilly, that "The key to competitiveness is innovation and the key to innovation is people." They therefore place a very high priority on selecting, nurturing, engaging and developing people. They do this by providing opportunities for meaningful and challenging work assignments that involve learning. They align performance management and compensation programs with innovation goals, and they structure the organization to enable creative collaboration and teamwork. And leaders stay committed to these practices despite pressures on short-term profits since they recognize that investments spent developing an organization's people yield twice the productivity improvements as a similar investment in capital.

Building Block #4: Challenging Measures

Finally, an organization where innovation flourishes incorporates appropriate "dashboard-type" metrics. These metrics balance freedom to operate with accountability and focus, facilitate decision-making, and provide early warning signals for both external and internal changes. Measures that foster more innovation typically include a broad array of challenging metrics that focus on increases in productivity, revenues per employee, faster time to market, percentage of new products and services as a set of all products and services, or improvements in customer satisfaction and employee morale. Innovative organizations recognize that different metrics for different businesses in different life cycles are critical. Therefore, such projects are not expected to match the ROI or other metrics used to evaluate ongoing operations, but instead are allowed room and time for the team to test, adapt and learn.

Conclusion

This discussion of the four building blocks of innovation - an encouraging and humble leadership style, a supportive culture, creative processes, and challenging measures -- reveals a basic truth about managing for more innovation. Since the practices that encourage innovation in a company are the enduring principles of good management, they not only drive more innovation. They have also been shown to promote high employee satisfaction and morale and thus well-satisfied, loyal customers and long-term organizational success. Seeing innovation as more than a passing management "fad du jour" or a sexy distraction or a panacea is thus vital to long-term success. Instead, it needs to be embedded in the bones and marrow of the organization so that it is becomes part of the organization's DNA and every employee's responsibility, just like quality and customer service.

Being a leader in today's complex and global world is not easy. There is no single best way, no formula that will ensure a steady stream of innovation from all parts of the organization. External advisors who promise fast solutions with the latest terms, intricate models, new rules and prescriptions can make the challenge even worse. Leaders must take the time to acknowledge and appreciate their own strengths and areas of development and those of their teams, to value and foster strong teamwork and collaboration, and to implement good management practices, processes and metrics as a system as opposed to independent endeavors. Only then will they able to reap significant returns in terms of high levels of employee and customer satisfaction, and in turn a prosperous and innovative company.

Lynne Levesque, Ed.D., is a member of WJM Associates' Executive Coaching faculty. Based in Boston, Lynne is committed to accelerating the strategic and creative performance of leaders and their organizations. She has co-authored several articles on critical management processes as part of her research at Harvard Business School, in particular "Meeting the Challenge of Corporate Entrepreneurship" (Harvard Business Review, October 2006). Lynne was formerly Vice President of Information Technology Administration at Shawmut Bank (now Bank of America). She also teaches Strategic Leadership at Northeastern University.