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The Anatomy of Innovation

The Anatomy of Innovation

Bohdi Lewis

Bohdi Lewis

September 16, 2019

Host/Havas’ Innovation Forum highlights the 8 “T”s for delivering meaningful innovation.

"The reality is innovation is not a thing but rather the process for uncovering the thing or things that deliver value in people’s lives."

Innovation is one of the most misused terms in the corporate world, all too often used to describe an outcome or end point: the launch of a new product, the development of a new piece of tech. 

The reality is innovation is not a thing but rather the process for uncovering the thing or things that deliver value in people’s lives. It’s the doing. It’s the cultural shift toward risk appetite and experimentation. It’s the act of involving customers throughout the design process to inform decision making and, more importantly, having the systems in place to adapt and make changes in line with their expectations.

Simple, right?

Wrong. Unfortunately, while this all sounds sensible, and I’m sure familiar to some, the reality is it’s rarely done well.

There’s a reason businesses are in business. Put simply, they’ve found some kind of product/market fit. They have paying customers, revenue, and market share—and in most instances are profitable. Over time, they form muscle memory. Habits and ways of working embed themselves, along with KPIs and incentives, that encourage employees to maintain the status quo instead of exploring new possibilities.

Last year saw a record level of venture capital pour into startups: startups with new and innovative business models; startups that are more nimble and adaptive to opportunities; startups that are obsessed with better serving the customers of legacy businesses. 

In turn, customer expectations have become impossibly high, leaving corporations forced to continuously innovate and reinvent. And it’s here that the innovator’s dilemma lies: the tension between maintaining the mothership and exploring the new, between short-term tactics to hit next month’s sales target and long-term transformations to meet the future expectations of customers. This is the challenge. This is where innovation not only slows down but finds itself on a knife’s edge, waiting to die.

Having said all of this, it’s not all doom and gloom. There are ways to remove the roadblocks—to allow innovation to flow through the veins of the organization and thrive. But how?

To answer this, we brought together some of the sharpest minds from venture capital, startups, corporate innovation, talent incubators, and global technology companies to speak at our Innovation Forum and share their unique perspectives on how to deliver meaningful innovation in the enterprise. Here’s what we learned about the 8 “T”s of innovation:

Transparency 

The first “T” is transparency. For innovation to be successful, it can’t happen in a vacuum. There needs to be a clearly communicated vision and shared understanding of what success looks like to the entire business. But instead, a survey of Forum participants revealed that only 36% believed their business clearly communicated an innovation vision.

In addition, Mark Reinke, Managing Director of Consumer at News Corp, suggests, “Department teams across the business need to have a shared set of customer-centric KPIs underpinning a company’s innovation vision to create cohesion and accountability.” But again, more than half of respondents claimed they weren’t measured in this way.

The idea of accountability was also directed toward top level executives within organizations and the need for them to not only endorse innovation but to be engaged throughout the process. But with only 36% agreeing their leadership teams were accessible and involved in ongoing innovation, this is clearly one of the biggest blockers of progress.

Transformation

Once there’s visibility around your company’s innovation ambitions, the second “T” focuses on the structural changes required to transform rhetoric into substance. 

Companies need to reimagine the way they operate—the way teams are structured and the way investment is allocated to create space for innovation to thrive.

Part of this is about creating widespread cultural change and embedding new ways of working. But corporations are complex beasts. The older they are, the more legacy systems and processes exist, with the challenge being how to operationalize innovation into existing operating rhythms.

A simple way to approach this is to find the part of the business with the least bureaucracy and start there with a small-scale test and learn to get some quick wins before building out. But a more holistic approach highlighted by several of our experts was to apply the 70/20/10 investment model, whereby 70% of operating spend goes into business-as-usual activities, 20% into transformative projects, and 10% into moonshot future-focused ideas.

Only 21% of survey respondents said they had access to sufficient investment to support and maintain ongoing experimentation. The 70/20/10 model ensures the business is ring-fencing enough money to place some calculated innovation bets while still maintaining the core business.

Talent 

Many organizations fall into the trap of relying on things that have worked in the past to inform the decisions that shape the future. They rely on existing skills and capabilities to solve tomorrow’s challenges, assuming that throwing lots of resources at a problem will make it go away.

But resources are like carbs: without the right balance, you get fat.

Instead of having lots of resources, businesses must become more resourceful by hiring those with hybrid skills; modern practitioners with a breadth of capabilities in new and emerging fields.

To do this, Greg Attwells, Cofounder of Creatable, suggests, “Instead of trying to find talent, build talent—by giving people a problem to solve.” It’s about creating environments that people want to join by aligning your organization’s purpose to people’s passions. To move away from simply advertising roles and functional job specs to sharing and allowing potential talent to experience your innovation story.

Timing 

When it comes to innovation, ideas are the easy bit. It’s the execution that’s hard. Our desktops are a graveyard of PowerPoint presentations, littered with ideas that never make it into the hands of customers. But timing is everything in a constantly shifting consumer market. All too often, companies are too late to act, letting hesitation get in the way of forward momentum.

Innovation is at its best when it taps into macro-behavioral trends and rides their prevailing winds. But 66% of survey respondents claimed they aren’t good at identifying market opportunities to focus innovation efforts. As a result, most organizations struggle to decide in which ideas to invest—not for any shortage of ideas but because there’s no consistent framework to evaluate or prioritize them.

Companies must be tethered to what’s going on in the world, using research and data alongside a simple set of criteria to inform choices about where to invest. They must also bring together a diverse range of empowered decision-makers, both from inside and outside the organization to help see blind spots.

Technology 

It is rare for a technology to be something completely new. Rather, most technologies are incremental improvements that arise by combining two or more existing ideas together in undiscovered ways to create new value. 

When it comes to corporate innovation, companies need the ability to make connections between advancing technologies and the potential ways in which they might solve business or consumer challenges—many of which aren’t obvious.

Organizations that stay on top of technological advancements and understand their applications will have a competitive advantage over those that don’t. Or as Emad Tahtouh, co-founder of technology company Nakatomi suggests, “Organizations must be able to advance technologically in a way that maintains the human connection and focuses on the individual story.”

Traction 

When senior leaders invest money into innovation, their goal will be to see outcomes and results as quickly as possible. In other words, they’ll be looking for signs of traction before releasing further rounds of funding.

The key is having the mechanisms to quickly validate your ideas and prove product/market fit through the iterative test and learn process, i.e., to demonstrate there’s an audience willing to pay money for your product or service.

According to Mark Reinke, Managing Director at News Corp, “Our ability to adapt is the singular most important thing we can do,” adding, “the number one predictor of adaptation is speed of learning.” But the reality is that only 10% of survey respondents felt their company had the systems in place for rapid prototyping and testing of ideas, making it difficult to move at speed once the red tape starts to emerge.

With a similar argument, Brian Lenz, Chief Product Officer at Kayo Sports, suggests, “To get innovation successfully to market, you have to build momentum along the way,” which requires companies to bring the customer into the design process to guide the organization toward the end solution in a risk-free environment.

Lenz warns, “We need to move away from minimum viable products (MVPs) and instead think about minimum lovable products,” i.e., creating things that solve genuine pain points along the customer journey. But, again, only 36% of respondents had a clear view of their end-to-end customer journey to truly understand customer needs.

TAM 

TAM stands for total available market and is a term used to describe the potential market demand for a new product or service. Ultimately, it’s about determining whether a new idea is relevant to a sizeable audience and has scalability.

In most cases, organizations are looking at existing markets to see where they’re being underserved, but the bigger opportunity is to identify entirely new markets that don’t yet exist.

The aim for innovators is to find product/market fit as quickly as possible and to demonstrate there are customers willing to pay for your product or service idea before an existing competitor or new startup beats you to market.

Jackie Vullinghs, Investor at AirTree Ventures, suggests corporations have a huge advantage over startups, but they’re not capitalizing. She highlights, “The hardest thing about building a startup is finding customers. You have no brand. You have no social proof. You have no sales and marketing budget.” Whereas established brands on the other hand already have existing customers and sales data and marketing teams, which unfortunately aren’t used well when it comes to innovation.

Accessing customer feedback is a crucial part of making evidence-based decisions, but it can also be a major bottleneck for access with cost being a barrier. According to Vullinghs, the key is to build a relationship with your audience, provide a sufficient budget to test early and often, and ensure the mechanisms are in place to scale ideas fast.

Teamwork

Collaboration is not just about working well in cross-functional teams. It’s about identifying unexpected people and partners outside the business with complementary attributes to deliver mutual value greater than the sum of the parts.

According to a recent Forrester report, companies with the most mature partner programs are growing almost twice as fast through access to new customer accessibility, capability, capital, and in some cases, existing IP.

Those that recognize the importance of collaboration and incorporate it into the innovation process—not just between departments but between the organization and external partners—are far more likely to succeed. So organizations must recognize their weak points and identify gaps. Then it’s simply about surrounding the problem with the right people.

"The reality is innovation is not a thing but rather the process for uncovering the thing or things that deliver value in people’s lives."

Innovation is one of the most misused terms in the corporate world, all too often used to describe an outcome or end point: the launch of a new product, the development of a new piece of tech. 

The reality is innovation is not a thing but rather the process for uncovering the thing or things that deliver value in people’s lives. It’s the doing. It’s the cultural shift toward risk appetite and experimentation. It’s the act of involving customers throughout the design process to inform decision making and, more importantly, having the systems in place to adapt and make changes in line with their expectations.

Simple, right?

Wrong. Unfortunately, while this all sounds sensible, and I’m sure familiar to some, the reality is it’s rarely done well.

There’s a reason businesses are in business. Put simply, they’ve found some kind of product/market fit. They have paying customers, revenue, and market share—and in most instances are profitable. Over time, they form muscle memory. Habits and ways of working embed themselves, along with KPIs and incentives, that encourage employees to maintain the status quo instead of exploring new possibilities.

Last year saw a record level of venture capital pour into startups: startups with new and innovative business models; startups that are more nimble and adaptive to opportunities; startups that are obsessed with better serving the customers of legacy businesses. 

In turn, customer expectations have become impossibly high, leaving corporations forced to continuously innovate and reinvent. And it’s here that the innovator’s dilemma lies: the tension between maintaining the mothership and exploring the new, between short-term tactics to hit next month’s sales target and long-term transformations to meet the future expectations of customers. This is the challenge. This is where innovation not only slows down but finds itself on a knife’s edge, waiting to die.

Having said all of this, it’s not all doom and gloom. There are ways to remove the roadblocks—to allow innovation to flow through the veins of the organization and thrive. But how?

To answer this, we brought together some of the sharpest minds from venture capital, startups, corporate innovation, talent incubators, and global technology companies to speak at our Innovation Forum and share their unique perspectives on how to deliver meaningful innovation in the enterprise. Here’s what we learned about the 8 “T”s of innovation:

Transparency 

The first “T” is transparency. For innovation to be successful, it can’t happen in a vacuum. There needs to be a clearly communicated vision and shared understanding of what success looks like to the entire business. But instead, a survey of Forum participants revealed that only 36% believed their business clearly communicated an innovation vision.

In addition, Mark Reinke, Managing Director of Consumer at News Corp, suggests, “Department teams across the business need to have a shared set of customer-centric KPIs underpinning a company’s innovation vision to create cohesion and accountability.” But again, more than half of respondents claimed they weren’t measured in this way.

The idea of accountability was also directed toward top level executives within organizations and the need for them to not only endorse innovation but to be engaged throughout the process. But with only 36% agreeing their leadership teams were accessible and involved in ongoing innovation, this is clearly one of the biggest blockers of progress.

Transformation

Once there’s visibility around your company’s innovation ambitions, the second “T” focuses on the structural changes required to transform rhetoric into substance. 

Companies need to reimagine the way they operate—the way teams are structured and the way investment is allocated to create space for innovation to thrive.

Part of this is about creating widespread cultural change and embedding new ways of working. But corporations are complex beasts. The older they are, the more legacy systems and processes exist, with the challenge being how to operationalize innovation into existing operating rhythms.

A simple way to approach this is to find the part of the business with the least bureaucracy and start there with a small-scale test and learn to get some quick wins before building out. But a more holistic approach highlighted by several of our experts was to apply the 70/20/10 investment model, whereby 70% of operating spend goes into business-as-usual activities, 20% into transformative projects, and 10% into moonshot future-focused ideas.

Only 21% of survey respondents said they had access to sufficient investment to support and maintain ongoing experimentation. The 70/20/10 model ensures the business is ring-fencing enough money to place some calculated innovation bets while still maintaining the core business.

Talent 

Many organizations fall into the trap of relying on things that have worked in the past to inform the decisions that shape the future. They rely on existing skills and capabilities to solve tomorrow’s challenges, assuming that throwing lots of resources at a problem will make it go away.

But resources are like carbs: without the right balance, you get fat.

Instead of having lots of resources, businesses must become more resourceful by hiring those with hybrid skills; modern practitioners with a breadth of capabilities in new and emerging fields.

To do this, Greg Attwells, Cofounder of Creatable, suggests, “Instead of trying to find talent, build talent—by giving people a problem to solve.” It’s about creating environments that people want to join by aligning your organization’s purpose to people’s passions. To move away from simply advertising roles and functional job specs to sharing and allowing potential talent to experience your innovation story.

Timing 

When it comes to innovation, ideas are the easy bit. It’s the execution that’s hard. Our desktops are a graveyard of PowerPoint presentations, littered with ideas that never make it into the hands of customers. But timing is everything in a constantly shifting consumer market. All too often, companies are too late to act, letting hesitation get in the way of forward momentum.

Innovation is at its best when it taps into macro-behavioral trends and rides their prevailing winds. But 66% of survey respondents claimed they aren’t good at identifying market opportunities to focus innovation efforts. As a result, most organizations struggle to decide in which ideas to invest—not for any shortage of ideas but because there’s no consistent framework to evaluate or prioritize them.

Companies must be tethered to what’s going on in the world, using research and data alongside a simple set of criteria to inform choices about where to invest. They must also bring together a diverse range of empowered decision-makers, both from inside and outside the organization to help see blind spots.

Technology 

It is rare for a technology to be something completely new. Rather, most technologies are incremental improvements that arise by combining two or more existing ideas together in undiscovered ways to create new value. 

When it comes to corporate innovation, companies need the ability to make connections between advancing technologies and the potential ways in which they might solve business or consumer challenges—many of which aren’t obvious.

Organizations that stay on top of technological advancements and understand their applications will have a competitive advantage over those that don’t. Or as Emad Tahtouh, co-founder of technology company Nakatomi suggests, “Organizations must be able to advance technologically in a way that maintains the human connection and focuses on the individual story.”

Traction 

When senior leaders invest money into innovation, their goal will be to see outcomes and results as quickly as possible. In other words, they’ll be looking for signs of traction before releasing further rounds of funding.

The key is having the mechanisms to quickly validate your ideas and prove product/market fit through the iterative test and learn process, i.e., to demonstrate there’s an audience willing to pay money for your product or service.

According to Mark Reinke, Managing Director at News Corp, “Our ability to adapt is the singular most important thing we can do,” adding, “the number one predictor of adaptation is speed of learning.” But the reality is that only 10% of survey respondents felt their company had the systems in place for rapid prototyping and testing of ideas, making it difficult to move at speed once the red tape starts to emerge.

With a similar argument, Brian Lenz, Chief Product Officer at Kayo Sports, suggests, “To get innovation successfully to market, you have to build momentum along the way,” which requires companies to bring the customer into the design process to guide the organization toward the end solution in a risk-free environment.

Lenz warns, “We need to move away from minimum viable products (MVPs) and instead think about minimum lovable products,” i.e., creating things that solve genuine pain points along the customer journey. But, again, only 36% of respondents had a clear view of their end-to-end customer journey to truly understand customer needs.

TAM 

TAM stands for total available market and is a term used to describe the potential market demand for a new product or service. Ultimately, it’s about determining whether a new idea is relevant to a sizeable audience and has scalability.

In most cases, organizations are looking at existing markets to see where they’re being underserved, but the bigger opportunity is to identify entirely new markets that don’t yet exist.

The aim for innovators is to find product/market fit as quickly as possible and to demonstrate there are customers willing to pay for your product or service idea before an existing competitor or new startup beats you to market.

Jackie Vullinghs, Investor at AirTree Ventures, suggests corporations have a huge advantage over startups, but they’re not capitalizing. She highlights, “The hardest thing about building a startup is finding customers. You have no brand. You have no social proof. You have no sales and marketing budget.” Whereas established brands on the other hand already have existing customers and sales data and marketing teams, which unfortunately aren’t used well when it comes to innovation.

Accessing customer feedback is a crucial part of making evidence-based decisions, but it can also be a major bottleneck for access with cost being a barrier. According to Vullinghs, the key is to build a relationship with your audience, provide a sufficient budget to test early and often, and ensure the mechanisms are in place to scale ideas fast.

Teamwork

Collaboration is not just about working well in cross-functional teams. It’s about identifying unexpected people and partners outside the business with complementary attributes to deliver mutual value greater than the sum of the parts.

According to a recent Forrester report, companies with the most mature partner programs are growing almost twice as fast through access to new customer accessibility, capability, capital, and in some cases, existing IP.

Those that recognize the importance of collaboration and incorporate it into the innovation process—not just between departments but between the organization and external partners—are far more likely to succeed. So organizations must recognize their weak points and identify gaps. Then it’s simply about surrounding the problem with the right people.

Bohdi is focused on bridging the gap between brand strategy, design, data and technology to make things people actually want.

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