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5 Reasons Your Corporate Innovation Efforts Fail: An Interview with Mike Hatrick

Much of the literature and thought-leadership around innovation paints a pretty picture about what it actually takes to create lasting change. It sounds glossy and nice, and always seems to end in success, but the real world experience is not always so positive.

Having worked in innovation for over a decade now, our friend and Global Head of Intellectual Strategy & Portfolio at Volvo Group Mike Hatrick has seen his fair share of attempts at corporate innovation going bust after a promising start.

“When a big corporation wants to reinvigorate their innovation process, they usually launch a big initiative, which generates a lot of enthusiasm and may have some great initial success before fading away a few years later,” said Hatrick.

“Questions then begin to pop up. ‘has this transformation failed?’, ‘what did we achieve?’, ‘Is this naturally how innovation works?’, ‘Should we look at this in a negative way or a positive way?’

Hatrick believes that the success or failure of an innovation program hinges not on how long it lasts, but what it contributes to the bigger and longer term picture.

 

 

“I had learned how innovation can be taught, enabled, and systemized while leading the innovation transformation program at Bombardier Aerospace,”

Originally a product designer and engineer, Hatrick made his first foray into the world of innovation when he and his team at Bombardier Aerospace entered a product they developed for an innovation award and received a runner-up certificate from Prince Phillip, Duke of Edinburgh.

“We were on stage and the photographers’ flash bulbs were going off, and I was thinking ‘how the heck did this happen? I got thinking about what we had done that had caused innovation to happen, and trying to understand how we can repeat the process” reminisced Hatrick.

“That was the turning point for me, moving from being an engineer to an innovator,”

Fast forward a decade, and he’s now cycled through Bombardier Aerospace, Swisslog and Volvo, while also serving as an advisory board member for the Front End of Innovation EMEA.

 

 

Having experienced first-hand how corporate innovation programs can go boom and go bust, Hatrick is now currently working on a book with the working title “The Search for Innovation”.

In the book, he explores the innovation journey from the practitioner’s point of view — the day-to-day hurdles to overcome, what to do in the face of adversity, what works, and what doesn’t.

He explains how innovation is often a cyclical journey, which can peak over  two to three years, and then drop off.

If an organization is to kickstart an innovation initiative and make the most of those two to three years, they must ensure these five key things are in place, according to Hatrick.

 

1. Starting Point

Where is the starting point?

When an organization decides they need more innovation, their first course of action is usually to start an innovation program. However, most of them tend to ignore the success factors surrounding it. It is quite often treated as an experiment — organizations start an innovation program, see how it goes, and cross their fingers hoping to create something positive out of it.

“It’s really strange because we don’t do anything else like that in big organizations. Everything else is usually well-planned. You wouldn’t start a Lean Transformation or Six Sigma introduction without a detailed programme and experts involved, so why would you for an innovation program?” said Hatrick.

Some key questions to ponder upon before launching your next innovation program:

  • Where is it we want to get to?
  • What does it look like when we’re finished?
  • What are the results that we really want?
  • Do we have the right team on it?
  • Does our team have the right skills and pedigree to deliver?

 

2. Organizational Resistance

When you work on any transformation initiative, such as an innovation program, it’s exciting and there is a tendency to think that everyone else is as excited as you and wants it to succeed.

Most of the time, that isn’t the case at all, and there is a hidden resistance, or even a solid brick wall blocking it.

“To the C-suite and senior management, the idea of something constructive or different that could potentially derail the existing business model is really, really scary. Many people in that situation may just wish it would go away and they can carry on doing what they’ve been doing successfully until now, and continue doing it for as long as possible,”

“This is one reason big corporations are often very slow to react to market changes — it feels very risky to imagine switching your business to something very different. You already have the factories, the people, the skills, distribution, networks for your current business and those are hugely difficult to change,” Hatrick explained.

Some questions to think about:

  • What kind of organizational resistance exists in our organization?
  • How can we confront that resistance or work around it?

 

3. The Handshake

Or simply, how well does your innovation process gel with the rest of the organization?

Many thought leaders often believe that innovation is all about execution. But Hatrick believes that’s only part of the equation.

“Take a company like Volvo. They’re fantastic at executing and have been doing it forever, so why should an innovation program spend any time thinking about the execution side of bringing the product to market?”

“They should instead be thinking about creating fantastic things that could be delivered to the right parts of the organization who are great at executing. Define where that handshake point is,” remarked Hatrick.

Some questions to think about:

  • What is the boundary between the front and back end of innovation in our organization?
  • For what we plan to create, does the back end capability (product development, manufacturing, and distribution) already exist?
  • What exactly is going to be delivered by the front end to the back end?
  • How can we make that handshake work as reliably as possible?

 

4. Culture

Drucker said, “culture eats strategy for breakfast,” and creating an innovation culture is crucial in any organization. However, if your window is only two to three years, expecting a large organization to change its internal culture completely in such a short time span is a bit unrealistic.

“During the two to three years, it pays to put total emphasis and focus on delivering some fantastic projects and transforming some key people so it becomes a lighthouse project. Demonstrate what can be achieved, who are the people who can do it again, and you will create a domino effect where project numbers grow as the years pass,”

Rather than trying to change a very large number of people, it is far more efficient to start off creating a special task force.

“If we look at companies that has truly transformed their culture — the ones like Whirlpool, P&G, 3M — they all took 10 years to achieve that. In order for that to be successful, they have to be really resilient, and have a CEO that is completely on board for the long-term. Most companies don’t have that luxury,” remarked Hatrick.

Questions to ponder:

  • Who should join the innovation task force?
  • How can this task force work in harmony with the existing company culture?
  • How can we evolve the company culture to be more conducive to innovation, starting with this task force?

 

5. Role of the Innovation Manager

As a relatively new job title, the role of an innovation manager is not well-defined, and it often changes.

Innovation managers are often tasked to deliver an innovation process right from the beginning to the end, when what’s required can change quite dramatically in the different stages.

In the early stages, they’re researching, strategizing, evangelizing, and pioneering the initiative. As the process transitions into the middle stages, an innovation manager becomes the change agent, designing the organization. As each stage requires very different skills and modes of behavior, it is not necessarily the same person that drives it from the start to the finish line.

“That’s another thing that makes it so difficult — the choice of who should be the innovation manager is really important. Maybe during the process this person changes as well. This is something organizations need to think about if they want their transformation to be successful,” said Hatrick.

Questions to ponder:

  • What should the role of the innovation manager be?
  • Where will they come from?
  • How does it feel to be one?

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Follow Mike Hatrick on LinkedIn.

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Catching the Next Wave in Innovation: An Interview with Rowan Gibson | Part 2 of 3

This is part two in a three-part series with Rowan Gibson, discussing how the world’s best innovators come up with breakthrough innovations, and how his clients – most of them not the typical tech darlings we’ve come to think of being great innovators – find new avenues for growth via business model innovation.

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In today’s rapidly transforming world, it is important as a leader to be able to spot and capitalize on the emerging trends that could revolutionize your industry as you know it now.

Not catching the right waves and changing at the right time can create very real problems later on for your business — just take a look at Nokia, Borders, Kodak. They did not keep up with market changes and now they are floundering or non-existent.

Knowing that you have to align your strategy with the current trends is one thing, but how can you identify new trends? How can you capitalize on them ahead of your competition? How can you tell the trends from the fads?

Author of The Four Lenses of Innovation Rowan Gibson shares from his extensive experience in helping large companies harness new trends and redefine their company.

 

To Predict the Future, You Must First Understand the Present

“Everything you need to know about the future, you can basically know,” says Gibson. “In today’s world, very little knowledge is actually proprietary anymore. It’s all out there to be found, if you’re willing to take the trouble to look and to join the dots. The future will be formed from trends that are already observable.”

The challenge is no longer so much about trying to imagine and predict or even invent the future. It’s more about being fully aware of what’s already going on around you right now, and then harnessing that knowledge to create the new value that customers will be looking for tomorrow.

That means we have to develop a deep understanding about the emerging trends and discontinuities across many domains, and then synthesize them into a   compelling vision and a strategy about what to do next. What’s important there is to distinguish between the big, industry-shattering trends and the passing fads that will fade away very quickly. You don’t want to be banking your company’s strategy on the latter.

 

Amplifying Weak Signals

So how can you tell one from the other?

Gibson suggests an exercise called “Amplifying Weak Signals”.

Ask yourself, “If this small, rather insignificant trend – this ripple on the ocean – actually grew and became more important, what would the consequences be?”

Take something like the rapid increase in internet bandwidth, for example, in the early 2000s. That was something that quickly opened up the doors to file sharing, which led to music downloads and iTunes, and eventually to the downfall of the record industry as we had known it for decades.

“Basically, anyone could see that internet bandwidth was going to increase exponentially, so why did it take the record labels so long to react? They basically went into denial, and tried at first to fight the file sharers by threatening them with prison, rather than coming up with a new business model like iTunes, for example.” said Gibson.

“It’s the same principle with streaming media — Netflix and Spotify jumped on that trend, whereas Blockbuster clung onto their old business model based on physical retail outlets and DVDs.”

You can usually see the signs of the next big wave. They’re not necessarily invisible. It’s just that they may be more than a little unpalatable if that oncoming wave threatens the current way you run the business. It may even turn out to be a giant tsunami – a tide of history – that could wash your company away, if you’re not careful.

Here’s the good news: it’s entirely possible to react properly to these trends, although that doesn’t by any means suggest that it’s easy. Take Netflix, for example. Just like Blockbuster, their business model was based on renting out DVDs. In their case, of course, they didn’t have physical retail stores, but they did have big warehouses, and shipping, and logistics, and call centers etc. Yet they were able to achieve a complete overhaul of their business model to make the shift to streaming. And now they’re a major player in that space, while Blockbuster is dead. So it is possible to harness a huge industry-transforming trend, and to make the necessary transition, but it’s still very difficult. However, the alternative is to simply become obsolete and die. That’s not a good option B.”

Exercise:

Take a look at one or two trends, some thingsthat might be changing in a rather minor way at first. Try to scale them up and project them into the future.

Ask yourself:

  • What if this became really big?
  • What kind of difference will it bring to our industry?
  • What are the consequences?
  • Who would be impacted by those things?

 

Disruption in the Next Ten Years

With the pace of change rapidly increasing, it’s reasonable to expect pretty much every industry to be disrupted within the next decade. Today’s disruptors, too, will be susceptible to disruption if they do not continue innovating.

The question isn’t whether your industry will be disrupted, it’s when and by what, and by whom. Perhaps mostly importantly, it’s how to respond.

“Most people, when responding to surveys, say that they expect their industry to be disrupted in the next two to three years. So they’re aware of it, but they’re still very often stuck in their conventional business model. It’s one thing to recognize that there’s disruption coming your way, it’s a whole other thing to make the kinds of major changes that disruption may require,” notes Gibson.

His recommendation to companies is for them to not just understand what the trends are, but to figure out ways to incorporate them into the existing business.

“Let’s take the combination of autonomous driving  and ride-sharing, for example. If you scale it up and you look forward, in the future there is a big possibility that nobody will really want to own a car. They’ll probably just take the next Uber or whatever that’s going past the door. They won’t even have to learn to drive or own a driving license. What does that do to car sales? And to car financing? And to car insurance, and so on?”

“We know that we’re rapidly moving towards an era where it might not even be a car, but a quad-copter outside the door. If we’re in insurance, we’ll have to realize that we’re not necessarily insuring the drivers anymore, but the vehicle instead. If we’re a bank, we’d need to know that consumers won’t be buying a car or needing a car loan anymore. We’ll need to rethink the whole idea around insurance and loans.”

The most important takeaway is to take a good look at the various ways the world is changing and then make sure you change with it. The key is to harness the power of change to continuously rethink and reinvent your business model so that remains fit for purpose in the new ‘Transformation Economy’.

 

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Industry Shifts Map is powerful strategy tool you can use to help identify and map out the impending shifts in your industry and adjust your strategy to be ready for them. Download it for free here.