In 2004, an e-commerce company engineer named Charlie Ward submitted an idea to the company’s digital employee suggestion box.
He proposed a fast-shipping service club where members could gorge on as many online purchases as they liked and get their goods delivered at record speed – all for a fixed monthly fee.
Other employees really liked the idea and started responding to it. The action caught the CEO’s attention, who pounced on the idea and set an executive team working on it.
At the first work session in November 2004, he told the team that they could have any resources they needed to make the idea a reality by their next earnings report, a mere three months away.
They launched the service in February 2005, with naysayers and skeptics speculating about the loss the company would incur with such a high-cost service.
Amazon Prime is today one of the biggest drivers of Amazon’s growth. There are about 90 million paying Amazon Prime subscribers in the US today who spend more than four times what non-members spend. According to some estimates, Prime accounts for 60% of the total dollar value of all goods sold on Amazon.
Planning a Successful Innovation Program
As companies realize the importance of innovation as a future driver of business, more and more leaders are setting up innovation programs that they hope will lead them to the next big thing.
However, these programs often fall short – not because of a lack of ideas, but because they’re often vague and haphazardly put together.
Charlie Ward’s little idea would not have seen the success it has today if it didn’t have a conducive environment to thrive in.
So what are the biggest pitfalls that companies often face when they plan an innovation program?
We spoke to a close friend of Engage // Innovate’s and experienced innovation leader Harvey Wade about the lessons he’s learned from the numerous innovation and change programs he has led.
Five Mistakes to Avoid When Planning Your Next Innovation Program
Having kick-started innovation programs across some of the world’s largest companies like Citibank, J&J, Cisco and Allianz, Harvey has seen his fair share of flops and has through experience, uncovered the ingredients to an innovation program which yields actual results.
According to Harvey, here are top five mistakes you need to steer clear of:
1. Leaders leaving innovation to others
If innovation is not on the top of the boardroom agenda, it’s not going to happen. As innovation is too fragile to survive on its own in the beginning, it needs a leader to visibly drive it.
In my experience, when a leader or CEO is personally involved in driving an innovation effort, innovation will be given time in the boardroom and leader discussions, as well as awareness and the lever to get action when needed; it makes them accountable.
I’ve worked with organizations that try to run an innovation program which is driven by middle management or lower down in the organization. While some of them achieve good results, they very rarely get to the point of a transformational success, which in my opinion can happen if the top leadership are involved. To drive a sustainable approach to innovation that keeps your company on the leading edge, you’ll absolutely need the buy-in and personal sponsorship of those at the top.
To-Do: If your leaders are on board your innovation program, consider how you can make them more visible and think about what role you need them to play. If they’re not involved, you’ll need to understand why that is and start to consider what will get them involved. You know your leaders best and decide the best way to get them invested in the program – be it through board influence, external advice, or some good old shock treatment of what will happen if they don’t support innovation.
2. Thinking innovation is just the outcome
Rather, it’s an enabler of a better performing organization.
You often hear people saying, “I need ideas, I need innovation!”
But why do you need that? Because you need a better performing business, or maybe you’ve got problems that you need to solve, but don’t know how.
As soon as innovation becomes the outcome, what you’ll get is what I like to call “an island of misfit toys”. You’ll get all these really cool things done, but you don’t quite know whether they’re aligned to creating a better performing organization.
It’s harder for people to get involved in “random” innovation, because they’re thinking about what the strategic objectives of the business are, while innovation is running on a separate track.
Innovation should not be the goal, but the enabler to drive more business and organizational value, and enable you to be in a better place as an organization than where you were without innovation. It must be aligned to your organization’s strategic objectives to be truly embedded.
To-Do: Understand what your organization is looking to achieve, identify the gaps where they’re either not performing or don’t know how to close. Ensure innovation aligns with those strategic imperatives and the stakeholders of those imperatives. Start focusing on innovating around those needs and problems, and consider how you can bring that back to the business.
3. Thinking strategy will trump culture
Clients often come to me saying that they have a fantastic innovation strategy. Then you ask, “so what’s your innovation culture like?”
Answers usually range from “it’s OK, but nothing special,” to, “oh, it’s really negative and we have low engagement.” Some even say, “we’ve just gone through some restructuring, it’s tough at the moment.”
You can’t ignore culture because innovation is all about people. They need to care about the organization and its purpose to want to make it better.
If your company has a culture where the employees aren’t really invested or engaged, why would they dedicate their time and effort towards an innovation initiative that is looking to make the company better?
If you have a workplace culture where employees are overworked, feel unappreciated and not encouraged to challenge the status quo, they will not be responsive to your requests to get involved in the innovation program.
If you’ve got a culture where everything revolves around politics, you’ll have employees who are more concerned with climbing up the career ladder than explore something like innovation.
To-Do: Culture change is hard because it means changing behaviors and habits. It’s going to be hard, so you’ll need to start small. Consider your program and what behaviors are needed to bring greater success to your innovation program. Taking that one behavior, how could people change this, what would encourage or incentivize them to make a change and stick to it. You may have to talk about the big picture, or talk about who else is doing it, why it’s needed. You may need to find people that are displaying the desired behavior, and celebrate them. It will take time, but start somewhere.
4. Not making time or space for innovation
Organisations can normally find the budget for innovation projects, but what they struggle with is finding the resources to make it happen.
Everyone’s opening labs and nice spaces where people can “innovate”, and of course the right physical environment is important and good to have, but it’s essential to give people the time to work on innovative experiments.
Taking someone away from their day job will probably cost you in the short term, but to have a future, you have to invest in it. This investment will pay off in the long run. Consider the risk of not doing anything versus trying innovation ideas. It might be that there’s more of an opportunity to drive change when you actually invest the time.
Many of the world’s leading companies subscribe to this belief. 3M employees get 15% of their work time driving experimental projects that they’re really interested in, which in turn often lead to new products. Cisco’s internal innovation program – the Innovate Everywhere Challenge – awards the winners with mentorship, access to Cisco’s global Innovation Centers and labs, Cisco partnership in their venture, funds, and time off to work on their project.
To-Do: You have to not just find resources, but develop ways to create time for innovation to happen beyond just the voluntary giving of time, otherwise the day-job always gets in the way. Consider how much you can invest in disruptive innovation, maybe that’s 5% or 10%, and then find ways of giving both money and time to that desire. There is always a risk involved, so consider it the cost of future-proofing your business, the same way you train employees to be better at their job.
5. Not creating individual performance metrics that encourage individuals to support and practice innovation
When an employee does good work at their day job, they usually get a bonus and maybe even a raise. Whereas in some innovation projects that I’ve experienced, people normally don’t have a well-defined reward. You usually get a pat on the back and people telling you you’ve done a good job. You may get a raise or a big bonus if lucky, but it’s often not structured and people don’t know for certain that their efforts in innovation will feed into their overall performance.
This is why people always focus on their day jobs, because that’s where they will be recognized and rewarded for good work. People are generally supportive of innovation, but are hesitant to get involved because they don’t feel they can invest in it if it will cause them to perform worse in their actual job. Looking at this in another way, if people can get a fantastic job review and a large bonus while completely ignoring innovation, you’ve got a problem that needs to be fixed.
Making this change is going to take careful navigation of the organisation and you may need to invest in a flak jacket! Changing personal performance metrics is not going to be easy, which takes you back to ensuring you have leadership buy-in and backing before you start on this journey.
To-Do: This is not going to be easy, so start small. In terms of KPIs, instead of the usual performance metrics, think about bringing in an improvement metric. This starts to create a conducive environment for innovation to thrive. For example, asking people to show how they have supported someone in their team who had an idea, how they got involved, helped them make it better and most importantly, supported the implementation. As this begins to get accepted, step it up to the next level, and don’t forget to get HR involved and on–side!
Questions? Reach out to Harvey Wade on Twitter, LinkedIn, or his company website.
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Sources:
https://www.seattletimes.com/business/amazon/10-years-later-amazon-celebrates-primes-triumph/
https://www.forbes.com/sites/louiscolumbus/2018/03/04/10-charts-that-will-change-your-perspective-of-amazon-primes-growth/#7493c8563fee
https://www.fastcompany.com/3067455/why-amazon-is-the-worlds-most-innovative-company-of-2017