This interview first appeared in Ctrl-D in the Romanian language. Click here for original article.
Christian Rangen will meet with the Romanian public at the IMWorld 2017 conference on October 4-5, 2017. Engage // Innovate will go on Main Stage, where he will hold a session on Is Your Strategy Ready for the Future?
A lot of companies talk about innovation, although they don’t always know what they mean by it. So, how would you explain innovation… for an employer and employee?
Thank you for a great question.
In its most simple terms, innovation is something new that creates value for the company and its stakeholders. Of course, very often it’s much more than that.
We like to talk about innovation vs transformation, where innovation is a number of important new things for the company – for example a new product, a new service, or entirely new business models, while transformation is really a large scale, significant change to create entirely new businesses or business areas that over time can become bigger than the old company.
We always recommend companies to learn our tool The Innovation Pyramid that uses 9 different levels to explain what is innovation. This is a really powerful tool to create shared understanding and shared language in the organization. You can download it at www.strategytools.io.
The right tools, the right structure or the right mindset – which one is the most important for a company to successfully seize new growth opportunities. Why?
You need all three. We work a lot with companies to build innovation capabilities, and again and again and again, we see that we need this combination of factors.
You need a mandate and structure for anything to happen, you need the right tools internally to work within an organizational setting, but without the right mindset and culture, nothing is going to happen over time.
What other measures are needed beyond just training executives in a new strategy tool, in order to innovate?
Successful companies share three traits. First, they have a strong mandate for innovation, usually from the board of directors and the CEO. Second, they have sufficient resources in terms of time and money, and finally, they have the right structure and tools in place. Hence, the right tools are really really important, but you need to look at the wider organization in order to succeed.
Can a company teach its people to be innovative?
Absolutely. Innovation, like any other organizational skill, can be taught, trained and developed over time. We’ve seen some great examples with large organizations really putting innovation and creativity training to the core of their people development.
Based on our work with large companies around the world, we’ve observed three things – first, you need an innovation hero. This is the person that’s creating the internal interest and buy in. Second, you need to link it back to the corporate strategy – so where the company is going in the next ten years. Then it’s really simple, in the matter of designing and running training programmes. This can be physical training sessions, it can be online programmes, or it can be corporate education programmes.
But yes, innovation and creativity can definitely be taught and learned in any conversation.
Nowadays most of the companies outsource innovation. Do you think this is a good thing or that innovation should be a core company competency in order to create a culture of innovation?
I think building a deep capability for innovation is a must for any company and any industry. I also think companies should develop innovation strategies that allow for both internal and external forms of innovation. A great example is Cisco and its framework for innovation strategy. They do a really, really good job of explaining how innovation should either be internal-driven, acquisition, partnership, investments, or collaborations. But first and foremost, innovation should be a deep organizational capability.
You’re the co-creator of several strategy tools for business model innovation that really speed up processes & help companies make informed decisions. Can you talk a bit about each model and about the main thing it helps with?
I’d like to point to 3 of our most popular tools: the first – Three Levels of Business Models – is a great tool for building structure and portfolio around your business model innovation.
It has helped IT companies move from an hourly billing model to a portfolio of business models including one that helped dramatically increase profit margins.
Second is the Industry Shifts Map. This is a newly developed tool that we’re seeing great impact from its work. The Industry Shifts Map allows executives to better understand and act on significant industry inflection points and changes.
Third is The Transformation Test. This is a tool available in its first generation, and it allows executives to survey the company’s ability to lead large scale transformation. We are currently developing an online survey version of this to be tested out with key companies over the next year.
The market all over the world is changing rapidly and many business models are no longer viable. The most common advice companies receive is to reinvent and transform. What does that mean, beyond theory? Where to start from?
I’m so glad you asked that question. It’s the number one challenge many companies struggle with.
The starting point is to develop a strategy for the future. Develop a strategy that allows for much bigger change in your environment and industry. Develop a strategy where you decide on claiming ambitious positions in this new landscape, and finally develop the right transformational architecture inside your company. This requires the right people with the right mandate and tools, to create the future for your company.
We can no longer rely on legacy business models, but need to take aggressive and accelerated positions for the future.
We’re seeing this being done with clients in energy, utility, technology and industrials, but it really requires a top management team with ambitions for innovation and growth, rather than just more of the same.
To be successful, companies should start by building innovation capabilities and the right tools for innovation and transformation.
All tools mentioned in this interview can be downloaded free at www.strategytools.io.