The Innovation Fundamental.

CPH127 thoughtfully translated part of a Danish report titled “The 7 Circles of Innovation”. The research covered 449 Danish companies by a board of practioners and scientists. This report, Magnus Christensson writes, is worthy because it doesn’t just focus on process as it is popular to do so these days, and he gives us a list of what businesses should have in place in order to “have any ambition in terms of innovation”.

The five areas being: Strategy, Culture (& team, Empowerment), Cooperation, Structure & Measurement and Change Management.

And I think the list is fine and adequate. Flexible enough to probably host any endeavor and with just enough useful categorization to live as guiding principles. But the list assumes that the business is healthy enough to do this in the first place.

In my work (which is loosely described as consultancy) I come across many companies who have huge aspirations and equally large ambitions. These companies vary dramatically in size, from being ten-billion dollar, several hundred thousand employees in size, to ten-million dollars in size (revenue) and to being a small three person start-up. All want to be successful, all want to grow in some way or fashion, and these days, all use the term ‘innovate’ as loosely as people used to throw about the word “brand” some few years ago.

And in each type of company, it is also the same ailment that will kill innovation even before any weakness is shown in any of the areas listed by the Danish report: lack of clear vision and brand for the organization.

At first I thought the first on the list, Strategy, covered this, but then I thought back to the ‘innovation groups’ or CEOs I’ve worked with who already had developed strategies for their new interest in innovation. This ranged from giving a team autonomy, budgets and the responsibility to do what was needed, to also providing a clear way for new products or services to be presented and put into production. But more often than not, the innovation activities were done outside of any awareness of the overall company vision.

An additional layer to this is the general “health” of the organization in both its ability to perform as well as maximize the new value created. It is all very well sitting there in your first meeting with IDEO, Doblin or whomever, and saying “I wanna innovate” but to actually be in a position to be able to do so is something else entirely. And for the big companies, it is very different how you structure this compared to when you’re a small company.

I often think of research labs, like HP Labs or the old Xerox PARC and wonder how much they benefit (or benefited) or suffer(ed) from not being closer to people who might design the end-user product, brand or service. When you see companies like Apple, Google, BMW, and P&G you wonder if they’re set up better to turn innovation into economic success. Blue Sky research is very different from the ‘act of innovation’ I know, but both activities have to accommodate a certain amount of abstract to be able to get started. It is only the healthy company that is able to take this innovation activity and build it squarely into its already successful business processes, and make something of it. And to be able to do this, the vision and brand strategy of the business have to be clear to all.

So this is all very well, again, if the “company” is trying to innovate and perhaps launch new products and services to dominate the market. But much of the time, innovation is never seen directly by the customer, or isn’t present just in the product they’ve purchased. Innovation can happen anywhere within a business cycle.

Perhaps the “company” I’m speaking of, is an insanely huge software company that suddenly finds itself in the shadow of a recent upstart who looks poised to take the market lead. Company A, this aforementioned large monopolistic software company, decides that it needs to innovate– in fact scratch that, it needs to be an innovator and dramatically increase its ability to conceive, design and release new products. So company A sets up an internal innovation group. Complete with all the above five areas covered. Including post-it notes, and obligatory copies of anything a Kelley or someone from IDEO, or MIG has written.

Company B, a recently wealthy and pretty active company, has an entirely different culture from Company A, where every individual within the organization understands, believes in and can pretty much articulate Company B’s vision and values. Each individual is empowered to innovate, by either prototyping new ideas or getting together with other likeminded individuals to research and prototype new ideas. Company B has no internal innovation group, but has structured itself to be exceptionally good at listening both to its internal individuals, as well as to its customers. Doing this through stuff like blogs, receiving suggestions and monitoring closely the usage of its products. The company is willing to test new products on customers, and adapt and amend things with its user base. Over the years, the customer base has been accepting of this and even helped to strengthen this ecology of innovation and development.

Company A was first started at a time when business was perhaps simpler. It developed a key product and then built a business around selling that product. It grew in size by being better at selling the product and better at running its business. Every development was controlled by a culture of developing “features” for the main product, or by some connection with the sales and marketing of this said product. So really, it grew by being really damn good at its business– not necessarily businesses.

Company B started only a number of years ago and its core product makes no money but the success of it allows it to make money from it, sort of indirectly. In fact it is confusing as to what business is the company really in. Is it a frog that thinks it’s a rabbit, or is it a rabbit that thinks it’s a cat? Its business strategy is very difficult to pin down, and it is almost as if there is no clear strategy, but an unprecedented ability to adapt and change according to opportunities it develops. The Change Phases suggested by John Kotter are clearly present in this scenario.

Both companies look healthy, one in fact is incredibly so if you just look at market size and cash in the bank. But I would argue that Company B will sustain success for much longer and without so much concern as Company A has. And this is primarily because Company A is, at the moment, healthier because its vision; purpose and brand are much more ingrained into its culture and way of being. They don’t “do innovation” they’re being innovative.

(This was a purely fictional story, and does not bear any actual fact based on real people, companies or organizations. Any such coincidence is just that and was fictionalized by me, the author, purely to illustrate my point. No really.)

Though this wasn’t the point (or lack of point) from the post by Christensson, and it has been said before, “innovation has to be built into the brand of the organization” - because, as it has been said elsewhere, “Companies aren’t innovative - People are”.

And my addition to the CPH127 post would be that before all that (being the five things listed) the company has to check whether it really is an organization that can support and manage innovation. Innovation isn’t just about services and products for its customers, but innovation that might provide better value in the long-term to its customers. Fixing problems internally, adapting to change, even a restless appetite for self-improvement are all characteristics that help provide an environment for innovation to thrive in.

Sick companies usually think that building a new website, or making a new product will help them out. When in fact, it’s usually just the ability to recognize that the organization is sick and is in need of a vision and brand revitalization to help fix things. Then making a decision about what type of marketing, business, brand or sales activity can take place.

It does seem that times have changed, and apparently you can no longer just sell T-shirts anymore. Today you have to sell a lifestyle, branded experience and adopt an emotion to be able to sell T-shirts successfully. Innovation is only a small part of the whole equation, and today a company has to ask its employees to innovate probably as many times as they drink a cup of coffee a day or check their email. This can only be a good thing, because organizations can cease to carry on as efficient machines making mass-produced products (in a very narrow example) and become a mix of operating efficiency and creative, committed and inspired people. In an ideal world anyway, well, unless your headquarters are nearby in 1600 Amphitheatre Parkway, Mountain View, CA perhaps.