With the increasing speed of change and an escalation of accessible data, strategic innovation should serve as a coping strategy for the complex challenges of tomorrow. Growing numbers of organisations understand the value of an innovation culture, which constantly redefines and renews business models, processes, customer offering and technologies. Yet, …
With the increasing speed of change and an escalation of accessible data, strategic innovation should serve as a coping strategy for the complex challenges of tomorrow. Growing numbers of organisations understand the value of an innovation culture, which constantly redefines and renews business models, processes, customer offering and technologies. Yet, not many are capable of actually implementing theory into practice. It all falls down to good intentions, with little tangible impact. So, what should organisations do to avoid stasis and move forwards in search of better leadership, better culture and better outcomes?
First and foremost: if you want innovation, stop talking about it. Instead, concentrate on analysing your organisation in terms of decision-making. Innovation relies organically on decisions about resource allocation. New ventures tend to require extensive investment without immediate returns – obviously this is not the prefect pitch slogan. Management teams are not at ease with high levels of uncertainty and risk when it comes to business innovation. Businesses seek proven results, a history of success, and thick margins.
To reconcile this flawed system with innovation, organisations have two options. On the one hand, current debate on the explorative and exploitative activities in an organisation is an interesting benchmark for organising internal structures (Kriger 2005). Following this thinking, organisations should be structured dually – with a strategic approach to exploiting existing operations and parallel entrepreneurial activities that aim at exploring new directions for products, services, processes, networks and business models. The two strands should coexist and be equally high on management agenda. At the same time, both explorative and exploitative activities require very different skills, hence they should have separate teams. Practice shows that while it looks easy on paper, it is enormously difficult to institutionalise such frameworks in existing organisations.
In their current shape and form, organisations are often not capable of supporting both behaviours, which backfires with shrinking margins, outdated processes and declining growth. One of the key insights identified through my research suggests that innovation is best approached from outside existing structures. The external status allows innovation projects to be unrestricted by prevailing ways of doing things, bureaucracy and metrics. Whether building an innovation culture inside an existing system, or taking innovation outside – both approaches essentially rely on strong leaders. These individuals are capable of juggling decisions about exploitative and explorative activities, in and outside of existing structures, while retaining a “bird’s eye view” on the entire portfolio. The ability, on part of management teams, to zoom in and out, and handle the need to outweigh the risks with the opportunities is core to a winning strategy in organising for innovation.