The Twelve Disciplines of Consistently Innovative Organizations
Ever notice that some organizations seem to be far more consistent at delivering new innovation than most? I have. Ever wonder why this is… what they do differently? I certainly have.
Indeed, like so many others before me, I’ve spent my entire adult life working in and around organizations that were trying constantly to deliver better value to their markets. Some — like Ford, GSK, and Whirlpool — have been relatively successful at this. Others less so.
After observing these organizations — and hundreds of others like them from all over the world — what I have to come to understand is that there are certain common disciplines that seem to mark the most consistently — and successfully — innovative among them.
Examples of organizations that would fall into this camp today would include Amazon, Google, Apple, IBM, Tesla, Netflix, Spotify, Tencent, Patagonia, and Corning, among others. Of course, none of these are 100% perfect in this regard, but they are about as close any organization has come so far.
In particular, I have identified twelve disciplines that businesses — if they are to be consistently successful at innovation and market leadership like these businesses — must develop and use persistently. I will explore each of these in turn, from 1–12.
No 1 — They are constantly hungry!
No organization ever got to the top its game without being hungry. The market leaders in most all industries got to where they are because they wanted it badly, and because they worked their butts off to get there. They were hungry.
The opposite of hungry is complacent. Complacency leads to distant follower status and ultimately to irrelevance. Market leaders know this, and so they know that they can never resign themselves to comfort and complacency. They know — just like Steve Jobs did when he infamously exhorted businesses to “stay hungry” — that doing so was the only way to stay on top.
It is out of this constant, unrelenting hunger that leaders deliver the sort of innovation to their markets that let them remain leaders in their markets for years and decades on end. You will never find a market leader that was not first hungry to be there, and you will never find a persistent market leader that was not persistently hungry to stay there.
To be the market leader, you must be constantly hungry.
No 2 — They have a clear plan for where they want to go, and a sound strategy for how they intend to get there.
No market leader ever got to where they are by being unfocused and throwing its energies around haphazardly. They got to where they are by having a clear plan for where they wanted to go, and a clear strategy for how they intended to get there. The plan focuses everything they do toward this aim, while the strategy lets them know what to say “yes” to and what to say “no” to.
Today we codify these in the form of a formal Innovation Strategy. Such a strategy will lay out — in detail — the specific areas the business intends to go after, as well as the specific types and scopes of innovation it intends to deliver for each of those areas. It will also lay out the specific innovation vehicles the business intends to leverage to deliver those innovations.
By defining, articulating, documenting, and religiously pursuing this strategy, the business is able to — bit by bit, and piece by piece — claw its way up into the market leader position. All of its investments and energies — on account of this strategy — will be funneled down this path; none will be wasted and squandered on things that do not contribute to this goal. This ensures they remain highly focused on achieving this key objective.
No 3 — Their radar is perpetually on.
In consistently innovative organizations, their radar is always on. What this means is that they are constantly out doing needfinding work — eagerly looking at every turn to connect new dots and find new opportunities to deliver breakthrough innovation and value to their markets.
Like a wild beast guarding its lair, nothing gets past their gaze. If a new emerging (unmet) need begins to surface, then they are the first ones there… the first on the scene responding with a well-considered solution.
Being able to do this requires a very sharp sense of “market acuity”, a skill that engages the business’ five “discovery senses”…
· Feeling for their customers — making customer-centric thinking their constant way of life.
· Tasting engagement — working hard to turn their customers into a true community.
· Listening acutely — hearing all the voices around them to find persistent pain & friction points.
· Seeing the world differently — reframing every situation into its most fundamental needs.
· Sniffing out nascent opportunities — always asking themselves “What’s next?”
To make this a reality, these organizations maintain staffs of professional “needfinders” — individuals and teams whose full-time jobs are to be “out there” engaged with the market, scouring it to uncover current and emerging opportunities to deliver new innovation. Such teams — often part of a Core Innovation Group or perhaps a Strategic Marketing Group, and sometimes stationed at various “listening posts” around the world — need not necessarily be large, but they must be skilled at this task, and they must have access to the right decision-makers in the business so that when they do bring new insights back into the organization that represent significant new opportunities, they have the right people to listen to them and take appropriate action.
This discipline is very important for helping the business to remain “fresh” and “relevant” to its markets, and for ensuring the business continues to evolve over time as its markets and their needs evolve — or come and go altogether. That in turn helps the business to ensure its long-term resilience in the face of the inevitable changes and market shifts it will face.
No 4 — They source their insights and capabilities far and wide.
It used to be that organizations believed everything could — and should — be done entirely in-house… organically. That allowed them to play their cards close to the vest, thus avoiding the risk of competitors knowing what they were up to.
But consistently innovative organizations know that anymore this cat & mouse game with competitors is simply a losing race of incrementalism for the “me-too”s of the world. It does not produce the quantum leaps needed to claim true market leadership. For that, the organization must leapfrog their competition by moving the needle substantially forward for their customers.
One very important way this is done is by sourcing both insights about the market and its needs, and the capabilities needed to address those needs, from the outside. In the twist we now know as Open Innovation, there have come to be all manner of crowdsourcing campaigns, tournaments, and other venues by which businesses can tap into the “wisdom of the crowd” to uncover significant new opportunities — opportunities they otherwise had been overlooking, largely on account of industry myopia. Similarly, there have to come to be a broad range of platforms and venues by which new relationships can be brokered between those who need access to certain capabilities (technologies, service methods, market channels, and so on), and those who supply such capabilities (often very niche capabilities).
Consistently innovative organizations understand that looking outside can be a very lucrative source of fertile new opportunities and fertile new capabilities. They are therefore extremely open-minded about where they go in search of these things. They are not concerned with the old-school “not invented here” mentality (NIH) — a tired and decrepit remnant of the Industrial Age. They’ve moved on. And they have the results to show for it — they tend to launch far more and far better innovations than do their competitors who are stuck in the last century.
No 5 — They go both organic and inorganic!
Consistently innovative organizations understand that in order to produce the greatest possible impact on their business and its markets, they must simultaneously pursue innovation through multiple different innovation vehicles:
· Organic — centers of excellence / roadmap R&D + NPD / X-works R&D + NPD
· Extended Organic (partnerships) — contracted R&D / technology transfer / strategic suppliers / cross branding + marketing + selling / open innovation
· Inorganic — corporate venturing / innovation-synergy M&As.
They understand that none of these vehicles are mutually exclusive, and that no one of them in isolation will be able to meet their needs… that at times any or all of them will have to be called upon if they are to succeed. And so they develop centers within the business that have the capabilities needed to leverage each one of these in their own appropriate way. This allows the business overall to execute a very large, bold, and ambitious Innovation Strategy — the sort that ensures its ongoing market leadership, as well as its long-term resilience in the market.
No 6 — They use the 5 Discovery Skills to carry out Design Thinking.
Consistently innovative organizations employ both Design Thinking and the five Discovery Skills. They use these together to study new opportunities and to reframe and re-scope them so that they can conceive optimal solutions to real “problems worth solving”.
The five Discovery Skills derive from a six-year study undertaken by Dyer, Gregersen, and Christensen, and are well documented in their follow-on book The Innovator’s DNA. Specifically, these skills are Observing, Questioning, Experimenting, Networking, and Associating. When organizations can teach and cultivate these skills within their business, and in so doing get their workers to use them routinely, then the organization starts to become much more adept at finding, studying, and understanding new innovation opportunities. Consistently innovative organizations understand this, and work hard to inculcate these five skills into their work — particularly in those teams explicitly charged with pursuing innovation.
Design Thinking encompasses three elements:
1. The Human Centered Design philosophy (HCD) — this emphasizes the need to cultivate deep empathy for the customer, and thus an empathic understanding of them and their situation within a given context.
2. The Design Thinking process — a series of diverging and converging steps for exploring both the problem space and the solution space, and in between defining a compelling Point of View and relevant Design Principles against which to work.
3. The immense collection of Design Methods — an extremely broad array of practices that are used to observe, question, experiment, and study the situation of interest.
Consistently innovative organizations embrace the HCD philosophy, practice the Design Thinking process where appropriate, and teach and use an extensive array of Design Methods so as to fully explore and characterize the problems and solutions in their domain. This gives them assurance that they are solving for the right problem at the right level (a properly reframed problem) and that the solutions they conceive for it are in fact optimal solutions for the right problem. As a consequence, this de-risks their innovation process by vastly increasing the chances of delivering a new innovation that will resonate with a real need in the market.
The best organizations layer these two together… using the five Discovery Skills to undertake the Design Thinking process. This yields the highest possible caliber results.
No 7 — They experiment relentlessly!
Consistently innovative organizations are relentless in their desire and willingness to experiment over and over and over again… trying, trying, trying, over and over again, until at last they finally get it right!
This is so often what separates the winners from the losers. The losers run out of interest, or their leadership lacks the patience needed to sustain constant experimentation, and so they walk away before learning anything of any real value. The winners on the other hand, while equally pragmatic, understand that in this case the race goes to those who persevere, and so their leadership strives to embed into the culture itself the patient willingness needed to pursue constant and relentless experimentation. It simply becomes a part of their DNA… a part of how they operate. The pragmatic side of them will ensure that with each iteration of an experiment they are learning something useful, but the determined side of them will ensure they continue applying these learnings to each subsequent iteration until at last they find what they are looking for. This usually produces the insights they ultimately need to then develop and launch new innovations that are fully on mark.
Consistently innovative organizations get this, and so they experiment relentlessly to find the right paths forward for sustained market leadership.
No 8 — They are liberal in their use of enablers and reinforcements.
Consistently innovative organizations are very liberal in their provision of innovation enablers and equally or more liberal in their use of innovation reinforcements — both needed to drive and sustain ongoing engagement in their innovation program. In these organizations, there are no excuses for workers not being able to innovate!
Enablers include such things as innovation training, general resources, technology tools (e.g. design software), infrastructure (e.g. innovation or R&D labs), access to discovery opportunities and insights resources (e.g. field research and syndicated research reports), the opportunity to engage their networks in helping to evolve new ideas, and access to a broad ecosystem of partners to help execute new ideas. These are all necessary for giving workers the skills they need to think and act like innovators, and the resources they need to actually go out and do high-quality innovation work for the business.
Reinforcements include such things as incentives (to kick start engagement), recognition and rewards (to sustain engagement), and PR campaigns targeted at customers, workers, and investors (to maintain ongoing support for the innovation program). Together, these serve to reinforce within the business its innovation efforts so that its workers remain engaged in its innovation program indefinitely. By using these liberally, the organization will ensure a healthy and sustainable innovation program that is constantly feeding a strong and vibrant Innovation Pipeline.
By combining the right enablers with the right reinforcements, organizations can develop strong, healthy, and vibrant innovation programs that produce significant results for the business. They remove all barriers and excuses for people not being able to innovate, which in turn tends to maximize overall engagement in the program, thereby maximizing the business’ return on its investments in these enablers and reinforcements.
No 9 — They have a disciplined and focused innovation investment process, allowing them to choose their investments wisely.
Consistently innovative organizations have a well-defined and highly disciplined and focused process for making their innovation investment decisions. Starting with a defined Innovation Strategy (which serves to focus them and point them in the right direction), they carefully consider all of the innovation investment options available to them at any point in time, and after conducting appropriate research and justification on each one (i.e. is it really a “problem worth solving”… does it impact enough customers that delivering a solution to it will scale and pay back for us?), they thereafter make their innovation investment choices. This ensures they are selecting the best possible options for realizing their strategy.
To put it simply, this disciplined and focused process allows them to choose their investments wisely — ensuring they are not wasting resources and efforts on pursuits that do not align with their strategy. This maximizes their strategy’s chances of succeeding.
No 10 — They execute “steel bar” solid!
Consistently innovative organizations execute. Period. In fact, they execute — technically and commercially — “steel bar” solid!
This requires their having developed tremendous skill and discipline on the Back End of Innovation, so that they can take all of the novel solution concepts that Front End teams have conceived, and then actually turn those into real offerings the organization can deliver consistently day in and day out. This ensures their investment in the Front End pays back for them.
This is very important, because otherwise if an organization cannot execute the things they are defining on the Front End, then they are essentially wasting their time, energy, and money on that Front End work. The only way to recoup their Front End investment, as fun and warm and fuzzy as it may be, is to be 100% fully capable of taking those Front End concepts and turning them into real new offerings the business can sell and monetize in the marketplace.
Consistently innovative organizations get this, and so they build as much capability and muscle on the Back End as they do on the Front End. It takes one to serve the other; neither in isolation will let them succeed. They must have both.
No 11 — They operate innovation as an ongoing, never-ending cycle.
Consistently innovative organizations operate innovation — including all of the preceding disciplines — as an ongoing cyclical process. It never ends!
They realize that it’s all about running their “engine of innovation” (their innovation program) so that their “innovation factory” (the people championing new ideas) can produce a constant and steady flow of new innovations coming out of their Innovation Pipeline and into the light of the world. They understand that this constant and steady flow will not happen by running the engine on and off again intermittently, or by occasionally idling their innovation factory. They understand that the only way in which they can ensure a constant and steady flow of innovations is by operating these full-time, all the time, in an on ongoing cyclical process.
This means that every time they finish one cycle through their pipeline / portfolio loop, they start all over again and initiate a new cohort of projects to keep their portfolio refreshed and their pipeline filled. Depending on the speed of their markets and their development cycles, this innovation cycle may occur monthly, quarterly, bi-annually, or otherwise, but whichever it is, it constantly repeats. Over and over. Never ending.
Consistently innovative organizations understand that this is the only way by which they will continue to remain innovative and thus relevant to the world.
No 12 — They wrap it all up with the right sponsorship and leadership — creating and sustaining the right culture in the business.
Consistently innovative organizations wrap up all of these disciplines with the right types of sponsorship and leadership. This enables them to create and sustain within the business a true culture of “hunger”, and thus of ongoing relevance. This includes issuing a mandate for innovation within and across the business.
Sponsorship refers to the individual(s) who will “sponsor” the business’ innovation program, and thus give it the executive “air cover” it needs to ensure it can overcome the various obstacles and hurdles it will inevitably encounter (including potentially entrenched “corporate antibodies”). In most cases, the Sponsor is the business’ CEO or a similar top-level executive — someone with the authority and clout to back the program and ensure that it thrives over time.
Leadership refers to those individuals who will actually lead and guide the business’ innovation program. These are the persons who will oversee both the content of the innovation program (setting the Innovation Strategy and green-lighting new projects for development and implementation (the Innovation Pipeline), thus establishing the business’ Innovation Portfolio) and the operation of the innovation program (its structure, roles, responsibilities, processes, and so forth). These individuals will often report up to one person — typically the Chief Innovation Officer or an equivalent role — and that person will set the vision and agenda for what each section is to do. Strong leadership is crucial to having a healthy and well-functioning innovation program. It is equally crucial that the individuals who fill these roles “get” innovation. They must understand the “round peg in a square hole” nature of innovation and that innovation often requires us to go against the status quo. For this reason, they must have the street smarts to know how to “tackle & block” their way through the obstacles they will have to clear along the way. Consistently innovative organizations understand this, and therefore work hard to ensure they are placing the right individuals into these roles.
The mandate for innovation is both a documented and articulated requirement — typically issued jointly by the sponsor and leader of the program — dictating very specific requirements for each portion of the business (business units, sections, departments, and so forth) concerning the extent to which, and in some cases the ways in which, they will pursue and deliver new innovations for the business. Examples of this might include: “each year, 20% of the projects you undertake will relate to innovation, and 5% of the projects you conclude must have originated from within our Core Innovation Group.”, or “20% of the revenues your unit generates each year must originate from new innovations launched within the past three years.” Such mandates create within the business a certain level of “pull” for innovation, ensuring that each portion of the business is doing its part in helping the business realize its larger innovation goals. Consistently innovative organizations understand this, and therefore issue and repeatedly reinforce these mandates.
And so there we have it… the twelve disciplines of consistently innovative organizations.
Any organization that wishes to become like this will emulate these disciplines and find their own variations of them. This — and understanding all the nitty gritty details that fill in between them — is what enables organizations to have healthy and well-functioning Innovation Pipelines that ultimately pave the way to market leadership.
Anthony Mills is one the world’s foremost thought leaders on business innovation. As the Founder & CEO of Legacy Innovation Group, he has coached hundreds of business leaders from around the world and has led countless innovation initiatives within businesses. He can be reached at firstname.lastname@example.org. Learn more at www.legacyinnova.com.