The turn of the 21st century redefined innovation once more in the global economy, as thought leaders have been driven by the goal of gaining a competitive advantage through human capital.
We spoke with Vic Anand, the Director of Innovation and Partnerships at AppStudio. Over the past two years, he has been tasked with leading AppStudio’s innovation activities and overseeing the external partner relations network.
Prior to AppStudio, Anand was working as a Sector Leader, Technology for ALM Media. As Sector Leader, he was responsible for researching and developing technology-related programs in Canada. Prior to ALM, Anand was leading cross-functional business and IT teams at the Info-Tech Research Group to design, develop and execute efficient technology initiatives for CIOs.
Christopher P. Skroupa: People are central to an organization’s innovation mission. How can large organizations tap into their diverse workforce to leverage a vast pool of talent with varied skill sets to collaborate effectively and accelerate innovation?
Vic Anand: In the 21st century business ecosystem, companies have a unique advantage which allows them to tap into a vast pool of skills and business experience, as a result of a demographically diverse workforce in modern economies. This includes:
- Striving to create a culture of open innovation:
- Where “outside the box” ideas are heard;
- When minorities form a critical mass and leaders value differences;
- All employees are empowered to bat for compelling ideas and persuade senior management to deploy resources to develop those ideas.
- Ensuring that everyone is heard;
- Making it safe to propose novel ideas;
- Giving team members decision-making authority;
- Sharing credit for success; giving actionable feedback;
- Implementing feedback from the team.
Executive ranks must both embody and embrace the power of differences. Leaders also need acquired diversity to establish a culture in which all employees feel free to contribute ideas. Leaders who give diverse voices equal airtime are very likely to unleash value-driving insights, and employees in a “speak up” culture feel motivated to contribute their full innovative potential.
Diversity creates a better understanding of your customer base. Especially in an industry like Software, that’s laser focused on reaching an increasingly diverse population, it’s exciting to see baby boomers sitting at the same table with fresh-out-of-school 20-somethings, who have a completely different sets of skills. It takes a broad spectrum of diverse minds, cultures and experiences to effectively connect with different audiences.
Having employees who differ in thought processes, background, culture and beliefs is paramount to developing innovative ideas and to pushing the status quo. Retaining senior-level diverse employees is an ongoing challenge, and by promoting diverse talent and giving them access to a support network, diversity will become a priority within the organization, from the top-down.
Skroupa: How can organizations identify and leverage the best innovation systems for themselves to create a competitive advantage and minimize risks?
Anand Innovation ecosystems are a core element in the growth of any organization. The reason is simple: having a diverse “entourage” of past, present and future open innovation partners with whom to share risks and ideologies as well as reduce new product or service development costs represents the perfect context for value networks to emerge and for entrepreneurship to flourish.
There are three different innovation-based ecosystems that help the growth of any organization:
- Technology-based ecosystems focus on idea conversion and innovation adoption. To create value, they should leverage the power of collaboration by connecting with suppliers and companies in complementary businesses, and stimulate the fast adoption of innovation. Example ecosystems include consumer electronics, high-tech, automobiles and machinery;
- Service-based ecosystems are oriented towards solution adoption. Their key role is to provide for asset optimization. Bank and insurance companies, engineering firms and consultancies, but also retail, utilities and contract manufacturing can be seen as industries that build this type of ecosystem around the services they provide;
- Science-based ecosystems are geared towards the front-end of the idea-conversion cycle. Value is created and captured by building critical mass when pushing the scientific frontier in an applied field. Semiconductors and the life sciences, the latter encompassing pharmaceuticals, biotech and medical devices provide examples.
Smart companies know they are faced with stronger global competition, new market structures, changing demand patterns and a move to more real-time business. Five years ago it seemed as though the role of innovation in these challenges was simply to develop a raft of new ideas. Now the role of innovation is to help create the strategic options that allow a company to respond to fluctuating, transformative conditions.
Developing reliable partner relations: The broad logic behind open innovation is that it is increasingly difficult for a firm to continuously innovate and grow in isolation. It has to engage with different types of partners to acquire ideas and resources from the external environment to stay ahead of the competition. As global competition intensifies, knowledge workers become more mobile and innovation becomes riskier and more costly, more businesses have turned to open innovation as a way of increasing the speed and effectiveness of their innovation approaches.
Firms are seen as the principal innovation actors, the employees sitting at the centre of the innovation system. They are best placed to respond to signals from the market place, on the one hand, for different, better or cheaper products and services and, on the other hand, to mobilise or exploit the opportunities and capacities within their value chains. In their pursuit of innovation, they may draw on the know-how and resources of several other groups of actors. In order to holistically leverage a robust innovation ecosystem, companies must:
- Assemble a small team and arm them with proven techniques for identifying unique opportunities for innovation, developing impactful solutions, and prototyping quickly and effectively;
- Incubate a reservoir of ideas, both big and small, so that you are ready to execute on innovative projects when the timing is right;
- Once they have demonstrated the ability to innovate, capability must be matured with a permanent innovation process and program;
- Assess the organization’s performance with respect to the six key preconditions of innovation success: Business buy-in, Time and resources for innovation, IT awareness of business strategy, Diversity of experience, Idea exchange and Recognition of innovators.
Senior executives can influence and become key actors in the Innovation Ecosystem by:
- Promoting people and skill development – the talented and skilled workforce need to be incentivized to learn new concepts to generate new ideas and product enhancements that will drive innovation;
- Facilitating availability of Financial resources; the investments required to satisfy the resource needs of project;
- Providing the specialized advice and support network that innovators require to create and enhance innovation capability;
- Openly accepting and implementing ideas and leverage the know-how of the workforce that creates innovation opportunities;
- Aiming to develop innovators, not innovations: You need staff that intimately understand their users and are willing to fail often and fast to solve the problems that matter most.
Skroupa: Data analysis and the endless amount of consideration lead to a certain rigidity of mindset, which makes it very hard for large corporations to change course. How can organizations improve their speed of action and incorporate agile thinking into their innovation strategies?
Anand: The design of effective innovation processes is a complex topic in its own right, and there are many flavors depending on regulation (i.e. pharma versus online media), complexity of technology (i.e. semiconductors versus pet food) or timelines (i.e. aerospace versus apparel) — yet two important themes remain almost universally valid:
- Elimination of barriers between a great idea and the end user so that a great idea is not watered down by a refined funnel process by the time it reaches the consumer;
- User acceptance and testing: should ensure customers/clients/end-users test ideas early, and that the customer value proposition is kept in full focus along the way.
Companies can drastically improve speed of action by:
- Installation of a strong project management office: A strong PMO will oversee the day-to-day priorities for the team and direct resources, but will also provide substantial inputs to the performance reviews of project contributors. It is important that the project manager also holds integral responsibility for budget adherence, time-to-market, and key specs;
- Creating truly cross-functional teams allows for better coordination of work under a single leader: The best companies have comprehensive skills databases that facilitate staffing with the most qualified people. Require team members to be fully dedicated or for at least 50 percent of their time. This will greatly improve the nurturing of a project culture that puts the success of the innovation project above the success of each contributor’s own function;
- Frequent project reviews: Project reviews need to be frequent, carefully orchestrated and with mandatory attendance for project managers, team leaders and functional line managers. Meetings must drive towards clear decisions in terms of go/no-go and next steps;
- Keeping full focus on the customer value proposition and ensure early market learning: It is important to track the compliance of the innovation to the intended customer value proposition at each step as it moves through the development funnel. All changes to the concept need to be deliberate and informed by new information. Guard against unintended changes to the value proposition originating from miscommunication as it is handed across from one part of the team to another.
Skroupa: Given the current economic scenario where large corporations are facing immense competition from startups that are changing the status quo across the board, commercial returns from investment in new product development are often far from assured. What are the elements that a senior executive has to get right in the innovation game to tip the odds in his/her favor?
Anand: In the early 2000s Sony was expected to be the king of the music industry, but in 2001, a smaller, more nimble company with an entrepreneurial mindset took the emerging market by storm. Apple debuted iTunes and the iPod, and soon virtually every listener was plugged into the iTunes ecosystem. Sony’s loss proves that belonging to the enterprise is both a blessing and a curse. Sony had far more resources than Apple in 2001, but lengthy product development cycles and poorly communicating divisions hamstrung its MP3 efforts. Apple, meanwhile, harnessed its startup culture to design quickly, iterate swiftly and get to market before its competition.
- Startups value disruption: When your entire purpose as a company is to create something that never existed before, it trickles through the entire culture. There’s an embracing of the unknown, of doing things differently than what everyone else is doing, of risk. Large companies tend to concentrate on an established, repeatable business model. The traditional thinking and practice that underpins this focus does not support the discovery of new business models and markets, which is key to disruptive innovation;
- Being ruthlessly transparent: It’s no secret that communication is necessary condition for business success, and companies in this competitive business landscape have little room for error, as most failures come down to misalignment of expectations or breakdown in communications;
- Foster a shared sense of accountability: In most start-ups there is this incredible feeling when the team sits around the table to figure out what we were doing. There is no sense of “well this is my job, and that is your job.” People did what needed to get done. It was much more like “Hey let’s do X. I’ll go run with the Y part of it. You ok to pick the Z part?” Super collaborative. All in it together, and knowing that we all succeeded or all failed.
Skroupa: By its very nature, innovation is a high-risk undertaking, even for the most experienced companies. Fear of failure leads to risk aversion and is often a reflection of command and control culture. How can leaders of innovation move away from the fear of change and accept change as an opportunity and not a limitation?
Anand: Fear and silence are the biggest impediments to innovation in a corporate environment. Senior executives are under immense pressure from board members and stakeholders to deliver results that are far from consistent in today’s cut-throat business environment.
Fear is the major hurdle for executives today. When someone lives in fear of making difficult decisions, nothing gets done. Perhaps an executive is too busy to focus on problems or issues. Perhaps an executive has become friendly with a manager who isn’t complying with critical protocols and, therefore, can’t bring himself to rein the manager in. Perhaps:
- Fear kills creativity: If an executive is terrified of creating a new product or pursuing new revenue streams, he/she ends up analyzing and researching every angle for failure before making a move. All of this stalls making a decision. Nothing gets done. Nothing changes. Nothing improves;
- Great leaders never lead by using fear tactics: Leading with fear kills any chance for innovation because you’re raising an army of yes-men. Innovation thrives when there is trust and autonomy. Senior Executives must lead by example and this includes giving people permission to experiment with things that might not work in the spirit of discovery;
- Driving change with minimal disruption: In many cases, fatigue around the constant pace of change is one of the major detriments affecting the rapid evolutions taking place in the modern enterprise. Organizations that need to drive change, but are also concerned about keeping employees on board, can use process management technologies to ensure that every day operations remain efficient and simple as workers are asked to take on new tasks.
Good leaders set expectations and hold people accountable. They also establish a strategic vision and plan for achieving it. Good, honest communication will always be an asset for those you lead.
The challenge for today’s innovative and courageous leader is to feel the fear and continue with caution. Sure, it’s great to do research and look at all angles, but it shouldn’t be a deterrent.
As a leader, you’re charged with making decisions and following through on them. No team will want to follow someone who doesn’t offer vision and decisiveness.
Vic Anand will the interviewer for R&D and Long-Term Value: Lessons Learned Over the Last Two Decades at The 21st Century Company conference in New York, NY on November 7.