A weekly shot of new thinking for business leaders: innovation needs short business plans, employee incentives and social trends
Corporate leaders often talk about creating a ‘culture of innovation’ within their companies. Most of what is considered ‘innovation culture’ is ‘innovation theatre.’ Having rooms with business model canvases, sharpies and sticky notes is not innovation culture. Neither is opening an innovation lab or working with startup accelerators. Even after putting all these practices in place, executives are still frustrated by the lack of results. They have all the great innovation tools in their business, but no innovation.
Innovation culture is not some mythical phenomenon. It is created by what these leaders punish, recognize, celebrate, and reward. Innovation tools will not help a company if its leadership team is still hanging onto traditional management practices. While executives lament the lack of innovation in their companies, they are still unwilling to relinquish thirty-paged business plans and the calculation of bonuses based on annual sales targets. If corporate leaders want the innovation tools to have an impact on their company culture, they have to change the following three management practices:
THREE CHANGES NEEDED FOR WHOLE-COMPANY INNOVATION
Companies want to innovate but the leadership team has no clear strategy around innovation. Instead, employees are given a broad and general remit to come up with great new ideas. What companies need is a clear innovation thesis that outlines the key trends impacting their business and how the company plans to use innovation to get ahead of those trends. This innovation thesis should provide a simple guide of the types of innovative ideas the company will invest in.
Investment Decision Making
Corporate leaders can stifle innovation by how they make decisions to invest in ideas. Investment decision making is the most powerful lever managers have in transforming a company’s culture. If employees are still required to write long business plans before they get any money, the company will end up rewarding the kinds of people who are happy to write such plans. Such practices tend to exclude the creatives and leave them out of the process. Since most innovative ideas fail, increasing the number of bets is a good method for discovering ideas that work.
Incentives and Rewards
Another powerful lever for changing culture is incentives and rewards. Most companies calculate bonuses and make promotion decisions based on how well people perform in relation to revenue growth on the core products. While managers pay lip service to innovation, they do not put any innovation goals in their employees’ annual plans. Until they change how they incentivise their managers, they will not get the results they wish for.
To move beyond the sticky note approach to innovation, leaders need to change how they set strategy, make investment decisions and reward their employees.
Guest blogger Tendayi Viki