When innovation disrupts existing delivery models or other aspects of a company’s status quo, that can be uncomfortable. But getting innovation right is imperative for enterprises who want to survive the current seismic changes and emerge steady, strong, and more customer-focused than ever.
During our recent webinar, Creating an Environment for Accelerated Innovation, I was lucky to get a chance to discuss this issue with Gordon Suttie of EY and our own Conor O’Neill. How can enterprises face the challenges of innovation in an intrepid way, and deliver value for themselves and their customers, when it might involve changes that cause discomfort in the short term?
Tackling innovation on all three fronts
The good news is that, although large organizations across industries find innovation challenging, there are lessons to be learned from those who have successfully pioneered new products and services, in new markets using new tools.
As we heard from Gordon, that sort of innovation is what is termed transformational innovation: moving beyond the optimisation of existing products for existing customers, and beyond the pursuit of new lines of business, to achieve actual breakthrough innovation, defined as creating totally new offerings for new markets and new customers. But there are three varieties of innovation – Core innovation, Adjacent innovation, and Transformational innovation – as Gordon explained, and it’s possible for an organisation to manage itself through these three kinds of innovation in a way which will let it achieve truly novel products and services, without killing its core product.
Gordon cited Nagji and Tuff’s writing from Harvard Business Review on this illuminating analysis of innovation types and what each type means for the organization.
Gordon’s key point was that an organisation must work on all three of these “horizons” simultaneously, and with different teams and resources, so that it nibbles away at the innovation challenge at all three levels, rather than focusing exclusively on just one kind of innovation and placing all its bets there.
If you’re not already familiar with EY’s superb Virtual Advisor, a self-service digital platform that gives users access to EY level consultancy, you can read more here, but during the webinar Gordon also gives an excellent summary of how the platform was developed.
It’s a strong example of transformational innovation, and he shares frank insights about pitfalls and lessons learned, including the need to resist the temptation to simply “digitize” what an organization is already doing today. It’s imperative to centre everything around customer need, to ensure that what’s being developed meets that need instead of basing innovation on the HIPPO concept (the Highest-Paid Person’s Opinion; their view about what customers need can’t supplant feedback from customers themselves).
A performance mindset is everything in innovation
Conor talked about the need for enterprises to approach any innovation project with a performance mindset. Conor discusses the value of taking a design-workshop driven approach where – similar to Gordon’s point – the focus is on the customer problem.
Sometimes it involves questioning things that already exist and really getting to the heart of the market-facing objective. With a focus on performance, this can deliver efficiency benefits not just for the users internally but for the customers themselves. Conor cites an example to illustrate what he means: if the company is using a suite of spreadsheets to (inefficiently, unscalably) power a business process, it should ask itself what customer need those spreadsheets were really designed to solve. This may often lead to developing a solution – such as a cloud-native, web-based app – that allows customers to self-serve and enjoy a better experience.
Conor also gave an in-depth look at why open source is so valuable to innovation initiatives, delivering targeted capabilities, sourced from the world’s largest population of skilled and passionate developers, that fit precisely with what an enterprise is trying to achieve.
The focus, Conor argues, for any innovation initiative must be to achieve true transformation: an enterprise truly wins when it doesn’t just aim to catch up with the market or be a fast follower, but when it adopts performance as a philosophy and everything that entails.
From project to product
During the panel discussion, the topic turned to what Gordon described as moving from a “project mindset” to a product mindset. With a product mindset, Gordon argues, the organisation thinks chiefly about the customer and their needs.
This isn’t just about customer-centred design, but about drawing on all parts of an organisation and their skill sets in order to focus 100% on finding the best solution to a customer problem. That means pulling in expertise from the organisation’s engineering team, the business side, actual customers, and designers, where everyone discusses and analyses true customer requirements and the best way to meet those.
A project mindset, on the other hand, can often kill innovation initiatives: this is a mindset that sets metrics for success in advance and commits rigidly to those before the real work begins. On the contrary, a product mindset doesn’t decide in a fixed way what success will look like but defines success based on what the team learns during the innovation process. With a product mindset, the entire team sees and agrees what must be developed next, based on lessons and insights they’ve all learned.
This led to the topic of DevOps and how it is vastly misunderstood in many organisations yet its role in accelerating innovation is crucial. The problem comes down to organisations who think that if they hire people with the title DevOps engineer or invest in some DevOps tooling that this is going to solve any bottlenecks and improve their IT delivery model. But that is not so. Whilst DevOps practices are expected to become as disruptive to IT as lean was to manufacturing during the 1980s, it will take business leaders to understand and IT leaders to adopt DevOps methodologies rather than just sets of tools and buzzwords.
To sum up the key message from the discussion: the best innovation projects, which achieve true transformation, don’t just deliver a great customer experience, but also build and change the core capabilities of the organization itself.
Head over here to listen to the webinar in full and see what your key takeaways are.
I’d like to thank Gordon Suttie for joining Conor and me on the webinar and we also thank Global Business Intelligence for hosting the event.
Clare Dillon is Head of Strategic Partnerships at NearForm. You can connect with Clare on LinkedIn.