Over the past six months, Harvard Business Review asked 1,000 executives how their organisations approach innovation across five key areas – process, human capital, funding, customer experience, and data and technology. The resulting report gives an intriguing insight into the five key traits of innovation.
With contributions from 12 of the world’s leading chief executives, including IBM’s Ginni Rometty, Salesforce’s Marc Benioff and PayPal’s Dan Schulman, among others, the report (sponsored by Mastercard) identifies 50 actions that can spark innovative change. Here are the five key takeaways.
Five Key Traits of Innovation
1: Innovation Requires Speed
Innovators need to think in quarters and weeks, not years.
Nearly all (97 percent) of innovation leaders bring new ideas and solutions to market quickly as opposed to 17 percent of “laggards”.
“Forget about three- or five-year strategy plans,” says Mark Buitenhek, global head of transaction services for ING Group.
“We think in quarters, we think in weeks. We think in sprints.”
Or Hans Vestberg, CEO, Verizon Communications Inc. puts it : “Don’t wait for a ‘bolt from the blue’. Move at double time; break rituals.”
2: Innovation Demands Data-Driven Decision Making: “Kill Zombies”
The payoff for using data-driven analytics can be dramatic, the report finds and this, above all, is now one of the key traits of innovation.
“Being data-driven is one of the top differentiators between leaders and laggards.
“97 percent of leaders measure the impact of innovations on business performance, compared to only 23 percent of laggards.”
As Coca-Cola Group CEO James Quincey illustrates: “We have a formal stages-and-gates process that helps drive our innovation efforts.
“We’ve also developed a disciplined approach to innovation that includes a leader-challenger-explorer framework, as well as something I like to call ‘killing zombies.’
“Killing zombies means getting rid of stuff that’s not working. We analyzed about 2,000 of our beverage product launches over five years and found that 30% contributed only 1% in volume. In 2018, we killed more than 700 zombie products, which allows us to redeploy resources in areas where we see more growth opportunities.”
3: Innovation Takes Commitment from the Top
Effective leadership is a vital ingredient for successful innovation.
Organisations should ensure executives make it clear that innovation is a priority.
As the report notes: “For example, the executive team can hold quarterly reviews of the company’s innovation pipeline. Following each review, the C-suite can communicate key updates to ensure employees across the organization see the results of innovative pursuits, which can inspire deeper engagement and support.”
Citigroup CEO Michael Corbat comments: “We make innovation central to every aspect
of what we do and how we do it. By looking at technological advances, regulatory changes, and social and behavioral shifts, our goal is to pinpoint the irreversible, accelerating trends that convey the clearest picture of where the market is heading.”
4: Innovation Requires (Yes) An “Entrepreneurial Culture”
Bring in diverse talent to provide fresh thinking, the report emphasises.
“You need an outside view,” says Mark Buitenhek, global head of transactions services for ING. “You need people coming from completely different worlds to really make a leap forward.”
Businesses should also “embrace failure” in practice by testing a broad pipeline of ideas. Eighty-four percent of innovation leaders say their organizations test a broad pipeline of ideas with the expectation that many will fail, versus just 13 percent of laggards, the report notes. As Salesforce’s Marc Benioff puts it: “Don’t forget ethics; listen to diverse voices; cultivate a “beginner’s mind.”; build trust.”
5: Innovation Means A “Relentless Focus on the Customer”
It may sound trite, but focussing on the customer (and drilling down on their requirements by tapping as much data as possible) is vital.
This can mean tapping customer support much more.
As Lyft CEO Logan Green puts it: “Innovation at our company comes from all angles.
“We have a phenomenal design team that leads our research activities and continually tests ideas with users. Our engineering team also leads on a lot of the innovations… And we have a great data science team. But all these groups maintain a close connection with our support team because it’s the support team that’s hearing what’s important to the customer and what’s not working for the customer. That support team does deep-dive immersion
sessions with all of our product, engineering, and design teams across the company in which they deeply immerse them in all these customer experiences.”
As Ajay Banga, president and CEO of Mastercard concludes: “It’s more important than ever for companies of any size to be innovative and creative. It’s our lifeblood. ”