These days, nearly everyone touts the importance of “innovation,” yet most companies struggle with how to replicate it regularly. And the rise of the interconnected and increasingly digitized world has raised even more questions about innovation and agility – questions about how new technologies might be rewriting the rules.
Put simply, innovation is the process of creating value for people through new or improved products or services. And while companies do innovate regularly, many still struggle with the everyday obstacles of using innovation effectively.
Organizations should consider introducing a portfolio of innovation approaches to maximize agility across the finding and vetting of opportunities, the scaling of responses, and the optimization of details. Here we will recommend a set of approaches for developing your innovation mix.
1. Analytics and optimization
Analytics and optimization are often seen as necessary evils rather than opportunities for innovation. Driving value from this approach assumes rapid implementation of changes and a team with a test-and-learn attitude. Aggregating a series of apparently minor A/B analytics-driven tweaks in a programmatic way can be shockingly beneficial.
SapientNitro’s Global Lead of Analytics, Simon James, calls this the “war of marginal gains.”
2. Hybrid agile
The second approach, “hybrid agile,” seeks to deliver the benefits found in agile development, while also permitting the long-term horizons typical in large companies. Unlike more traditional agile (e.g., Scrum), hybrid agile is a better fit for large programs with dependencies across multiple groups. We often see large organizations with heavy planning processes built around quarterly (or even less frequent) releases. Internal teams are doing more in each release, thereby accumulating risk without value with every unreleased change rather than splitting the risk and value introduced over smaller releases.
3. Labs and pilots
The next two approaches share similar intents, but assign differing levels of autonomy and responsibility to teams.
The lab approach marries a dedicated team to a distinct physical environment, purpose-built with state-of-the-art tools. As an organization, a lab understands opportunity spaces in a usefully ambiguous way, organizing explorations around an open-ended hunt with high standards, but loosely defined goals.
4. Lean start-up
The last approach is focused on a single opportunity space. Lean start-ups are undertaken with the idea of creating both a business and a product. A great example of a successful start-up stemming from a large organization is “giffgaff,” spun out of the UK mobile telecom, O2, in 2009. Its customer-driven business model is something O2 could not execute within the company itself given its management’s focus on incremental growth. As a separate entity, however, it had a definite market impact.
Most major corporations could use this lean start-up approach when they identify a key opportunity within the market, but don’t see a way to pull it off within their current structure.
While each approach is capable of attacking opportunities with differing scales, time horizons, and concreteness, there are six innovation principles that can be applied in any context:
1. Portfolio not projects
Innovation in large organizations is maximized by understanding which problems align with which approaches. Consider how your set of opportunities aligns to potential teams and approaches.
2. Move through the insight → make → measure cycle quickly
At every level of innovation, the faster a team can move to drive change and then measure its effect, the better it will perform.
3. Best practices do not drive leadership
Breakthrough innovation comes from focus directed at your customers’ ecosystems and larger journeys, the exploration of new technologies, or the experimentation of new business models. It doesn’t necessarily come from what your competitors are already doing.
4. Innovation must be people-centric (eventually)
Innovation can be effectively driven by technology and organizational work, but it is ultimately realized by understanding how it solves problems for people.
5. Not every team member is ready or willing to move at lab pace
Labs may sound exciting, but they can be tremendously difficult. They require constant reprioritization, and ask team members for a level of rigor and focus that many cannot – or do not wish to – invest.
6. Think beyond the four walls of your organization
The culture of experimenters in the innovation space lends itself to collaboration and idea-sharing. Creating an innovation network is an important component of creating an internal innovation offering.
To see common innovation myths debunked and read more about each of the above approaches (along with in-depth dives into the ones SapientNitro has applied within its own walls), be sure to download the full article PDF below.