Launching a successful innovation lab
While almost 40% of the ASX100 now has an innovation lab, they’ve not all had as much success implementing an innovation culture as they’d like. If you’ve been tasked with taking your company on the innovation journey, here are a few common pain points to guard against.
1. Ditch the silos
The world’s most innovative companies take a cross-disciplinary big picture approach to the work they do. You’ve probably heard this, so why is it still such a widespread issue? Even companies who’ve started thinking more holistically about how they approach innovation can struggle to implement their ideas because of siloed business units and legacy technology layers. “It’s one of the biggest challenges corporates we’ve worked with have”, says Gerhard Diedericks, Industrie&Co’s Venture Architect.
2. Build multidisciplinary teams
Related to the first point, but worth making separately. If we know that the best ideas come from a diverse range of perspectives, why are we still grouping teams by business unit rather than bringing together a group from every business stream around a particular customer problem? This is particularly important when your innovation lab has a technical focus, to ensure that technical requirements line up with the customer experience and market strategy from the very beginning.
3. Think outside your business or market sector
Again, this is a mindset shift which requires breaking away from years of single-track thinking. Amitava Chattopadhyay, Chair of Innovation at INSEAD, says “It’s very difficult to think of a disruptive business model because we’re victims of the rules of our industry. When I teach exec programs there’s a constant demand for cases from their industry – why? You’ll only learn something disruptive by looking outside of it.”
4. Take (measured) risks – don’t just talk about them
Talking about how innovative you are won’t do anything for your share prices (link to Terem report above). If you want to think and act like entrepreneurs, you need to have skin in the game. There are ways of minimizing these risks, though; for example, the Industrie VentureOS 12-week program helps companies reap the benefits of an agile, entrepreneurial approach to innovation without overinvesting in the ideas that won’t work.
5. Design new KPIs and corporate performance measurements
Alongside siloed business units, we’ve found that traditional performance measurements can be a huge hindrance to implementing a culture of innovation in a large company. Fiona McKenzie, Strategy Director at the Australian Futures Project, says that employee behaviour often continues to be dictated by targets and indicators rather than a CEO championing innovation at the company’s annual away day. “They’re going to listen to the thing that’s structural and deep. If you’re evaluated by your team, why would you waste time with someone else’s? But if your KPI put the onus on you to collaborate, you’d collaborate a lot more.”
6. Treat innovation as an exploration rather than a tightly scheduled journey
This is easier said than done, particularly when there are business targets to consider. But as long as you can unite the team around a clearly defined purpose that gives the work meaning, you’ll create an environment where creativity and innovation can thrive. “Innovation comes from anybody and everybody. It’s not about creating an innovation lab and somehow expecting magic to happen disconnected from the business” says Chattopadhyay. “You need to have an integrated solution and to make it work everyone needs to feel that, regardless of whether they succeed or fail, it’s a worthwhile process.”
Being aware of the four stages of a successful startup will give you some structure along the way when the destination isn’t clear. VentureOS brings new companies and product ideas through these stages, testing to ensure they meet the requirements of each before progressing them to the next. If they don’t make it past one of those stages, it’s time to retire them.
7. Be tolerant of failure and mindful of resistance to change
Failure is a crucial part of experimentation – test, adapt, improve – but counterintuitive to many performance-driven leadership teams. By thinking long term and being tolerant of failure you can tweak your product or business model and make it more resilient to change.
There’s also a wider systemic challenge around cultural change, particularly in Australia, says Fiona McKenzie. “A lot of Australians react against the innovation agenda because there’s an implication they’re not being innovative. One of the reasons systems are so resilient is that the people in the system get anxiety and push back like a rubber band. The whole framing around disruption and innovation is quite negative in that context because it makes people feel like what they’re already doing is wrong.”
Industrie&Co work with companies of all sizes to create technology-driven businesses for a better tomorrow. If you’re wrestling with the challenges of transforming your company and would like to talk to us about it, contact us today. We’d love to explore the future together.