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How to Navigate Key Barriers and Proactively Fund Big Innovation

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How organizations navigate the barriers to big innovation
can often make the difference between epic failure and celebrated market
disruptor. Outlined below are the dynamics behind 3 barriers we see most
frequently standing in the way of breakthrough and disruptive innovation. This
content is intended to help innovation leaders who are seeking to make a bigger
impact and already have a firm grasp on the definitions of incremental,
breakthrough and transformative innovation.
1. FUNDING

Funding big innovation is often the first obstacle that many
would be innovators struggle to overcome.
WHY IT IS SO
DIFFICULT TO FUND BIG INNOVATION?

Organizations are inherently risk averse, and for good
reason. The primary goal of most businesses is to allocate resources in the
most efficient way to generate a targeted return for shareholders. If significant
resources are allocated with little return, it certainly means leadership
change and possibly corporate default. It's no surprise then that risk
avoidance manifests from senior leaders' fear of losing their jobs. The
omnipresent focus on reducing risk locks the organization into its current
business model and incremental change to its value proposition and core
offering.
HOW SOME HAVE FUNDED
BREAKTHROUGH AND DISRUPTIVE INITIATIVES?

Across established organizations, we've found that most
disruptive and transformative innovation doesn't occur by choice, rather it is
forced by necessity. Typically a traditional competitor delivers a breakthrough
innovation with a better value proposition that takes significant market share.
For example, Crest 3D White forced Colgate Optic White. In regard to
transformative innovation, a nontraditional competitor enters a market with a
different value proposition and often new business model that takes significant
market share. For example, Nest forced Honeywell to redefine the value
proposition of their thermostats.
HOW TO PROACTIVELY
FUND BIG INNOVATION

Outside of a truly visionary leader, the only structured way
we've seen breakthrough and transformational innovation acquire funding is
through a vision. A vision is derived from an organization's purpose (reason to
exist besides making money). A vision contrasts the business implications of
the present day value proposition to a vision for a new value proposition, in a
future context (likely state of customers, competition, and supply chain
relevant to the business). To ultimately acquire funding, a vision needs to
incorporate a timeline backward from the future context to present. It should
illustrate just how fast change must occur to avoid failure and achieve
success, thus driving urgency to act.
2. CROSS-SILO
EXECUTION

Executing big innovation is radically different than
executing incremental innovation. It requires intense cross-silo collaboration
to design not just the offering around a new value proposition, but often a new
adoption strategy, associated go-to-market channels, supply chain and revenue
model.
WHY CROSS-SILO
EXECUTION IS SO DIFFICULT

Most organizations measure and incentivize each functional
and/or business unit uniquely so that they can efficiently drive top and bottom
line goals. For instance, engineering is often measured on execution timelines
and manufacturing cost, marketing on customer acquisition, etc. These siloed
metrics disincentivize true collaboration and shared wins between them.
HOW SOME DRIVE
CROSS-SILO EXECUTION

Some organizations have built new operational structures
from the ground up. For instance, Google structures around cross-functional
project groups and incentivizes them through the lens of a project. Others
simply bypass the siloed metrics of the core organization by creating a
cross-functional spinoff measured as a unified whole. Hershey did just that
with the brand Brookside.
OTHER WAYS TO DRIVE
CROSS-SILO EXECUTION

Outside of major structural overhauls, one of the most
effective ways we've seen cross-silo collaboration necessary for big innovation
emerge is through a shared, outside-in view of the supply and demand systems at
play. Organizational tools can act as a unified business dashboard and are
necessary to share and leverage the outside-in view across silos. The demand
view most often articulates the goals of target customers within a category,
their path to purchase, experience using/engaging with offerings available, and
their motivation to advocate. The supply view often articulates transactions
between silos and the customer. Together, this outside-in view allows silos to
see the impact they have on one another, and more importantly the customer.
This simple change in perspective can motivate cross-silo collaboration,
radically impact the dynamics of those collaborations, and facilitate the
allocation of resources more holistically.
3. INTERNAL CHAMPIONS

Breakthrough and transformative innovation require
passionate people willing to stick their neck out for what they believe is
right. In absence of champions, bigger innovation initiatives lose momentum and
fizzle out in favor of the status quo.
WHY CHAMPIONS ARE
HARD TO FIND

Breakthrough and transformative champions exist because they
have been exposed to something that others in the organization have not '
whether methods, skills, industries, competition, environments, etc. These
people often leave jobs abruptly if they are over constrained by hierarchy.
Hierarchy and its associated 360 goal setting processes frequently establish a
pyramid of goals which support each management layer above. Of course hierarchy
is important for any organization to efficiently achieve corporate goals, but
it can squeeze out the alternate points of view and autonomy to experiment. Hierarchy
heavy organizations tend to have homogenous workforces that are really
efficient at doing the same thing over and over.
HOW OTHERS HAVE
ATTRACTED AND DEVELOPED CHAMPIONS

3M is well known for its employee flex time program.
Employees are expected to pursue experimental projects that have the potential
for bigger impact while aligning to personal interest. Others attempt to
outsource champions ' whether they need an expert point of view from outside
the organization, or hire external teams to run small experiments.
OTHER WAYS TO ATTRACT
AND DEVELOP CHAMPIONS

Autonomy + Purpose + Exposure = bottom up innovation
champions.  Autonomy to run small experiments can be achieved through a
variety of flex time programs and 360 individual goal setting.  Purpose,
the organization's reason to exist beyond making money, provides the 'why' for
the work.  Not only is the 'why' a really powerful employee motivator, it
also increases individual risk tolerance. Exposure can be achieved through
cross-silo interaction, diversity of  employee experiences and employee
training programs.
The potential of the champion equation is greatly enhanced
when the role of management shifts from resource distribution (ensuring the
same things happen again and again) to resource acquisition (getting the
resources necessary to do new things). Leaders should navigate these barriers
concurrently. There are hidden repercussions if they are navigated
individually. For instance, employee autonomy can be wasteful in absence of
organizational purpose and derivative business vision. Organizational tools
that alter point of view, uncover root issues and provide a means to bypass
internal resistance are essential to driving a more innovative culture. Once
tools find an effective home within the organization the barriers can be
navigated again and again.
Like this topic?
Attend BEI Back End of Innovation 2014 in Las Vegas, NV in October! Learn more
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About the Author: Tim
Sweeney is a designer, entrepreneur and a thought leader in the field of
business conceptualization and product innovation. As founding Partner of UPSTREAM, a front-end innovation
consultancy that helps leaders drive innovation, he's helped start-ups to
Fortune 100's apply world-class design thinking to build and realize vision. He
holds numerous innovation awards and over 15 patents. Follow @UPSTREAMthought.

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