It should be no surprise that the highest performing companies in the world are near the top of their industries in terms of effective innovation. How do some of the most successful organizations in the U.S. approach innovation?
We recently sponsored a study to help answer that question, and also referenced a similar study by Ernst & Young, a white paper on innovation by 3M, and articles about other high performing innovation organizations. What we learned was that companies that outperform their peers share a number of common features, behaviors and values that, in combination, provide the right pre-conditions for successful innovation efforts:
1. A supportive, committed leadership. Aggressive innovation goals can’t be realized with traditional business models, structures and philosophies; they require organizations to dramatically transform their processes, approaches, and mindsets. Leaders in these companies are willing to be advocates and champions of the change necessary for a refocused culture that will thrive long-term. SAP, for example, slashed the time it takes them to get new products to market by creating more, smaller teams and champions throughout the company to eliminate the barriers teams face. Innovation may be even more difficult in the environment of today, where marketing organizations are facing continued pressure to reduce overhead. But some leading innovation companies continue to commit the necessary resources to feed innovation. 3M, as an example, spends around 6% of its annual revenue on R&D in order to fuel its new product pipeline. (2012 3M Report on Innovation)
2. The willingness to look ridiculous and occasionally fail. It might be an overstatement to say successful companies welcome failure, but certainly they understand that “good failures” can still yield great learning, and also serve as demonstrations of a company’s willingness to take smart risks. Great creative thinking can often spring from what might like silly or child-like activities; trust comes from knowing those behaviors are encouraged or even rewarded for what they can lead to. Our study concluded that out-performing companies put far more effort into understanding all the environmental and structural elements that contribute to creativity.
3. A diverse innovation department. The most effective innovative organizations build diversity into team design as a way to encourage new patterns of thought and discovery:
- They include people with expertise in areas not directly applicable to the project, because too much expertise on a topic can breed conventional wisdom. By including a variety of unrelated perspectives, you get unique insights that help the team venture away from expected approaches
- …and people from both inside and outside the organization. Insiders have valuable knowledge of the company and its goals, yet too much of that indoctrination will limit the ability of the group to move in new directions. Outsiders can also be more free to challenge an organization’s conventional thinking, because they face few consequences of challenging the status quo
- Pixar uses “Black Sheep,” frustrated malcontents who demonstrate a dislike of the status quo. The input of someone who ruffles feathers or who is seen as contrary often shake things up and contribute ideas that spark new thinking
4. A collaborative approach. Teams in high performing companies like Google and Pixar work to get everyone in the same room, and accept the fact that every idea won’t be a good one – and even a “bad” idea may actually be the genesis of a great one. The key is to set the stage properly, encouraging participants not to filter ideas before sharing. Trust, which can only be built authentically, is a requirement for effective collaborative innovation.
5. A well-stocked idea pipeline based on key business initiatives. Organizations with well-developed cultures of innovation make sure the top of their idea funnel is wide and very full, aggressively pursuing ideas that could turn into successful new products or services. That means putting effort into communicating corporate direction broadly and deeply, while refraining from judging top of the funnel ideas too quickly or harshly.
6. Highly engaged in soliciting consumer/customer ideas. These companies put a very high value on a continuous series of conversations with consumers and customers. Qualitative researchers use a number of methods to observe, test and challenge shopping and consumption behaviors, create opportunities for natural consumer dialogues, and provide platforms for spontaneous idea exchange.
7. A stimulating office atmosphere. We’ve all heard about the playground-like offices of Facebook and Google, and they’re not the only companies that work to instill creativity and provoke thought by providing the kind of space that accommodates and encourages it. Pixar, for example, located its restrooms and mailboxes in the very center of its building, away from individual offices, as a way to manufacture interaction. Steve Jobs, who designed the building, realized that when people run into each other – when they make eye contact – “things happen.” So he made it impossible for people not to run into the rest of the company.
8. Aggressive innovation goals. Rather than looking for incremental improvements in development costs, functionality, or quality, high performing companies are looking for significant change, new concepts, dramatic growth and new markets. Their approach is not to improve on what’s out there, but to imagine and create products that don’t exist today for markets that are new to them and their industry.
Innovation in major corporations can’t be thought of as a department, a function, or even a set of activities. The best organizations view innovation as an attitude surrounded by a deeply held set of values, continually reinforced by behaviors that confirm for everyone involved the critical importance of innovation. We have no doubt that any organization that wants to be considered high performing needs to view these innovation traits as the blueprint to getting there.
We recently worked with a well-known kitchen cleaning products company to kick-start their new product innovation efforts. Download the case study to learn more.