Effective innovation is one important way to keep organizations healthy and thriving, and their cultures invigorated. You see examples of innovation in all types of companies – those putting a new twist on an old category (think scent boosters in laundry detergent), a completely new business model and go-to-market strategy for basic, everyday items (Dollar Shaving Club), or creating entirely new categories, like biofeedback products, smart watches and solar vehicles.
Leaders of most public companies would likely agree that improving both their innovation performance and growing the organization’s contributing capabilities are important and valuable goals, but their biggest problem is understanding objectively how they’re doing and why they’re performing at the level they are. Contrary to popular belief, for creativity and innovation to happen, there needs to be a solidly defined structure and process. In fact, in our blog post “Defy Your Intuition: Use Structure to Unlock Creativity and Imagination” we articulated critical steps to set your organization up for innovation success. However, without knowing where you stand, there’s no good way to follow those guidelines effectively.
In a recent academic article co-authored by Anna-Maija Nisula and Aino Kianot they argued that understanding your current organic innovation capabilities across six critical dimensions is the single best way to understand your innovation strengths, weaknesses and potential competitive edge; without understanding the current innovation state, no business can effectively set an improvement path forward.
According to a 2013 article published in the Interdisciplinary Journal of Information, Knowledge and Management, “Evaluating and Developing Innovation Capabilities with a Structured Method,” organizational capacity to continuously innovate can be measured and evaluated based on the dimensions of strategic competence, learning orientation, exploiting time, and connectivity. This evaluation determines an organization’s ability to produce new products, processes and insights enabling it to adapt to a changing environment. It also identifies how efficiently an organization is able to use its resources for learning and innovation to achieve competitiveness over other companies with identical resources but less renewal capability.
According to the study, each of the dimensions can be quantifiably scored and analyzed using the ORCI (Organizational Renewal Capability Inventory) method to accurately identify the strengths, weaknesses and needs of the business to appropriately structure the organization and develop its innovation capabilities. With innovation teams being tasked to bridge the gap of organizational silos, accurately assessing ALL capabilities becomes even more critical to gain a competitive edge. Let’s take a closer look at each dimension:
- Strategic competence – How the company connects its visionary element, basic task, identity, and general steering principles of the organization
- Leadership – Characterizes the decision-making and reward systems in the organization, as well as the ability of the leaders and supervisors to support innovative activities through their personal activities
- Learning orientation – Represents the general attitudes of organizational members towards creativity and learning, and the extent to which these activities are supported and allowed by organizational structures and processes
- Exploiting time (or, how quickly the innovation comes to reality allowing the organization to take advantage of it before competitors catch up) – Related to company capabilities – a competitive asset needed in order to produce new ideas and turn them into successful outputs
- Connectivity – The structure and quality of social relationships within and across organizational boundaries
- Knowledge management – The organization’s systematic practices and tools for information storage and knowledge sharing
The theory of renewal capability states that each dimension carries equal weight and contribution overall, regardless of individual departmental fluctuations. The ORCI is designed to capture that overall contribution. That’s not to say, however, that each department’s capability isn’t crucially important and shouldn’t be evaluated separately - quite the opposite.
Here’s how it works:
- A statistically relevant sample of the organization’s employees from all departments proportionately participate in a survey to elicit responses regarding their experiences and perceptions about the company’s renewal-enabling and -hindering characteristics
- The response format is a 7-point Likert scale ranging from “strongly disagree” to “strongly agree” deeply probing each of the six dimensions. In addition to the structured questions/rankings, open-ended questions are also asked to gain specific insights
- In some cases, the surveys are followed up by interviews with participants, again in proportion to departmental structure
- Analysis addresses both the overall organization’s renewal capability and that of each contributing department. Department capability outliers are scrutinized and recommendations made regarding where adjustments should be made a priority
The information and analysis process elicits critical, explicit and actionable direction in developing the organization’s structure and competencies. Simply put, organizations that maintain and develop these six dimensions of renewal capability are likely to improve innovation performance and gain competitive advantage over their competitors.
Once the current state is well understood, you’ll be prepared to formulate a plan that addresses your best opportunities first. To help identify your priorities, ask yourself these questions:
Leadership & Learning Orientation Dimensions
- How committed and supportive is your leadership in the innovation process? Are they clear and decisive in articulating the integration and role of innovation in overall vision and strategic direction? Do they verbally and through their actions demonstrate a drive and willingness to take risks – and possibly fail?
- Do they foster an atmosphere of experimentation and learning or are results and immediate wins expected?
- Do HR and reward systems reinforce the desired innovation culture and results orientation?
Connectivity & Knowledge Management Dimensions
- How willing is your organization to bring in outside resources? Adding fresh thinking and experiences can be as simple as involving people from “unexpected” departments in your company (from HR and Operations, for example), or taking advantage of the insights of multi-disciplinary thought leaders in your network. In our Transforum® process, we give you access to our Brain Trust (a team of professionals with a variety of skills and perspectives) which, without fail, opens up new innovation directions to explore.
- Are your people working in defined silos, or have you created spaces and an atmosphere where collaboration is encouraged?
- Have you formalized a process for gathering and sharing information and ideas with your teams?
Be prepared to commit the time and energy necessary to address the deficiencies you find. Doing the work around learning the nuances of your current state pays off only when you assess where you are, pinpoint areas of improvement, and formulate – and stick to – a plan forward.
In the next few posts of this series, we’ll review some of the most common areas organizations identify as needing focus and attention. SpencerHall works through these key innovation areas every day with our clients and can provide both guidance and a fresh perspective in your innovation efforts.