In the battle for growth, plan to win the war, not the next battle.
Sun Tzu 孫子 – the Chinese military strategist of the 6th century BCE and author of the oft-quoted “Art of War” – took the long view, engaging in battle only when victory was ensured, and defining the confrontation to win the war, not just the battle.
Innovation should be pursued with the same long view. Find the future, define your terms, and choose the path where you are predestined to win.
Equip your Chief Innovation Officer
My last post drew lines between Innovation and other traditional corporate functions who might otherwise pursue innovation growth from a skewed perspective. My partners and I advocate for a custom-designed Innovation function for our clients, led by a Chief Innovation Officer.
For your organization to thrive, you need a curious, perceptive and well-equipped innovation leader. Whether you put that leader into the organization or retain outside counsel, assign a single point of responsibility to answer the challenges every CIO confronts. “Do I really understand who the customer will become? Where should we focus? Do we have the right assets to deploy against new types of demand? Will the market give us sanction to play this role? Do I have support from the board AND from the field?”
New growth always presents the same hard questions, but every CIO works in a unique context. You can’t compare apples and oranges, or Apples and IBMs. GE is not P&G; the United Nations is not Man United.
There are multiple organization models for the Innovation function, which I address in a separate post. But there are a short list of essential characteristics shared by all successful Innovation chiefs. I direct these seven recommendations at board directors and chief executives who own the comprehensive responsibility for enterprise growth:
1. Assign Responsibility AND Authority
Give your CIO both the responsibility to win the future, and authority to go after it the right way.
Assign responsibility without authority, and prepare to trace a slow path to failure. Your CIO should question “why”, not “do or die”. In the face of that trade-off, the right decision is to resign their commission.
You wouldn’t charge a general with responsibility but deprive their command of the necessary troops, reconnaissance, arms, communications or supply lines to deliver victory. Military history is littered with those doomed misadventures.
2. Agree Clear Growth Goals
Nothing focuses the mind like big money pressed hard against tight deadlines. Don’t let your CIO get away with wishy-washy future-speak and hazy promises of the distant unknown. Measure innovation against three horizons. The near-term core business should produce a high volume of “sustaining” innovations (often the job of other customer-serving functions in service companies, or R&D in product companies). On the second horizon, “adjacent” innovations expand into new markets or deliver new offerings. The third horizon explores higher risk/reward possibilities, where wholly new offerings and businesses will emerge.
Treat the entire set as a portfolio. Put aspirational NPV targets on each horizon and expect progress reports against those goals. But don’t expect initial projections to deliver in less than three years on horizons two, five years on horizon three. And recognize that different risk horizons use different metrics.
3. Demand a Penetrating View of the Emerging Future
“Big Data” has never been more robust or accessible. Nor has it ever been more profligate and confused. An insightful CIO parses data in ways that reveal meaningful trends and a path to act on them.
Our friends at Doblin (now Monitor/Deloitte) pioneered an early bibliographic analysis to depict “innovation landscapes” by industry sector. Today, elegant big data pattern analysis tools like Quid’s (below, revealing National Public Radio’s diagnosis of net neutrality) make these capabilities more accessible and powerful, but like any sophisticated tool, it’s easier to abuse than to use. Put trained professionals at the helm.
4. Ensure 360 Empathy
Designers are trained to empathize with end users. They explore lives in context. Their tools include ethnography – living among customers and studying them from multiple angles to deeply understand their unspoken needs. (Not that this is very different from learning your customer’s obvious or spoken desires. Focus groups can tell you what customers want. Those wants are limited by customers current understanding of the offering available to them. Focus groups are a marketing back-end tool, not a tool for front-end innovation.)
Great design research reveals what customers will want, though they can’t yet articulate it, by observing unmet needs.
Designers, unfortunately, can be naive about the other critical audiences – the business participants and partners who deliver on those needs.
An effective CIO finds the sweet spot – the Venn diagram where customer needs and corporate needs intersect. Many great products die not because they’re wrong for the customer, but because they’re wrong for the company.
5. Build Design Competence
Specialized research is only one domain of design competence. The CIO needs to have at least a small core team of capable practitioners, even if only to manage outside agencies effectively. Otherwise you’re forced to outsource too many critical decisions to outsiders who will fail criterion #4 above. It wasn’t that long ago that companies didn’t have a Chief Marketing Officer – and outsourced marketing to ad agencies and other specialists with similar risks. Strategy and Quality functions went through a similar metamorphosis, from external specialty to internal competency. A capable balance, and partnerships with outside specialists, provides an optimal balance between internally driven decisions, and externally informed expertise.
6. Make an Objective Assessment of Core Assets
One of the hardest jobs for the CIO is to speak truth to power. Companies almost always have an inflated view of their core capabilities. High tech companies populated with engineers fixate on engineering factors and take pride in their unique achievements – whether or not they add value to end users or economic return to the business. That’s how IBM made the mistake of thinking of themselves as in the business of mainframe computing, and very nearly missing the proper value proposition of “enabling information” for their customers. That’s how pharma companies miss the desire for natural nutrition, and how soda manufacturers and processed food purveyors convince themselves that epidemic obesity and diabetes remain tolerable. Bill Gates only belatedly and famously acknowledged the looming shift that the web presented to Windows computing. When you make it your mission to put a desktop on every desktop, you can miss the dark “cloud” looming overhead.
Objectivity means stepping back and seeing your business from the market’s perspective. There’s a reason why analyst calls become wake-up calls.
7. Demand Vertical Support
The distance from vision to action feels long. Your CIO’s vision for innovation can be years and timezones away from the eventual customer experience. The best Innovation function, like the best service organization, marches a straight line from vision to action.
When you align for innovation vertically through your organization, your people on the front lines can tell you when real customer needs have been served, and when they haven’t. You’ll count them in dollars, in complaints, and in improved cycles. If you’re prototyping effectively, early results show up as leading metrics, from the field to the top of the organization, even before they have an impact on the top line.
Check for alignment. Do the market signals light up your board room? Make sure you have clear sight lines in both directions.
If you plan to win the future, equip your Chief Innovation Officer for success.
Of course most of these criteria apply to any CXO function. The point is to align your assets in the service of Innovation, and hold your Chief Innovation Officer accountable and capable of delivering on that responsibility.