The Economist Intelligence Unit has a new report out that says don't be afraid to fail — great innovation can come of it.
The report: "Cultivating business-led innovation", is based on a survey of 226 senior executives conducted in April 2012. The execs were in a range of industries, geographies and businesses sizes. And as a note, the report is sponsored by Oracle.
The driver for this report stems from the desire to identify fundamental strategies and procedures that encourage and support business led innovation. The reality is that businesses find it hard to innovate and if the CEO isn't on board with new ideas and approaches to achieving innovation, you're kind of screwed (that may sound a bit harsh — but it is the reality organizations must accept).
What exactly is innovation? It's "fresh thinking that provides value people will pay for” (Economist definition in March 2012).
Research has shown that successful businesses have cultures and processes in place that foster good ideas and know how to implement them quickly. Not only that, these businesses monitor and manage how these ideas are developed, allowing them to spot trends and create new opportunities for innovation. This includes learning quickly from failed innovations. That's right, failure is an option — if you know how to leverage your lessons learned and apply them back into new ideas.
Here are the key takeaways from the report:
1. Put Away Innovation Silos
To be successful at innovation, you have to forget about department lines and pull together teams from across the organization. The survey shows that innovative ideas come from all different types of departments across the organization, including IT.
But the report also showed that IT is very underutilized in many circumstances. This is unfortunate because it's IT that often has its pulse on the newest tech trends that can support innovation. In the survey, 51% of IT departments are involved in implementing new ideas but not the actual generation of ideas.
The size of the company played a role in how innovation is done. Larger businesses tend to be more siloed in their innovation approaches. In addition, businesses with US$ 500 million or less in annual revenues take advantage of customer feedback to create innovation. But for orgs of this size, the approach used is mostly direct interviews. Large organizations use interviews but also leverage social networks and sentiment analysis.
2. The Right Technology Helps Innovation
Disruptive technology supports innovation. Big Data, Social Media — both are great examples of technology and along with mobile and cloud computing were mentioned by the companies surveyed.
But each technology doesn't not necessarily offer the same innovations. Big Data was recognized for its ability to create new pricing models (60%), improve business processes (38%) and develop new products or services (38%). There was concern noted, however, around the lack of Big Data talent available.
In terms of social media, innovation in customer service (43%) and new ways of selling (44%) were noted. Although interest in social data is high and growing, many businesses recognize that they still have a lot to learn about social media's potential.
One point to make is that the approaches used again depended partly on the size of the company.
In terms of mobile and cloud computing, security concerns were cited as potential barriers to using these disruptive technologies.
3. Failure isn't the End, It's Opportunity
We can learn a lot from our failures if we have processes in place to understand what went wrong. Unfortunately, 49% of those surveyed have no system to deal with failure (13% didn't know if they had a system or not). Not taking the time to understand what went wrong is a waste of time and money, and a missed opportunity.
The report recommends placing team members of failed projects strategically into new projects to capitalize on lessons learned and offer fresh perspectives.
For those businesses that do have a system in place vary their methods of examining failed ideas. For example, some
- restate the problem (35%)
- readjust project timelines (24%)
- expand the amount of data leveraged (24%).
Principles for Great Innovation
So what are the key takeaways from this report?
- Upper management, including the CEO, needs to be on board from the get go
- Success is also about failure
- Pushing authority down is an enabler
- Work on small interactive projects to get things going and help establish good processes
- Disruptive technology is empowering
- It takes a village (cross departmental team) to raise a child (successful innovation).
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