Change and innovation management

Steering and strategic performance: change and innovation management. 

"Innovation": 400 million references on Google, a number that apparently increases by more than 10% per month. This subject systematically appears on the front page of the journals devoted to Management and is treated in depth by specialized publications and within numerous forums operating in the form of "ideagora", "unconference" or "crowdsourcing"... . Fashion, consequence of the crisis, new competitive pressures, emergence of new management methods? Change can be anticipated but innovation (differentiation, diversification)? How can it be encouraged and managed?

Innovation is obviously not a new paradigm, especially in the consumer goods sector, condemned for decades to constantly renew its range of products, not necessarily to create or meet new needs and differentiate itself, but often only to maintain its reputation: the new Txx washes even whiter, the Zz is even more efficient, the war of smartphones and touch tablets ...

This "innovation revolution" is affecting service companies, which are subject to growing competitive pressures that are prompting them to give a truly strategic dimension to this objective; the battle for competitiveness has intensified in this field, hence the need to instrumentalise the approach and apply new management techniques. The battle for competitiveness has intensified in this area, hence the need to use the approach and apply new management techniques. We are training MBAs, and the time seems to be ripe for an MBI: Master of Business Innovation or a 'CIO' as Chief innovation officer. A new dynamic is underway... and as is often the case, the main currents of thought seem to come from Boston, infiltrating through the Internet, social networks and the many forums that accompany them. A global consensus is emerging on the importance of continuous innovation, but many companies still have many questions about how to steer this process: methodical, empirical, heuristic approach?

Definitions and assumptions

Innovation must be a component of the company's overall strategy. It must therefore be framed within a master plan, a 'vision', intended to guide research, curb imagination and ensure the overall coherence of projects. Even if some companies may be tempted to move out of their core business (for example a bank selling IT services), innovation must serve an overall strategic objective, sufficiently detailed (in figures), which can be defined in terms of: market share, turnover per customer, profitability, diversification (products/segments), change of image and values...

A company cannot surpass its competitors by imitating them, but by innovating. To be innovative, a product or service must have unique characteristics that are valued by the customer and difficult to duplicate. Art for art's sake is useless and, unless you systematically try to patent your 'inventions', the only way to protect yourself temporarily from plagiarism is by the cost and/or complexity of the solutions.

Innovation is essential to counter the ageing of processes of all types: software, procedures... Change is generally imposed by the economic situation whereas innovation is determined by your business strategy; both can be incremental or radical. Unforeseen change often weakens processes: you have to work in a hurry, change priorities, accept technical or organizational compromises... For example, an unplanned software or procedure adaptation can degrade the beautiful linear and Cartesian structure that was originally put in place.

Resistance to change

Innovation can be perceived as a threat when it can lead a company to change its business model and values. The culture of short-term results inhibits risk-taking on investments with uncertain or distant profitability. Risk aversion is better rewarded than innovation. Budgetary procedures leave little room for R&D. Change of any kind is destabilising and its ease of implementation depends first and foremost on the support of staff: human beings have a propensity to accept incremental renovation more easily than radical innovation.

Challenges

A strategic objective that is difficult to define. Many companies rely on chance ('serendipity') or pressure from customers, whereas innovation and diversification are essential to remain competitive, reduce threats, conquer new markets but also to keep your existing customers, to whom you thus give proof of your willingness to continue to expand your range of services, which will enable them to preserve their own competitiveness!

Selecting the right innovation proposals. The crowdsourcing technique (suggestion box in your Intranet) can easily lead to an overdose of information. The bandwidth of decision-makers is not infinitely scalable, so processes need to be put in place to ensure that proposals are described in a structured way, with a sufficient level of justification and abstraction.

Risk-taking. No one has the crystal ball. When an idea comes up, it's hard to predict whether it's really going to lead to a radical improvement or whether it's just going to give rise to a microscopic incremental change.

Change management: responsiveness to crises, calls for tenders, etc.

The levers of innovation and change

There is no real 'invention machine', but change and innovation can be driven and driven in many ways. Ownership by the CEO and full management support are essential prerequisites. Innovation should be on the agenda of all Management Committees.

A cultural change. Innovation projects have little chance of success if the company's culture does not lend itself to it. A culture of innovation will (must!) attract and retain new talent; often it can revitalize a business model and an organization without necessarily having to reinvent everything. Communication is essential.

Risk-taking. A culture of venture capital. Failure is acceptable if it is formative. An innovation policy must be assessed as a whole and not on a particular initiative. Prototyping makes it possible to validate a concept at acceptable costs. Grant a large operational autonomy for the launch of new products: temporarily accept structural costs by creating new centres of competence with strong decision-making autonomy, while waiting for the product to reach maturity.

A better understanding of client needs and the search for complementary services. This is obviously a key point. For example, if a portfolio manager wishes to obtain a forecast liquidity table, it is obviously because he wants to optimise his cash position and it is therefore necessary to consolidate in this table all the expected financial flows, even for operations that have not yet been unwound, possibly making a distinction between the certain and the uncertain? A partnership with a pilot customer is always an excellent lever because it guarantees the adequacy with the customer's needs. If this customer has sufficient notoriety, this will be reflected in the new service. The best innovative solutions are those that allow the client to reduce the marginal and structural costs of certain activities that are outside their core business, by outsourcing them to you. The financial world offers many such opportunities, for example in the acquisition and control of financial data.

Reward and ownership: when an innovation project is selected, the creator must be rewarded. You risk disappointment if you think that the contributors (customers or staff) are only guided by a sense of duty. This remuneration can take various forms: financial, feedback, recognition... As with processes, you then need a 'sponsor' whose competence is recognised and who has a sufficiently strong network to promote the innovation and maintain the momentum. The appointment of a process manager also has a very beneficial effect on the process, as the owner will be committed to the process's development, both in terms of operational efficiency and value creation.

Ideagora, think tanks, think tanks: multidisciplinary and culturally diverse teams, educational, forums, 'suggestion boxes' (crowdsourcing) in your Intranet. The Lean Six-Sigma method offers a rapid improvement technique called 'Kaizen', which consists of sequestering a group with the right skills to improve a process or service. Experience has shown that this technique has a very stimulating influence on the creativity of the participants. The Internet also evokes 'unconferences' in which the agenda and themes are defined by the audience: this can be a good incubator because of greater freedom of speech (no hierarchical barriers) and diversity, but of course there is a need for moderators and a process of collecting suggestions.

Collection, selection and formalization of proposals. All these collaborative tools will inevitably generate huge flows of information that must be channelled, filtered, aggregated (if necessary, for example to avoid redundancy) and structured (synthesised). Simple techniques make it possible to operate far downstream to impose a minimum of formalism in the description of a new proposal: typology, impacts, ROI... and thus facilitate the discovery of nuggets.

Research methods of innovation

Despite its heuristic nature, a systematic approach is possible, along at least four axes:

- Market analysis. Carry out a census of needs and determine their satisfaction rate, in order to identify niches that could be as many opportunities: absence of competitors, new entrants...

- Comparative analysis of your business model with that of your main competitors.

- Analysis of the use of existing services. Companies are not always aware of the richness of their portfolio of services, which may contain under-exploited deposits that can be commercialized at lower cost and faster than highly innovative projects still in their infancy.

- Prospective analysis aimed at anticipating important changes in any dimension: legal, economic, fiscal... There can be no real surprises on events affecting the company. You don't necessarily know when the changes will continue but you know the main characteristics of these changes. The commercial, technological, political, fiscal, etc. 'watch' allows you to prepare the ground by defining a plan, by setting up a 'rapid intervention force' (for example a 'project or programme office') and finally, by promoting a project culture.

Conclusions & Action Plan: Master Plan, Process, Strategic Steering

Innovation can concern products, services, customer segments... but also your values, your image, quality... So many sources that can increase your turnover. A successful differentiation strategy will logically be based on at least the following 4 pillars:

A vision, a strategic objective materialized in a Master Plan specifying the objectives, the opportunities, the 'radical' changes you want to bring about (new marketing mix, switching from a strategy of cost domination to quality, image improvement...), the means you want to allocate to manage these 'transitions' (tools, skills, financial and human resources, processes, indicators, management...).

Strong commitment of the CEO and Management, possibly relying on a CIO (I for Innovation) or his CIO (I for Information). Innovation should be on the agenda of all Executive Committees, in order to create 'creative tensions' at this level.

Mobilization of collective intelligence. Creating fertile ground for new ideas: ideagoras bringing together multidisciplinary teams, cultural (genetic) changes, valorization of inventors and appropriation. Sustained communication, towards staff and clients.

Strategic piloting. Innovation is therefore a strategic component that requires to be piloted as such: dashboards, indicators (Key Innovation Indicators?). Setting up processes to collect, filter, structure, objectively evaluate innovation proposals... and to implement them easily and quickly, in order to make the most of them, as quickly and as long as possible.

Bernard Timmermans, Independent Consultant. www.strategic-pilot.com

 

– Book" Focus on Strategic Performance". - Publisher Imprimerie Saint-Paul / April 2011

- Training module in partnership with Get-Training ( www.get-training.org)