Taking the measure of your innovation performance

Posted on: January 31st, 2014 by bobmorris

Taking the MeasureHere is a brief excerpt from a Bain Brief co-authored by Eric Almquist, Mitchell Leiman, Darrell Rigby and Alex Roth, featured at Bain & Company’s website. To read the complete article, check out the wealth of resources, and sign up for email alerts, please click here.

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Innovation is one of the most popular acts in business, but one of the hardest to pull off. Bain & Company recently surveyed nearly 450 executives around the world at enterprises with more than $100 million in revenue, and two-thirds said their companies made innovation one of their top three priorities. Yet fewer than one-quarter believed that their companies were effective innovators. Even fewer, just one in five, said they were strong at “breakthrough” innovation.

We did find companies that are great at innovation, and we don’t mean just iconic innovators such as Apple, Amazon.com and Samsung. Virtually all the top quartile of innovators in our survey agree with the following statements:

o We consistently meet or exceed our innovation goals

o We have a winning, repeatable model for innovation that we apply consistently in different regions and categories

o We currently have projects that will meet or exceed our financial targets for innovation

o We are prepared for major market disruptions through innovation

Many executive teams still treat innovation as a black box, the serendipitous achievement of a few gifted individuals. But our survey found that innovation leaders consistently outperformed laggards on five manageable capability areas (see below, “The innovator’s edge”). The disparity suggests that innovators rely on a systematic approach, not just on finding people who happen to be innovative.

Innovation capabilities and the BothBrain® ingredient

What are the five capabilities? The first is a clear, specific innovation strategy, which includes setting goals and determining investment priorities in a way that captures both hearts and minds. The second is an organization with a culture that nurtures innovation—an organization supported by the right people, processes and organizational structure. Third, this organization should have effective idea generation and development processes to create attractive new offerings, both by generating a broad and diverse set of ideas and, especially, by converting these ideas into profitable business concepts. Fourth, a company has to manage a diverse innovation portfolio that has the right size, shape and speed—a portfolio aligned with its strategy. Fifth, a company has to be effective at scaling new business ideas, supporting them with the appropriate level and type of resources. It also has to create feedback loops to learn how best to reinforce, redirect or (when necessary) kill new ideas.

These capabilities are necessary for sustained innovation, but nearly all successful innovation relies on one essential ingredient that permeates all five. We refer to it as a “BothBrain” approach, and it underlies many of the systems and procedures that successful innovators adopt to manage innovation.

BothBrain derives from the recognition that innovation requires both the creation of brilliant new ideas and the ability to successfully commercialize them. Some may interpret these skills as “right brain” thinking (typically imaginative, intuitive, whimsical) and “left brain” thinking (rational, logical, linear). Most of us are more adept at one set of skills or the other. People who are equally adept at both kinds of thinking, like Leonardo da Vinci, are extremely rare, making up less than 3% of the population.

Many companies tend to separate creative activities from commercial ones. They expect the creatives to come up with new ideas, and then they ask the commercial types to analyze those ideas (and, often, to shoot them down). But it’s far more productive for companies to build integrated teams that bring together people with both orientations and skill sets. These teams can then work together from idea conception all the way to testing and scaling an innovation. We call the approach BothBrain because it engages both kinds of thinking at every stage.

Consider, for example, how a BothBrain orientation affects each of the five capabilities:

o Creating an innovation strategy isn’t simply about building appealing products and developing spreadsheets to make a business case. It’s about generating passion and excitement—capturing the hearts as well as the minds of your customers and the people in your organization.

o An organization’s talent management processes and innovation decisions need to reflect the importance of both kinds of thinking. Otherwise it won’t be able to create the kind of culture that fosters innovation.

o Idea generation and development almost always involves gathering data about customer needs and preferences. But analytic people can stare at this data all day long without coming up with new ideas. A creative person, by contrast, may draw on the same data to find an imaginative new intersection between customer needs, a company’s distinctive capabilities and the vulnerabilities of competitors.

o A successful portfolio of innovations always needs to include a balance between incremental and radical innovations. To create that balance, companies have to give their creative people more leeway on radical innovations, and not allow analysts with spreadsheets to shoot the ideas down prematurely. Most successful products evolve substantially from idea conception to commercial success. Creatives and commercials have to work through the twists and turns together, not just give up whenever they hit a bump in the road.o When a company thinks about how to scale an idea, it needs art and intuition as well as science to determine whether it should stay the course, pivot or kill an offering.

Properly applied, BothBrain engages and affects all the elements that make up an innovation system.

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Here is a direct link to the complete article.

Eric Almquist, a partner with Bain & Company in Boston, leads the Global Consumer Insights team. Mitchell Leiman, a Bain partner based in Boston, leads the firm’s Innovation practice in the Americas. Darrell Rigby, also a Bain partner based in Boston, is the head of Bain’s global practices in Innovation and Retail. Alex Roth is a partner based in London and leads the firm’s Innovation practice in EMEA.

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