Consider this: 50 years ago, the life expectancy of a Fortune 500 firm was approximately 75 years. Today, it’s less than 15 years and continues to decline. Eighty-eight percent of the original companies listed have either gone bankrupt, merged or—if they still exist—fallen off the Fortune 500 list. The reason? A failure to keep up with the accelerated rate of innovation required in today’s fast-paced world. We like to think great innovation is based on magical ideas conjured up by visionary geniuses. At the risk of dashing that fantasy, the reality is more simple.
When we break down innovation into its most basic form, we see that it is actually a byproduct of the successful execution of three key business elements:
- A corporate culture that empowers and unleashes employee innovation
- A relentless focus on opportunities that have the best return on investment
- The continuous discipline to manage the things that matter most
The most important element dictating whether or not innovation will succeed is company culture. Culture doesn’t mean proclaiming that your company is innovative. Instead, culture is shaped by a mosaic of shared rules, practices and artifacts that are not only expressed in formal ways, like organizational charts, job descriptions and the physical layout of your office, but also in informal ways, like social networks based on personal relationships both inside and outside the office.
Establishing a culture of innovation means you can point to specific, tangible things within your company that confirm and reinforce innovative practices. To establish a culture that drives innovation, you must start with an understanding that innovation occurs when you are passionate about solving problems for people outside the walls of your company. If you want to cultivate a culture that fosters innovation, you have to start by empowering employees to unleash this passion.
Unfortunately, while marketing and product teams are often told to be strategic, understand the market and spend time with customers, too often companies don’t practice what they preach. Instead, employees are chained to their desks, managing checklists, returning emails and attending meetings.
In Pragmatic Institute’s 2017 annual survey of product managers and marketers, more than 3,500 respondents said their corporate cultures are decidedly inward-facing. They reported spending 72 percent of their time on tactical activities. If we believe that the source of innovation is solving customer problems, this statistic shows we are not supporting the cultural practices that inspire innovation.
Worse, there may be a sense that giving the team time to talk to customers or identify new market opportunities is an unaffordable luxury. You might hear things like, “We don’t have budget to spend time in the market” or “I can’t really have you take time away from the office.” Then you do something incredibly risky: make stuff up. And the company never stops to think that when it builds products without market knowledge, it is ultimately more expensive and risky than establishing a market-driven culture.
Establishing a culture of innovation means that you must empower your teams to be market-driven by encouraging them to get outside the office. Encourage them to spend less time on emails and meetings and more time on market interactions. Then set a quantifiable goal. For example, for the next 12 months, you could target at least 10 percent of their time outside of the office, talking directly to the market. This way, instead of building products based on assumptions, you listen to your customers and prospects and solve their actual problems.
Another reason innovation often fails is a lack of focus. If you run toward everything that looks like the next big thing or spend all your time chasing the competition, it’s easy to get sidetracked or lost.
According to a CareerCast survey, 62 percent of workers rate their jobs as highly stressful and list unpredictability as their most common stress factor. A lack of focus can create stress in your business. And when you are stressed, it is difficult to perform at optimal levels.
When you run around in an endless maze chasing big ideas or trying to execute the strategy of the day, it is hard to focus, much less to find the path forward. Your ability to pursue the best opportunities that will achieve a maximum return is inhibited. And your entire job can quickly become a frenzied response to urgent and demanding requests.
True innovation stems from an ability to say no. You need to focus your energy on things that have the greatest potential return for the least investment possible or, as Steve Jobs so eloquently put it, “Innovation is saying no to 1,000 things.”
To help drive focus into your business, start by having a clear answer to two simple questions: Who are you trying to delight? And what will you build to delight them? In other words, how will you allocate your resources to build products that satisfy your biggest market opportunities and produce the greatest returns? Continuous Discipline
Lack of discipline is the third reason innovation often fails. Although you may have established a market-driven culture and created focus, without the discipline to keep the first two on track, innovation will fail. The secret to long-term success is both constancy of purpose and the agility to adjust tactics when needed.
For innovation to succeed, you must understand your direction and use that information to drive organizational alignment. However, maintaining directional clarity at today’s speeds can be challenging. It took 38 years for television to be adopted by 50 million users. Twitter acquired the same number of users in just nine months.
The velocity at which you have to respond to the market has changed dramatically. And development methodologies have evolved in response to that shift, which is why we have created and embraced agile. By doing work in smaller chunks, you can rapidly prototype and learn, yielding fast results, which is a powerful concept.
However, “Are you agile?” might be one of the most loaded questions in technology. Agile means a lot of things to a lot of people. Without the discipline to stay on track, agile can actually derail rather than foster innovation. Why? Because you risk simply accelerating the pace of unwanted products.
Done right, agile incorporates more discipline and more defined rigor and builds in more opportunities to say no. But if you are going to rely on agile to drive innovation at today’s speeds, there are two key elements of discipline you must master.
The first is to have the discipline to stay on course until you have delivered a potentially shippable product. Because of its iterative nature, agile’s development checkpoints—requirements, design, build and user validation reviews—occur more frequently. This frequency increases your chances of becoming derailed.
Agile discipline means leveraging these touchpoints to stay on track until you have delivered a potentially shippable product. So even though opportunities to review your product development initiatives may present themselves with a greater frequency, you can’t bungee in at the sprint touchpoints with new ideas until an iteration has been completed and tested with actual customers.
Teamwork is the second key element of discipline. For agile to work, you must fully integrate all parts of the development process. Requirements, design, build and test must be nested together and stable. The most successful agile teams work closely together and members remain constant. A team must be disciplined to stay on course and avoid allowing outside distractions to derail iterations.
But just as it’s important to stay the course through each product version, it’s also important to learn how to embrace and harness instability. This is something that requires constant work and discipline to manage. The days of building 50-page business plans designed to avoid risk are gone. Instead, you must plan for change by shifting your mind away from thinking that failure is not an option. Pursue failure and incorporate it into everything you do. Remember, every time you fail, you learn.
At the end of the day, your goal is to build remarkable solutions. But you are also running a business. Therefore, to succeed at innovation, ensure that the solutions you build are repeatable, scalable and profitable.
Ask yourself what type of company you want yours to be. One that has locked innovation in a trap? Or one that sets innovation free by establishing a culture that empowers employees to innovate by spending time outside the office, focuses energy on opportunities with the best ROI and is disciplined about staying on track?
The only way to set innovation free is to value learning from the market at least as much as you value launching your product into the market.