What should leaders do to boost their organization’s ability to innovate? There’s a seemingly endless list of options to consider. Set up a new-growth group. Launch an idea contest. Change the reward systems. Run an action-learning program to develop the top leadership team’s ability to confront ambiguity. Form a venture investment fund. Take a road trip to Israel or Silicon Valley. Build an open innovation platform. Bring in outside speakers. Hire seasoned innovators. Paint the walls blue. Buy a lot of books.
And what’s the point of all these approaches? To infuse innovation into day-to-day activities of your company so your frontline workers will identify customers’ problems and solve them in novel ways? To create an elite squad of business builders that can launch a disruptive business? To change the way senior leaders think so they are more comfortable with ambiguity? To developing a structured approach to rolling out a series of new-growth ventures? Some combination of all of the above?
Too frequently, companies decide what they’re going to do before determining why they’re going to do it. That’s challenging, because developing innovations that have a lasting impact requires going beyond doing one single thing. Improving innovation is a system-level issue, requiring a coherent and consistent set of organizational interventions. To begin to determine what set of interventions makes the most sense for your company, first you need to step back and answer a fundamental question: What problem does innovation need to solve?
The answer to this question matters substantially because it determines in which part of the organization a company needs to intervene, what resources leaders need to be ready to commit to, and how long it will take before any impact is felt.
One clear problem innovation can solve is creating new growth. An executive who has this problem recognizes that the company needs to push the boundaries of today’s business to achieve its financial objectives. Perhaps competitive intensity has increased, a new disruptive development has emerged, or a company’s core business has begun to slow. Hitting growth and profit objectives, then, requires boosting the ability to create new businesses that wouldn’t naturally result from day-to-day operations.
Scott D. Anthony is the managing partner of Innosight. David Duncan is a Senior Partner at Innosight. Pontus M.A. Siren is a principal in Innosight’s Singapore office.