By Deloitte Korea
Over the past 18 months Deloitte has been analyzing the practices of leaders of TMT (technology, media and telecommunications) firms and achieved insight about successful “DNA of innovation.”
First, at the heart of our research into effective innovation, we found three unexpected paradoxes. — 1) innovation is a social sport; 2) innovation is somewhat anarchic; and 3) “good” failure is critical to the innovation process
Innovation requires brilliant experts to work together efficiently. Innovation rates rise exponentially with increasing population density. It is because innovation occurs when many people from different occupations and professions interact and share ideas.
Deloitte has found that it is not true that large organizations have the greater degree of innovation. Larger organizations are often less innovative than their smaller counterparts. The concept of “organization,” which is about quickly standardizing operation — turning set ways of working into easily replicable processes, minimizing risk — is deliberately anti-innovation.
Organizations need to find a way to make failure acceptable and to help their people learn from failures. There should be balance between productive and unproductive failure. Productive failure needs to be openly acknowledged and processes need to be put in place to learn lessons from the failure. Unproductive failure needs to be minimized through effective performance management.
Second, our research has shown that organizations face a number of challenges when pursuing innovation. The following are required in order to overcome those challenges.
The theme of innovation is extending from creating new digital products and services to customer experience. This requires the creation of an environment that enables innovation.
Leaders should create an environment where innovation is accepted and at the same time keep appropriate balance between the innovation of new ideas, control of risk and ultimately of spending. Google famously gives a large number of employees one day a week to work on “personal” projects, thereby encouraging entrepreneurialism and innovation.
The role of a leader is essential to achieve innovation. The leadership of Nelson Mandela created an environment where their people could thrive. It has the fundamental belief that the only long-term differentiator they have is their people, and that their people — if provided with the right environment and supportive organization — will successfully innovate beyond where they are now.
Third, we have found four organizational dimensions that would maximize our inherited “DNA of innovation” and finally lead to achievement of innovation. Leaders should operate across three organizational dimensions to create an organization which is able to successfully innovate.
Organizations which are successful at innovation manage it as a portfolio across the enterprise. They adopt a clear strategy to nurture and launch innovations, while applying rigorous discipline with a “Total Innovation” approach at all stages in their lifecycle. Also, they think big (yet in a pragmatic and practical way) and take baby steps.
Subconscious fear of failure inhibits people from openly sharing their views and building on others’ concepts, and from taking appropriate risks. Leaders need to lead from the front, demonstrating their clear commitment to new innovation and to people who are willing to try new things.
Leaders need to create room to maneuver for their innovation teams and be consistent role models of cross-organizational working — openly working together and challenging each other. At the same time, they consider failure as a part of the greater innovation process, experiment often and learn from their mistakes.
Innovation requires free-thinking, creativity and an environment that promotes free-thinking and challenging each other’s ideas. Therefore, organizations need to focus on minimizing risk through standardizing process and specializing in core business as well as designing organizational structure that encourages effective collaboration.
Organizations should create an open environment where the entire staff can participate in innovation and build technological and functional boundaries in order to promote developing expertise and innovative ideas. In addition, they must design an organizational structure that encourages effective collaboration between experts from different disciplines, while compensating any contribution to innovation during performance measurement and setting simple rules to manage innovation.
Leaders must remember that, although the innovation process is difficult for many organizations, innovation is essential for the survival of an organization.
This article was contributed by Deloitte Korea