Does your company have an innovative culture?

With so much pressure on companies to innovate, Marketing magazine in Asia asked us what drives innovation success. It’s a big topic.

In this article we focused on innovation culture and the questions you should ask as you assess how well you are set up to excel.

Does your company have an innovative culture?

In our work with clients across industries we’ve found that what makes the biggest difference to their innovation track record is not an individual’s skills, but their innovation culture.

Companies with a great innovation culture have encouraging leaders, clear innovation strategies, well-observed innovation processes, team structures that give space for innovation ideas to be fostered, and agile, flexible project teams to make them happen.

These together are the drivers of capabilities: strategy, organisation, people, skills, processes and culture. Leaders need to manage all of these, thinking about how they interact, if they really want to drive growth.

Let’s get specific.

Does your company have an innovation strategy that specifies the role innovation needs to play in delivering the brand’s purpose or in creating new brands, and is this in line with the overall corporate strategy?

Do you know which particular areas of innovation you need to excel in to create a strategic advantage in your category?

Have you made full benefit of digital technologies in enabling the innovation process – bringing internal and external partners together, like for example, the Unilever Foundry or LEGO’s crowd-sourcing?

Are your leaders and middle managers embracing the risks and creative courage that innovation requires?

Lessons in innovation culture

LEGO is a great example. It’s a company filled with creative and skilled people, but despite its best intentions, in 2000 its innovation strategy led it down a path that virtually bankrupted it. In a digital world filled with kids playing computer games, people were questioning the relevance of a plastic brick.

The company tried to address this with a drive for innovation – sparking entry into new sectors such as video games and digital toys, jewellery and theme parks, and it proliferated its core range with movie tie-ups. The result was confusion.

Instead of innovating to support its brand purpose, its brand purpose became muddled and people didn’t know what it really offered and was about, and its internal efficiencies and profitability were compromised.

The company’s performance turned around when it shifted its strategy to innovation within clear parameters, guided by its brand purpose, and reconnecting it with its LEGO fan base. It continued to encourage innovation internally and with external LEGO fans, but it controlled it with clearer processes.

Also, it asked this vital question: does this match our brand purpose of building the next generation of engineers by playing well, and does it match our corporate strategy of being the best company for family products? The results speak for themselves.

Another forward-looking example is Rakuten – an exciting innovative company from Japan to watch out for. In the Forbes survey, it was rated as the second most innovative company in Asia. Today it’s the world’s third biggest e-commerce company. What keeps it at the forefront of innovation is its strong culture of innovation rooted in its Japanese roots of respect and discipline.

Is your company innovative enough?

If you want to find out, here are some questions you should ask yourself:

1. Does your company have an innovation strategy that specifies the role innovation needs to play in delivering the brand’s purpose or in creating new brands? Is this in line with the overall corporate strategy?

Does it, for example, set up the level of innovation required: from adding more SKUs such as flavours or colours to tap into trends, to creating new propositions to deliver against the overall brand purpose more deeply (such as Google maps with travel directions that take into account traffic flow to help people find more information they need, when they need it), or to create new brands for the portfolio?

Do you know which particular areas of innovation you need to excel in to create a strategic advantage in your category?

At Brand Learning we use the model of the innovation value chain to map the areas of innovation and spot where companies need to build capabilities.

Some companies, for example, will focus on coming up with new ideas first, as a way to build their brand. Others will build strategic advantage by excelling at getting to market (Mondelēz does this well with its chocolate brands for example), and yet others, such as P&G, will excel in rapid global rollout.

2. Have you made full benefit of digital technologies in enabling the innovation process?

In a globally networked world, digital platforms that crowd-source and crowd-select innovation ideas help companies such as LEGO and Unilever drive their innovation agenda. (If you haven’t already looked at it, check out Unilever’s foundry programme.) Others digitally empower collaboration behind the scenes – digitising the workflow of projects, sharing ideas internally and communicating via private social platforms.

3. Are your leaders and middle managers embracing the risks and creative courage that innovation requires?

Companies need to recognise and reward the attitudes and behaviours which drive innovation. Attitude to risk, the ability to make bold decisions and allowing the project team to have fresh independent thinking all stem from the culture of the organisation.

Leadership must do more than make go/no decisions against linear development paths, but be able to embrace constant flux, re-plan talent and resources according to the opportunity.

The leaders of the most innovative companies see themselves as innovators and do not delegate this responsibility. They must display the behaviours which underpin creativity and innovation so this way of working is entrenched in the cultural DNA.

Originally published in Marketing

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