Patrick J. Stroh, President, Mercury Business Advisors
CEOs and entrepreneurs never get a moment’s rest. You pour tremendous volumes of blood, sweat and tears into creating and launching your new product or business—and then, before you have a chance to catch your breath, all that hard work is in jeopardy of becoming irrelevant. Customers are capricious, and as their wants, needs and expectations change, your company must shift to meet them.
When we at the Institute of Management Accountants did the research for my new book titled Advancing Innovation: Galvanizing, Enabling & Measuring for Innovation Value!, we got a healthy dose of reality. We found the old rule of thumb that you need to innovate your business’s value proposition about every 10 is far outdated.
In fact, 75% of respondents in our research said they needed to significantly evolve or reinvent their business value proposition every five years at minimum to maintain relevance and market value. Every five years! The longevity of the value proposition that you just created the blink of an eye ago is already shrinking and you’ll need to move faster than ever to keep it relevant for your customers.
All of this means your company must have a relentless focus on innovation. I don’t just mean a quest to find that one disruptive, breakthrough idea that changes the world. Random, great ideas and epiphanies are fine and good, but focusing on current business problems and customer insights can lead to systematic, holistic, continuous innovation that consistently drives real value.
The desire and the ability to continuously innovate must be built right into the fabric of your culture. You need to hardwire your company with a system to galvanize, enable and measure innovation. Consider the following tips:
- Create multiple innovation channels to gain insights and ideas. Ask employees, suppliers, customers, educators and other constituents for ideas and solutions to current business challenges. You can’t get innovation insights and value if you don’t ask and you need to enable these people to provide insights via multiple channels. The smaller ideas and improvements can add up fast, don’t focus on just big ideas.
- Don’t just talk about innovation – measure it! When you measure innovation, look at metrics that align to your business’s strategic intent. I.e. – if you are Customer Solutions Provider archetype you should look at measures like Net Promoter Score, Strategic Accounts and Customer Acquisition & Retention. If you are a Best Price/Low Cost Leader archetype, you should focus on On-Time Delivery, Quality and other operational excellence metrics. Not everyone should use metrics like New Product Development Sales and Number of Patents as their innovation key innovation measures. Net/Net – if you can’t measure it, you can’t improve it.
- You’re the CEO – send the message to employees that it’s ok to fail when innovating. Just qualify that comment by saying, “It’s ok to fail, just fail fast and learn something from it and move forward.” If you are not failing once in a while, you are not pushing hard enough and if you don’t set this tone and send this message to employees, they won’t take risks.
- Innovate like a baseball manager. You can’t consistently win games over the course of a season by sending all your players up to the plate and telling them to swing for the fences. Have your employees hit innovation singles, doubles, and triples along with occasionally swinging for a homerun. You need a blend of innovations in your portfolio in order to win and this spreads out your risk profile and gives you a pipeline of innovation value to release to stakeholders over time.
Creating a culture of relentless innovation in your business is not easy, but neither is it rocket science. When everyone at every level is always on the lookout for small and medium size innovations, you get lots of quick wins—which create value and momentum in the business. Flashy innovation programs may generate good PR and sound good on earnings release calls, but embedding an innovation system into your culture will help you stay relevant to customers. This in turn will help you protect what you’ve worked so hard to build!
About the Author
Patrick Stroh, CMA, is president of Mercury Business Advisors providing management advisory services in business strategy, innovation and product development and is author of Advancing Innovation; Galvanizing, Enabling and Measuring for Innovation Value!(IMA, December 2015). He serves on the board of directors for the Institute of Management Accountants and was recently appointed as a Fellow in Palladium’s Positive Impact Research Institute. Patrick also writes a column entitled Innovation Elixir® for the American City Business Journals.