Monday, March 27, 2017

CIOs as “Chief Innovation Officer”: Setting Principles to Manage an Innovation Capability Portfolio

 Innovation should start from a deep research of people’s concerns, needs, and frustrations.

Generally speaking, innovation is to transform novel ideas and achieve their business values. It is not a serendipity, but a discipline and a systematic approach with a set of practices to achieve business goals. Innovation helps to tackle the complexities of business dynamic in the digital ecosystem. Nowadays, innovation is no longer “nice to have,” but “must have” differentiated capability to stand out from the competitions. Capabilities are typically expressed in general and high-level terms and typically require a combination of people, processes, and technology to achieve. So how to set well-defined digital PRINCIPLE to manage a healthy innovation capability portfolio and drive a successful digital transformation.

Do not ignore any specific types of innovation: Without innovation, organizations cannot thrive for the long term. Managing a healthy innovation portfolio should be integrated with the annual strategic planning process and financial investment model. The size and mix of the innovation project portfolio depend on the business circumstances, strategic objectives and severity of external challenges or changes. Generally speaking, all businesses should have a handful of "bets" in the breakthrough category. What's important when developing the mix is to strike the right balance of quick wins and long-term winning proposition; the radical breakthrough and the evolutionary changes. There are “hard” innovations such as product/service/business model innovations, as well as “soft” innovations such as management/culture/communication innovations. A high mature digital organization can handle innovation streams for different purposes and with different time frames. Due to the increasing pace of changes, innovation can happen anywhere across the organization and its ecosystem. If you do not innovate, your competitors will and make your current successful products obsolete. Innovation is the mechanism through which you grow and evolve something to something better (higher value-add) or something new, mostly based on a combination or modification of previous attributes/approaches. The evolution of innovation only exists in the more open environments that create insights, take advantage of all sources of creativity in a more open way and leap innovation management to the next level.

Accept risks for potential reward: The risk is part of innovation, but you can manage parts of these risks. Innovation by its inherent nature comes with a risk. The failure is of crucial importance in the process of achieving innovation. People learn far deeper and more enduring lessons from significant failures than from anything else. These lessons will increase the effectiveness of your next innovation practices and therefore probably increase your chances of meeting your objectives on your next attempt. Accept risk for potential reward for innovation management. However, from finance management perspective, set the discipline, consider what capital you are prepared to risk in making the innovation, do not let this be so much that losing it will cripple your business. Hence, the best judgment, a qualitative approach is given for managing innovation risks and improving innovation success rate.

Make innovation benefit the widest possible audience within your organization: Innovation is the means to the end, it should either benefit your customers or your employees. Innovation, as an individual process or collective process, helps us adapt, improve, grow and integrate. Lots of tools are available to help us think differently, assess problems and come to solutions in novel ways. When looking at business/organizations, the most powerful of these processes involves tapping the organization's ecosystem (people-centricity) for the collective perspectives/insights of those who make up and know intimately their parts of the system. Being innovative is our gift as humans, with a great deal of what defines us as humans actually, whether new products, services, solutions, new sounds and music, new way of reading and publishing, new ways of educating future of generation, etc It is about incorporating entrepreneurial and startup principles, with a focus on reducing risk adversity to add value to the quality of people’s lives.

Don’t sacrifice the long-term viability of the portfolio for short-term rewards: Innovation can happen everywhere -disruptive innovation, evolutionary innovation, and incremental innovation because technology is changing constantly. In dynamic environments, there must be a capacity to respond to new and emerging opportunities and to create new opportunities. Though both quick win and long-term return on investment for innovation are crucial, do not sacrifice the long-term viability of the portfolio for only short-term rewards, maintains a balance between exploration and exploitation. It is important to manage the innovation life cycle with speed. It’s about how to get all the way around the world, to capture all relevant information, to see from different angles. Disruptive innovations may be considered as drivers for emerging digital strategies with the goal to build the long-term competency of the organization.

Last but not least: being innovative is a state of mind, which is more important than doing any type of innovation: Just as we find energy is released from one steady state to another, we find innovation from our outer realities attempts to change to the steady state of our inner self. This energy is called being innovative - as a state of mind. There is an emotion life cycle in an innovation! The kind of emotions within a person that triggers an improvement/creativity process can be numerous and most likely will be a combination of emotions. Real change and creativity are deprogramming old mindsets, letting go of outdated traditions or the voices from the past, reprogramming collective minds with new values, norms, and attitudes. Innovators need to rise above the status quo and take on a new set of activities that have them involved in the strategy development process from the get-go. Being able to engage in the successful creation of innovations is a very hard work and does include a lot of thinking, observation, inquiries, unusual connections, experimenting, skills, and abilities as well as practices and theories. Innovation should start from a deep research of people’s concerns, needs, and frustrations. Innovation requires thinking beyond, as opposed to outside the box, altering or changing the frame of reference to create previously unconsidered solutions. Innovation is about thinking differently, acting differently, delivering differently, adding value differently from the status quo.
Digitalization stipulates companies work together in a hyper-connected and continuously converging environment that provides structural analysis and a certain extent of serendipity. This is about understanding the wholeness. Digital means flow, there is more flow of creative ideas, the better opportunities to reap the benefit from innovation management. Set principles, and take a holistic approach to manage a healthy innovation capability portfolio.


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