Two recent surveys — one conducted by Accenture, the other by Booz & Co. — reported an increased focus on “major” innovation among organizations. Companies are devoting more effort to projects with significant growth potential, projects for new markets or projects involving new business models. Incremental innovation continues, as it must to support existing business, but generally these executives are looking for projects with greater impact on their profits.
That said, there is a big gap between voicing a strategy and successfully implementing that strategy. Strategic intent is not what distinguishes successful innovators; rather, it is the way they go about doing innovation that matters. Innovation management is no longer just about new products or services: It encompasses new business models, new organizational forms and new partnerships between organizations.
This broader definition of innovation needs managers to develop a different mindset than in the past. They also need new skills to support the successful implementation of new business models or organization structures that deliver innovation to the market. Successful innovation requires as much attention to the soft side of business — people and their knowledge, skills and motivations — as it does to hard financial objectives or strategic reasons. The active management of innovation needs goals, structure, fair process, a diverse skill base and focused support.In his book The Innovation Manual, David Midgley identifies five steps that companies must take to innovate successfully:
1. Charter innovation within the organization.
2. Select, prepare and support the right team.
3. Co-create the innovation with customers.
4. Change the organization to deliver the innovation.
5. Build the market for the innovation.
What is common to these tasks is people: people collaborating with one another effectively so they apply the right knowledge, skills and resources to innovation projects at the time these projects need them.
As companies switch from incremental innovation, which works fine within existing organizational structures, to grander and more disruptive projects, the demands on people, structures and resources rise. This is not just because the project is more conceptually complex, but also because it must draw more widely on other parts of the organization. As a result, switching from incremental to major innovation is not just a matter of strategic intent; it has great consequences for the way the organization works. And there are many hurdles that prevent this from happening in large corporations, such as:
- Senior-level lip service being paid to major innovation, but no real commitment.
- Lack of clear direction about the areas where the organization seeks to innovate, leading to “shotgun” results and wasted resources.
- Hasty and poor definition of objectives for specific projects, allowing project members to fall back on safer incremental objectives.
- Poor team selection.
- Unclear incentives and processes for major innovation, leading middle managers to focus on safer tasks.
- Lack of innovation management skills at the middle to lower levels.
- Executives who can’t handle the ambiguity of running existing businesses while developing new ones.
Improving Execution of Major Innovation
Twenty-first century innovation is more about people, organization and business models than technologies or products. A learning executive aiming to raise the ability of his or her organization to innovate has the following basic choices:
1. Internal workshops to change thinking or transfer skills.
2. Internal mentors with good innovation skills.
3. External seminars from management education and development providers.
4. External consultants as trainers or technical support.
5. Projects to allow skill application and experience building.
While all of these can be useful, each one alone is not the complete solution. Arguably the best way to crystallize general knowledge about innovation into real skills at execution is to involve people in innovation projects. That way, they get to learn how to apply knowledge in a practical and useful way, and they build up expertise and confidence that they can apply to future projects.
That said, the relevant skills and how to apply them are dependent on the nature of the project. Some projects may highlight the customer, others technical development and still others organizational restructuring. Part of the training intervention therefore needs tailoring to the project. And that is the drawback of the stand-alone seminar approach.
Workshops and seminars on innovation can be useful in a general sense. However, they may underemphasize, or even omit, some frameworks and skills the particular team will need, while overemphasizing some they will not. Plus, within the constraints of getting people together for a few days, it’s often not possible to teach skill application in enough depth.
Finally, one should not lose sight of the overall goal to build greater ability to innovate across the organization. So the learning intervention must engage the organization as a whole to ensure people are enthusiastic and willing to learn new skills and reinforce one another in doing so. Well-designed seminars can indeed create early engagement and provide basic frameworks. But to sustain engagement over time, and to provide tailored and relevant application advice to each team, learning leaders need to combine seminars with mentors and consultants in a suitable way. This is where innovation tournaments fit in. Innovation tournaments combine seminars, mentors, consultants and projects to provide relevance, application and engagement.
Innovation tournaments fit the challenges of 21st-century innovation by blending action learning, organizational engagement and relevant skill transfer. But how exactly do they work?
What Are Innovation Tournaments?
According to Christian Terwiesch and Karl Ulrich, professors at The Wharton School and authors of Innovation Tournaments: Creating and Selecting Exceptional Opportunities, an innovation tournament in its simplest form is a Darwinian contest between various ideas to select the best. It’s similar to the well-known phase-gate method: A lot of ideas go into the top of the funnel, but only a few see the marketplace at the end.
However, the real difference is in the way the corporation runs the tournament. Executed properly, the tournament can open innovation opportunities to many more people, harness competitive spirit and pump powerful ideas into the phase-gate. Also, well-run tournaments use management development workshops to transfer basic frameworks, as well as mentors and consultants who help teams apply these to the specific needs of their projects. And because the tournament includes many teams, these mentors and consultants can leverage their expertise efficiently.
Keep in mind, however, that innovation tournaments are for the fuzzy front end of innovation. Their role is to produce a few good ideas — or “investable propositions” — that can then go into development. Similar to phase-gate methods, the goal is to produce a business case that top executives can invest in.
Through innovation tournaments, top executives can dip their toes into more radical innovation without incurring large risk or expense. For example, since everyone knows it is a contest, workers are prepared upfront for the fact that only a few, if any, projects will go into the formal innovation system. Middle and lower-level managers and employees can get their first experience of working on innovation projects without fear of failure. Everyone understands most teams will not win, and losing is therefore not career threatening.
Further, organizers can set up the tournament to focus solely on major innovation or to allow any degree of innovation, and they can engage as broad a slice of the organization as they wish. Engagement and enthusiasm for innovation comes from the competition — a more powerful motivation than most company incentives.
Through a well-designed and -supported tournament, the organization can achieve two critical goals. First, instructors, mentors and facilitators can transfer relevant skills to each project team as they draw up and present their unique business case. Second, the tournament organizers can share learning across teams and capture key results for the organization. In that sense, the winning projects are not the goal — although they may be valuable in their own right. Rather, the goal is to change the mind and skill set of everyone away from incremental innovation in silos to the more radical cross-organizational innovation in products, services, structures, processes and business models that adds significant value to the company.
Through two or three annual tournaments, these effects can be marked, creating significant learning for the corporation and generating cohorts of managers who can tackle future innovation projects more effectively. Innovation tournaments do not overcome all the hurdles that prevent major innovation, but they are a good way to start addressing them.