THE INNOVATION MATURITY MODEL

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1 THE INNOVATION MATURITY MODEL The strategic and capability building steps for creating an innovative organisation Author: Robynne Berg Berg Consulting Group Pty Ltd

2 THE INNOVATION MATURITY MODEL THE THREE QUESTIONS All businesses and industries in today s place are challenged by the increased rate of change, disruptive technology and uncertain economic times. While the specific challenges are unique to a business based on its industry, place and maturity, there are three key questions shared by all leaders. Those questions are: Where to we find the breakthrough ideas for long- term growth? How do we successfully action our ideas? How do I engage my employees to drive innovation and change? THE BARRIERS TO INNOVATION Many organisations find the process of innovating difficult. There s good reason for this. Mention innovation and you ll often hear comments like: New ideas never get up around here. We can t afford the risk of new ventures: we need to focus on operational improvements. We don t have the resources to undertake innovation. We can t start risking new ideas when we re dealing with reduced margins and revenue. I can t get my staff to take responsibility for being innovative and improving performance. We have plenty of new ideas but we can never action them. Every time we try to action a new idea something urgent comes up that shifts our focus. We tried some new initiatives but they flopped. We can t afford that kind of failure at the moment. When the economy turns around we ll. We cancelled the ideas box because it became a black hole. We re analytical types we can t be innovative; it s not in our genes. The above comments each represent the barriers to innovation. They re typically heard in organisations that have not yet built their innovation competency. For a number of reasons, often historical, the company fails to successfully create or implement innovation. This is not uncommon. Most often the reason innovation fails is the company has not yet grasped some of the truths of innovation. THE FIVE TRUTHS OF INNOVATION Becoming innovative is imperative for survival. If your business focuses only on operational improvements in today s business environment you will soon struggle for relevance in a place that has greater choice, changed expectations and increased power. Customers and clients have a different understanding of value that businesses must meet. Innovation is about people. Innovation is not about strategy or technology. It is first and foremost about people. The most sophisticated innovation strategy or technology will never succeed unless the people have the mindset to both create and deliver. Innovation is a skill: it must be learned Innovative practices are often incongruent with how we think and how management is taught. To become innovative, managers and employees must develop skills in innovative thinking and behaviours before they can be innovative. Importantly, innovation is not a genetically endowed skill; it is a learned skill. In other words anyone can learn to be innovative with training.

3 Innovation is about process A set of principles and processes is required to create and implement ideas that are commercially viable. Innovation doesn t end at the idea. Innovation must follow replicable sequenced a process from initial idea to full execution. Process will ensure that the idea is successfully actioned. Innovation requires a framework A framework is required to ensure that innovation activities are de- risked across the process including strategic, resource, operational and cultural risks. An innovation framework with a suite of tools and practices will ensure that a common approach and language for innovation is executed across the organisation at every level. ONE SOLUTION, TWO PERSPECTIVES The following model looks at innovation maturity from two different perspectives: the strategic perspective (executive viewpoint) and the capability perspective (organisational development viewpoint). In order for innovation to be successfully achieved you must consider it in terms of both your strategic processes and your organisational capability. These two perspectives are concordant and interdependent.

4 THE INNOVATION MATURITY MODEL Where to start? Innovation is fundamentally about people. An innovative mindset and culture can innovate without a strategy (although a lack of strategic process can increase risk and compromise outcomes). However an innovation strategy cannot be successfully formulated or implemented without innovative capability, mindset and culture. For this reason, it is advisable to place a preliminary focus on developing capability and culture. Innovation strategy formulation and execution are best to take place either whilst or after internal capabilities have been developed.

5 EXPLANATION OF INNOVATION MATURITY LEVELS LEVEL 1 ENTRY LEVEL INNOVATION PRACTICE Entry- level organisations are often those who have historically focussed on operational outcomes. While innovation may have started entering into the business vocabulary (eg: innovation is a corporate value), managers and staff are effectively paying lip service to innovation rather than building competency. There is no known executive sponsorship of innovation development across the organisation. Innovation has not been assigned to any individual or team, so there is no formal ownership. New ideas are generated through ideas boxes and brainstorming sessions but rarely enacted. Any innovation that takes place is generated on an ad- hoc basis and is often reactionary (in response to industry or technical shifts forced on the business). There has been little or no training in innovation and innovative leadership. STRATEGIC FOCUS To elevate you organisation from entry level to emerging level the following strategic focus is required: Securing executive sponsorship Developing competency of managers & staff Initiating strategic approach to innovation Assigning innovation responsibilities to managers Appointing innovation committee CAPABILITY FOCUS To elevate you organisation from entry level to emerging level the following capability focus is required: Build competency in innovative thinking and leadership Commence creation of a common language across organisation Commence focus on developing foundations for innovative culture Development programs should focus on: Develop innovative leadership skills in executive team Developing innovative leadership skills in management team Develop preliminary skills in innovation strategy in executive/management team Introducing innovation and creativity skills across all staff SOLUTION FOCUS To elevate you organisation from entry level to emerging level the following approach is recommended: Half- one day The Innovative CEO innovation program 2- Day The Innovative Leader program for executive & management team 1-2 Day The Innovative Culture all staff program

6 LEVEL 2: EMERGING INNOVATION PRACTICES Emerging innovators have recognised the need for innovation. Whilst the concept has become widely discussed the organisation has struggled to bring innovative ideas into action. While there is executive sponsorship, the executive is not seen as actively pursuing innovation. Any innovation has been assigned to only one person or department (eg: product development). Innovation activities have taken place but success has been limited. There is a lack of strategic direction in terms of innovation. Most innovation takes place in isolation and there remains a siloed approach to innovation in the organisation. There is some openness to innovation but not yet a fully engaged culture. There are no replicable processes for innovation. STRATEGIC FOCUS To elevate your organisation from emerging level to co- ordinated level the following strategic focus is required: Project- based innovation focus: products/services/s/processes Strengthening executive sponsorship Creating innovation KPIs and measures Building innovation across business strategy Developing innovation strategy skills Developing innovation strategy execution strategy Develop innovation framework and processes Furthering innovation committee role & influence CAPABILITY FOCUS To elevate your organisation from emerging level to co- ordinated level the following capability focus is required: Build competency in innovation strategy Build competency in executing strategy Continue to build competency in leading innovation Continue to build innovative culture Development programs should focus on: Innovation strategy skills Developing management skills in executing innovation and change (tipping point leadership, fair process) Developing innovation and creativity skills across all staff SOLUTION FOCUS To elevate you organisation from emerging level to co- ordinated level the following approach is recommended: 2- Day Blue Ocean Strategy Intensive workshops Executing Strategy (Tipping Point Leadership & Fair Process) workshops Strategy planning offsite Innovation incubator (working group) programs (4-26 weeks) Innovation processes training Mentorship and coaching (internal and/or external)

7 LEVEL 3 CO-ORDINATED INNOVATION PRACTICE At co- ordinated level, organisations have established innovation practices and strategies with some strategic success. This includes the successful launch of new products and services, the creation of new s or the implementation of new resource structures. The executive team sponsors innovation but directs rather than drives innovation. Innovation management processes are in place but remain the domain of particular departments. Managers exhibit competence in innovation. The culture of the organisation is regarded as innovative. Replicable programs and frameworks are in place to develop commercially viable ideas. Innovation KPIs are set for every department and manager. STRATEGIC FOCUS To elevate organisation s from co- ordinated level to innovation leadership level the following strategic focus is required: Strategic Innovation focus: business model Implementation of fully integrated innovation program (including policies, processes & procedures) Organisation wide innovation KPIs & measures Innovation KPIs & measures individual performance plans Innovative competency become a key recruitment focus CAPABILITY FOCUS To elevate organisation s from co- ordinated level to innovation leadership level the following capability focus is required: Advance organisation- wide innovation competency Developing organisation- wide innovation program Implement organisation- wide innovation policy and process Create high level employee engagement: strategic direction and innovation Development programs should focus on: Implementing employee engagement program (Organisational vision) Implementation of innovation program & processes Advanced- level innovation competency Innovation core focus of induction programs SOLUTION FOCUS To elevate you organisation from co- ordinated level to innovation leadership level the following approach is recommended: Innovation incubator (working group) programs Litmus testing of innovation projects The Innovative Leader & Innovative Culture workshops (advanced level and function- specific) Engagement programs (briefings, workshops, training) Training - innovation program policies, process and procedures Internal induction program Mentorship and coaching (internal and/or external)

8 LEVEL 4: INNOVATION LEADERSHIP The business has built a reputation for innovative practices. The organisation has had repeated innovation success across products, services and processes. It is an industry leader in both incremental and disruptive innovation. A robust and innovative business model ensures the company s long- term strategic success. A company- wide innovation program drives strategy at every level and across all departments and is supported by robust policies and processes. The management team is strongly supported through executive sponsorship. Innovation is considered a core capability of the organisation and is intrinsic to its brand value. Innovation is deeply embedded into the corporate culture. The company is viewed as a good company to work for due to its innovation capabilities. STRATEGIC FOCUS To elevate organisation s from innovation leadership to industry innovation leadership level the following strategic focus is required: Strategic innovation focus: industry and cross- industry collaboration Develop policy for open innovation and collaboration Develop IP management policies and processes Leverage organisational IP for commercial outcomes High- level engagement with innovation research, government and industry CAPABILITY FOCUS To elevate organisation s from innovation leadership to industry innovation leadership level the following capability focus is required: External collaborations across businesses and industries Leveraging organisation s innovation IP and businesses Industry leadership Development programs should focus on: Implementation of collaboration programs Cross- business/ industry innovation development SOLUTION FOCUS To elevate you organisation from innovation leadership level to industry innovation leadership level the following approach is recommended: Open innovation and capacity development training IP management and knowledge transfer Network development Open source R&D training Open innovation policy training Mentorship and coaching (internal and/or external)

9 LEVEL 5: INDUSTRY INNOVATION LEADERSHIP Widely recognised as industry leaders in innovation, the organisation has enjoyed consistent success resulting from its innovative structure and processes. The networked business structure is world leading and responds to current and future work practices. An industry leader in disruptive and incremental innovation the business is strategically driven by both industry and cross- industry collaborations. The company has a number of workgroups with representatives across the organisation working the charters such as new business innovation, innovations and business model innovations. It also invests in innovation working groups and start- ups operating outside the organisation who are tasked with research and development of disruptive products and technologies. A leader in its field, the business has leveraged its innovation IP into commercial enterprises. Company owned IP might include innovation ecology, innovation models and frameworks and innovation training programs. The company has deep relationships across research labs, universities, government and Small and medium- sized entrepreneurs and venture capital firms. It is regularly engaged in leading innovation research and pilots. Innovation its core capability and core brand value. The business is ranked a Top 50 Employer due largely to its innovation capability. As a result the business is able to attract and retain employees and executives of both national and international standing. FOR MORE INFORMATION For more information about the innovation maturity model please contact: Robynne Berg Managing Director Berg Consulting Group Pty Ltd P: M: E: robynne@bergconsulting.com.au W: