The one thing CEOs are missing regarding innovation

Most firms struggle with innovation not because they don’t have disruptive or original ideas but because of the lack of ambition in the first place. Without a clear ambition, it is not possible to evaluate your innovation performance.

 

If you are Sundar Pichai, how would you judge the success of these two projects: the new smartphone Pixel, with very low margin and market share; or Google Glass which had such a huge presence on the media? These projects, to your eyes, are a major success or complete failure?

 

You cannot answer this question if you don’t know the ambition of Sundar Pichai in the beginning. If his idea with Google Pixel was to introduce a breakthrough smartphone, then the project was a failure. But Pichai could be happy if one of his intentions was:

 

#1 What is an innovation ambition?

An innovation ambition is an incarnation of your firm’s strategy regarding a given market segment. It leads your firm towards where it wants to go, how your firm wants to be seen with your products/services, and which position your firm wants to take up.

 

At Stim, we have identified 4 different profiles of innovation ambitions: the Derisker, the Buzzer, the Performer and the Game-changer. These different ambitions will determine the firm’s choice of innovation projects as well as the priorities and the level of efforts for these projects.

 

#2 Ambition drives performance

The questions of “why are we carrying out this particular project?” or “what are internal organization and processes that can foster it?”, or even “what is the right amount of resources and investment to make this project a success?” must be answered precisely to drive innovation projects and to judge their outcomes as a success or failure. Firms, therefore, cannot innovate efficiently unless there are a clear understanding and alignment on innovation ambition in the very first place.

 

If a firm chooses to be a Buzzer, for example, they will launch their innovation activities with strong visibility to improve the brand image. The aim is to eventually profit the whole range of activities while capitalizing on his current capabilities.

 

This is the case of JC Decaux with the Vélib project. It is very likely that they have launched this self-service bicycle system with a vision of enhancing the JC Decaux brand as a “sustainable development furniture provider”. Claimed to have been sensitive to the environmental aspects of its activities and have offered sustainable street furniture “before the concept exits”, JC Decaux was presumably aiming at creating an iconic ecological innovation. In 2003, the Cyclocity system at Vienne was launched as the first “individual means of collective transport”. This positioned JC Decaux as a pioneer of a new market – sustainable urban mobility.

 

If you choose this ambition with your innovation projects, you will need to invest in a few high-visibility innovations to differentiate yourself from your competitors, while capitalizing on the current core of expertise.

 

ambition innovation

 

The Derisker profile tells a different story. Choosing this ambition means to focus on must-have innovations while closely monitoring potential disruptions that could directly endanger one’s current business.

 

One example is the watch of traditional banks on Fintech startups that shows how the banking industry has chosen a risk-averse profile. Banks are closely watching disruptions in the Fintech universe and investing (sometimes that means betting) heavily on ones they believe hold the disruptive keys. Some major banks could have chosen to invest a lot in their own Fintech capabilities internally in the last few years, but the choice was to stay strong in the current business, while staying relevant to the future one.

 

ambition innovation

 

Choosing this ambition means your investment level is low, because your effort will be an exhaustive watch regarding radically new technologies and market. This helps to anticipate potential disruptions to the core activities. The goal is not to launch new products or services, but simply to keep an eye on the ecosystem transformation.

 

Conclusion

At the end of the project, the way you judge if it is a failure or success would depend largely on the ambition you have set up in the very beginning. If the CEO’s ambition was to be a Buzzer, the return on investment of the project could be, for example, the impact on communication and the brand image. On the other hand, if his ambition was to be a Derisker, the question would be “Did I invest the right amount of money to learn about the market and the technologies on this new offer?”.

 

Innovation is relative…to the ambition you had in the first place. One cannot assess the performance of innovation if it has not been fixed at the highest level of the company. The problem is that the majority of CEOs are missing out on this key element of an innovation strategy.

 

Without any clear ambition from the top managers, that many innovation teams are going around in circles and exhausting themselves with hundreds of different projects aiming at completely different purposes. And when none of these projects became “the next big thing” for the firm, it disappoints both sides – the innovation team and the top managers and creates the impression that all innovation activities are a waste of time and money.

 

To prevent this inefficiency, at Stim, we propose a program that onboards top management to collectively define the innovation ambition in an efficient way and in a short amount of time. The starting point could not be clearer: set up a clear ambition innovation.

 

 

 

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