You Can't Just SAY You're Innovative
...you actually have to BE innovative.
And innovation is more than just throwing 10% of your R&D budget at an Advanced Tech Dev team, and hoping for the best.
This article from MIT Sloan's Management Review is about as good a starting place as any to better focus your thinking on your Innovation Narrative.
That's right--not an "Innovation Strategy." An Innovation Narrative. I love this idea, and it's going to be added as a pillar of the Innovation Strategy Services we provide here at TWC.
In a nutshell (and you should just read the article) there are two kinds of Innovation Narratives: growth affirming and growth-denying. Between those, there are four primary components (levers) that companies can pull to shift their narrative from affirming to denying, and vice-versa.
What struck me was that there is a significant gap in what executives may tell their boards and investors and what they are promulgating internally. In effect, while executives may be telling their boards that they are a "growth by innovation" company, their internal narrative is effectively a growth-denying one.
Ok, not exactly an earth-shattering insight. I get that. But look deeper at the details:
The four levers above drive an Innovation Narrative, and It's easy to see why. It's also easy to see where the breakdown is between saying you are a growth affirming company and actually being one.
I think a lot of this gap is driven by executives' lack of understanding for what innovation actually is. It's obviously not lip-service. And it's not some subset of discretionary spending dollars that you can drip out and expect it to not impact growth.
(The winners of the 2018 Nobel Prize in Economics won partly because they showed that innovation spending was integral to firm growth, and not simply a discretionary line item.)
Innovation Narrative is driven by innovation spending (and, I'd further argue, innovation discipline) and the chart above demonstrates that firms can control their growth position by spending their innovation dollars in a systemic and demonstrable way. It may not be sexy, I will grant you that. Setting up an "Advanced Technology Development" organization and staffing it with PhDs, and giving them a pile of money can be sexy. Or at least it's a shiny thing with which to distract your board.
From my own experience, I can attest to the power of these levers in creating a growth-affirming narrative, which then will allow for the space to create the outward signs of innovation such that they have meaning. I'm looking forward to working with our clients to develop a comprehensive Innovation Narrative that has meaning and impact, and I hope you will find this useful.