Does the transformation to an agile innovation system increase the company’s earnings? Can it adapt and survive in the face of external change? Or is agility essentially reserved for the start-ups of e-business? These are current entrepreneurial questions for managing directors, innovation managers and development managers.
Companies are working on a wide range of innovation projects. In well-known business fields, they develop product adaptations, novel product functions and technologically driven generation changes. Further innovation projects open up new business areas by means of novel products from known or new technology as well as new markets and customers. Innovative projects such as digitization transform business processes and business models.
The success of each innovation project depends on the quality of its innovation system: Does the innovation system meet the content and dynamic requirements of the innovation project? Like science, we understand under the innovation system the entire structure of roles, competencies, capacities, communication and interaction of the innovation management of all innovation projects of a company.
The innovation system must be agile in order to achieve the content and dynamic requirements of all innovation projects. It must be fundamentally different from the routine. The following transformation can lead to an agile innovation system with tangible business results:
- Leadership through innovation managers
- Development of the innovation culture
- Review of the innovation strategy
- Development of the innovation network
- Reorganization of the innovation organization
- Management of the innovation projects
Leadership through innovation managers means that conflicts with routine can be resolved in favor of innovation. The innovation culture lives. Strategic decisions, for example, on purchases of start-ups, and organizational rules are made in favor of the innovation projects. Interface management functions as the characteristic form of coordination of innovation projects. Innovation projects deliver innovation quality. Disruptive or transformative innovation projects are not delegated unless they are to fail from the outset. In this case, the CEO himself is the innovation manager, or CTO and CIO have very strong roles in the management. Known examples are APPLE under Jobs or TESLA under Musk. Less well-known is the innovation-oriented leadership of BOSCH over many decades. Innovation managers on the second or third level are usually not empowered to lead, but to manage.
The innovation culture is the cultural network of internal processes and relationships around the innovation organization. Even for insiders, it is rarely tangible, but far more powerful than the innovation strategy. It becomes tangible through paradigm, stories and myths, symbols, power relations, informal organization, control system, rituals and routines. An agile innovation culture is clearly distinguishable from an efficient routine culture. When we read stories about Edison, Siemens, Bosch, Bezos, Jobs and Musk, we can get a picture of effective, agile, and competitive innovation cultures.
For one to two decades, the dynamic innovation strategy defines the innovation objectives, the planning of innovation capacities, and the implementation and control of strategic measures and results. It includes, for example, roadmaps for technologies, products, markets and customers, sub-strategies for intellectual property rights, networks, resources, acquisitions, innovation quality, data, and tools as well as premises and key data of the business cases. The decisions taken define future earnings in the competition. Therefore, the innovation strategy is almost everywhere secret.
The innovation network covers all the necessary competences. It includes many partners, from research to suppliers, cloud sourcing and crowdsourcing to customers. Agile innovation requires high transparency of the innovation quality in real-time throughout the entire network in order to achieve the success of the innovation. Otherwise, agility must be achieved through a high innovation depth. Both in-house development and business acquisitions of start-ups, equipment suppliers such as GROHMANN, or digital platforms such as LINKEDIN, can make sense. CISCO has systematically acquired small companies for decades.
The innovation organization is aligned to the innovation projects. It follows the paradigm of simultaneous engineering immediately after the idea. For repetitive product adaptations or work packages, the innovation organization is designed to be process-oriented using Kanban. Therefore it works particularly good, fast and efficient. For significant problem solving, the innovation organization uses largely autonomous, agile, cross-functional teams focused on the business. Here, spatial proximity of the team members and the application of Scrum are very effective. Scrum has proven itself in the software development of start-ups. The R & D organization is mixed centralized and decentralized. Marketing designs the fast distribution of the innovative products. Innovation quality management supports the innovation projects in order to achieve innovation success through innovation quality. The quality management of the routine organization is not suitable for this because there are no customer requirements that could be fulfilled for up to 75% of project lead time. Digitization expands data driven innovation support. The innovation projects receive the knowledge they need in an efficient, tool based way without waste. A centralized multiproject management is specialized in controlling the innovation project portfolio. As a project house, it is set up for a limited time. With every change in the innovation project portfolio, the innovation organization is pro-actively re-organized, the innovation capacity is redefined.
The innovation project begins with an idea. Often it requires significant problem solving. From the idea and the significant problems, a simple but comprehensive project proposal is developed. It contains gateways of the investors and the customers, so that they can steer the project and terminate it prematurely. The working time of the innovation project is not subject to special approval until the project proposal has been released. The innovation project in a narrower sense will be launched by the release of the innovation proposal. The innovation project is initially very agile; even the project objectives are still unclear and dynamic. The formalized project management fails here. With the maturity of the innovation, the innovation project is gradually transformed into a formalized project organization, then into the routine organization. In the routine organization, the innovation project increases the company’s profit.
We advise you to define, design and implement your tailor-made agile innovation system and thus increase your earnings.