Innovation is crucial for the survival and growth of businesses. At its heart, innovation is just a mechanism for finding new ways to create and capture value. Without innovation, companies risk stagnation, becoming irrelevant to their customers and losing market share to competitors. But simply relying on the occasional innovative idea or two to pop up somewhere in the organisation is not enough to guarantee success.
Fortunately much progress has been made over the last decade in shifting innovation from being a ‘loose’ creative exercise to now being a robust business process that organisations can learn and master. It can now be managed systematically, with clear inputs, outputs and activities. This innovation framework ensures that the resulting projects execute the overall business strategy and delivers measurable results.
An innovation framework is a set of best practice processes and tools that enable businesses to identify new opportunities and create successful new products and services. It is a systematic approach that helps to reduce risk, increase the likelihood of success, and create a sustainable innovation culture within organisations.
The first step of the innovation process is focused on two things:
The second stage involves generating lots of diverse, creative ideas for solving the innovation opportunities you have identified. Importantly this is a structured creative process - not just a workshop. The process must maximise creative thinking and generate radical, breakthrough ideas for creating new customer value. Your highest potential ideas can then be developed into clear and complete customer value propositions. There's no room for ambiguity - they should define exactly what will be taken to market for customers to consider and choose. You can expect these to change over time as you learn what works, which is why the next stage is to validate these CVPs with customers.
The third stage of the innovation process is about testing whether your CVPs will actually create the customer value you expect. This is critical - otherwise you’re likely to over invest prematurely and "bet the house on an unproven idea". Value Validation tests the fundamental assumptions that underpin your ideas by creating experiments that get customers to reveal their preferences through their actions and not their statements of intent. If you bypass experiments and simply ask people for feedback you’ll often be told they’ll buy your product, and then be confused when sales don’t meet expectations.
This final stage involves developing the detailed product/ service design that will deliver the right customer experience and relentlessly testing and refining until you’re ready to scale and commercialise the offer.
An effective innovation framework includes metrics and measurements to track progress and ensure that the innovation is delivering the desired outcomes. However, traditional metrics aren’t relevant for innovation projects. They tend to focus on revenue and profit projections that are only measurable after the fact - when it may be too late to make significant changes or improvements. Instead Leading Indicators must be identified which provide real-time feedback that can help teams adjust their strategies and make necessary pivots before it's too late.
At Purple Shirt, we’re working with Fletcher Steel on a major strategic innovation programme. The programme is founded on the principles of modern organisational management, which focuses on sustained impact through continuous innovation, and is made up of cross-functional teams that work together as internal startups. These teams are able to experiment rapidly and scale their impact, with a clear ethos of 'think big, start small, scale fast'.
Purple Shirt is helping Fletcher Steel to build innovation capability across each of their business units, transforming the organisation into a nimble, thriving, modern customer-led organisation that can continually adapt and compete in its rapidly changing marketplaces.
