There has been a lot written about innovation over the past five years, with wide recognition that new practices will improve productivity, service delivery and provide competitive advantage.
Innovation is certainly one of the ‘buzz’ terms that is used too often and in the wrong context. Google the word “innovation” and you’ll get many definitions.
But the focus needs to be on the general intent, namely the alignment of innovation with the concept of continuous improvement.
This can range from incremental improvements to business as usual processes through to brand new services and products or new ways of doing things. Achieving any of these can require disruption and a shake-up of existing thinking and normal enterprise process.
This is where an innovation framework, spearheaded by an effective governance structure can help.
The governance piece is covered by the manage innovation process within the COBIT framework, with the goals being to create enterprise value, achieve enterprise objectives, and promote and enable a culture of enterprise innovation.
Specifically, version 5 of COBIT places a strong emphasis on creating a culture of innovation across the enterprise, even going so far as to recommend innovation as part of the HR framework.
Even risk-averse organisations from the more conservative industry sectors such as government or banking realise that the effective application of innovation enables businesses to flourish through better services and improved competitive advantage.
Innovation often comes from creative thinking and thinking outside of the constraints of defined policy and procedures, ‘the way we do things around here’. However, the successful application of innovation doesn’t always come from dedicated investments through R&D cells or structured think-tanks.
And it doesn’t always have to relate to new inventions or completely new ways of doing things, innovation can also be incremental, for example the use of existing technology in a new way.
Engaging with the ICT sector is one way of understanding the emerging technology environment and how it may relate to your organisation. Obviously, the ICT industry wants to focus on developing commercial off-the-shelf (COTS) software that it knows users will want.
While user and customer feedback on existing products through a variety of techniques and practices is helpful, a deeper engagement linking product development with direct client input will reap even greater benefits.
For example, one of my clients, a medium-sized federal government agency wanted to leverage the ICT sector’s product development investments to produce software to meet its own needs and those of its peer agencies.
This can be challenging for government, with several regulations dictating rules of engagement, particularly around procurement. Because of this, vendors are often left second guessing and making certain assumptions when they are creating products.
Governments will not engage with agencies beyond official procurement or existing contractual relationships. This often results in a lot customisation being required, making the system costly, hard to maintain and only partially supported by the vendor.
My client set up an innovation centre, a standalone infrastructure and collaboration environment as a ‘sandpit’ to test, pilot and trial vendor offerings.
It then invited IT vendors to participate, to sponsor its projects and be involved in creating new, innovative products. Staff provided clear feedback in a workshop-style format as the products moved through the stages of development.
The clear difference is that my client – the government agency – isn’t asking the vendor to do anything, and it is up to the vendor to determine the resources they commit and over what time frame.
The cost to the agency is their effort in providing feedback and defining requirements with the rest of the cost belonging to the vendor. And it’s a relatively small price to pay for the vendor which can now develop a product that meets the needs of many agencies in any country.
The agency also benefits greatly because it can now purchase and implement software that requires minimal customisation.
This particular initiative also worked well because c-level managers supported a new innovation framework; and governance rules were set up correctly form the outset, including terms of reference, controls and a defined process.
Create a new culture
Creating a culture of innovation is most effective when all staff are encouraged to think of new ways of doing things and are not judged or criticised for their ideas.
Including creativity exercises into existing organisational practice is one way of encouraging this approach through, for example, new starter induction and staff planning days.
Unlike most other practices in an organisation, failure should be viewed as a healthy and normal aspect of the innovation lifecycle. The rate of failure can be viewed as a performance indicator, with the greater the failure rate the more successful the organisation has been in embedding innovation as part of its culture.
This is because it can generally indicate a staff’s willingness to be thinking creatively of ways to innovate, in a structured and open way, without fear of rejection. Capturing these ideas and educating staff on the process that is involved are important steps in creating an innovative culture.
From a psychological perspective, it can be quite soul destroying to have your ideas rejected, but if there is a structured process in place, with clear, timely and constructive feedback, then staff should not be dissuaded from thinking creatively and how ideas might manifest themselves into workable and practical solutions.
All of this needs to be done in an environment where staff’s first priority must be on their core work duties (their ‘day job’), and idea exploration shouldn’t impede immediate productivity levels.
A model that is able to strike this balance is the holy grail that should be sought out by all organisations. All too often innovation is seen as a discretionary activity or as too risky, so is put in the ‘too hard basket’.
Ultimately, with the right support from all levels of management and a well-considered approach to the required change, innovation can be a key driver of product and service improvement, and competitive advantage.
Brett Petersen is a CPA and co-founder of ZEN Enterprise, focused on process improvement and contract and service management solutions.
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