In a turbulent marketplace, when complexity can add even more confusion, it is important to have a simple and straightforward innovation system. Shared and easy-to-use innovation practices and tools can enable everyone in a company to work together to develop ideas that deliver compelling customer value.
The Value of an Integrated Innovation System
Leaders have the responsibility to ensure effective, innovative architecture is created, understood, and widely shared throughout their enterprise. An integrated innovation system covers the full end-to-end innovation process and ensures the practices and tools are aligned and flow easily from one to the other. Clear and shared innovation architecture ensures employees have the methods and tools to:
- Explore opportunities: To discover emerging market trends and connect with customers to understand their needs
- Generate breakthrough ideas: To create and contribute their ideas
- Optimize value: How to develop their ideas into strong value propositions and business plans, how to work together with others to optimize the value of these over time
- Select and fund the best: To understand the process for competing for approval and funding
- Mobilize for results: If their projects are selected, innovators understand where to get needed support for implementation or for taking their projects to market
Too often the processes, organizations use to pursue innovation can erode their capability to innovate. In an effort to reduce risk, leaders over-engineer the process so it becomes burdensome and bureaucratic, limiting the potential for breakthrough thinking and deflecting attention from the customer experience. Other times, by limiting responsibility for innovation for a specific department, organizations underutilize the creative capabilities of other employees.
One example of a tool that cuts through the bureaucracy and enables employees at all levels to develop their innovative ideas is CO-STAR. By answering six basic questions, CO-STAR can turn an inexact concept into a well-honed value proposition. CO-STAR stands for Customer–Opportunity–Solution–Team–Advantage–and Results. These six elements are central to crystallizing the business value of an idea. It is a vehicle for enhancing innovative ideas through constructive dialogue and a process for focusing attention on the fundamentals that make an idea valuable.
CO-STAR guides innovators to answer the following questions about their idea:
- Who are your intended Customers and what are their most important unmet needs?
- What is the full potential of the Opportunity?
- What is your proposed Solution for capturing the opportunity and satisfying customers?
- Who needs to be on your Team to ensure your solution’s success?
- What is your competitive Advantage over alternatives?
- What Results will be achieved from your solution? (As well as the Rewards to your customers and the Revenue or Return to your team and company?)
Every element of a CO-STAR value proposition is essential for an idea “to grow up” to deliver value. The continued insight and passion of an innovation champion and team is necessary to turn an initial idea into a value proposition worthy of investment. Value propositions, then become the new currency of innovation, rather than only raw ideas. Venture capitalists have been using methods like this for years to reduce risk and maximize returns on their investments.
Scale: Tapping the Genius of the Entire Enterprise
Social media and crowdsourcing have introduced a new era of collective brilliance. The latest technologies break down traditional silos and allow for open innovation with large numbers of employees, as well as with suppliers, alliance partners, and even customers.
Pioneering companies employ online innovation platforms to harness the genius of the group far beyond teams that meet in the same place or at the same time. For example, a web based application like IdeaScale enables innovators to share their ideas utilizing the CO-STAR framework online. It allows you to gather feedback from any group anywhere in the world. In addition, companies can run targeted innovation campaigns in a small amount of time while collecting hundreds of ideas from employees. Participants submit value propositions online, provide feedback, and vote for the ideas of others. “The wisdom of the crowd” drives the highest ranked value propositions to the top, along with comments or links to additional information and resources for each one. A real-time dashboard makes it clear how ideas, activities, and decisions are progressing through the pipeline.
Just as a good surgeon, engineer, or artist would insist on using the right equipment to get the best results, leaders now have powerful online innovation tools to support their disciplined practices. There is no reason for companies not to scale their innovation activities to match the size of the problems they are tackling or the opportunities they are chasing.
Innovation Architecture for Quick Wins versus Big Game-Changing Ideas
Innovation is often slowed or inhibited altogether when new ideas go to managers, who then determine whether the ideas can fit into the next quarter’s or next year’s budgets. The budgeting process can slow the speed of putting new ideas into practice. An effective innovation architecture offers alternative routes for approval, funding, and implementation for a range of projects of various size, scope, and disruptive potential:
- For ideas that fit within the boundaries of their own departments, managers can set aside an innovation budget for ideas they expect will arise between budget cycles.
- For ideas with an impact across departments or divisions that would still be relatively easy and quick to implement, leaders can set up a type of Quick Wins innovation panel. A small group of innovation leaders from various disciplines to review ideas and give rapid responses for approval and resources.
- For bold new ideas with big commercial potential, leaders often set up Venture Boards, specifically tasked with evaluating and investing in larger and more disruptive proposals. These “high growth” ideas can come from within or outside the enterprise. Venture Boards have innovation leaders from multiple disciplines or divisions of the organization, and may include external experts as needed. These groups often fund proposals in sequential stages. Initial smaller amounts of funding to enable innovators to complete their business plans, prototypes, or initial customer testing. Larger amounts of funding become available as projects show signs of success and need resources to scale their solutions.
Leaders architect not only the innovation process itself, but each element of the organization that influences innovation as well. Organization designs that promote innovation include:
- HR practices to reinforce innovation such as recruiting, hiring, orientation, training, development, performance evaluations, rewards, and incentives.
- Finance ensures funds are available for developing ideas and innovation projects, and they may also create the metrics by which innovation is monitored and evaluated.
- IT supports online innovation, collaboration, and knowledge management tools.
- Legal offers intellectual property protection, as well as support for collaboration and partnering.
- The Facilities department designs environments for inspiring and enabling innovation and collaboration.
- Communications keeps innovation visible and celebrates successes.
Essentially, any element of the organization can play its part in making innovation possible and probable. In a large enterprise, each of these functions in the organization likely has its own set of leaders, so the Architect role requires building a leadership coalition that fully commits to and enables innovation.
As Arthur Jones said, “All organizations are perfectly designed to get the results they get.” Highly innovative enterprises are specifically designed and directed by their leaders to be capable of delivering increasingly better results, both from continuous improvements and from major breakthroughs that create new markets.
Architecting an integrative innovation system is critical as your program grows. But you’ll need to be a good evaluator and savvy investor to get the ball rolling. In the next installment of the series, we’ll dive deep into funding with the venture capitalist role. If you’d rather not wait, download the entire chapter today.
This blog post is part of the Leading Innovation series authored by Laszlo Gyorffy, MS. Laszlo is president of the Enterprise Development Group, an international consulting firm specializing in business strategy and innovation. He also is an accomplished speaker, certified instructional designer and trainer, and co-author of Creating Value with CO-STAR: An Innovation Tool for Perfecting and Pitching your Brilliant Ideas and The Global Innovation Science Handbook. Laszlo recently developed the One Hour Innovator a cloud-based toolkit that teaches people how to successfully generate and champion bigger, bolder, and better ideas.