Braden Kelley’s recent webinar, Innovation Is All About Change, took us on a guided tour to the intersection of innovation and change. He accomplished his goal of getting us to become better aware of the lay of the land, understand the dynamics of what really goes on there and prepare us on how to navigate the tricky terrain. While his first book on innovation, Stoking Your Innovation Bonfire, was mainly about how to remove barriers to innovation, this webinar and his upcoming new book is all about best practices and next practices of innovation and change management for a firm of any size.
Braden started by clarifying the difference between invention and innovation. While inventions are new ideas and can be interesting and potentially useful, innovations inspire people to use them. They provide enough value to cause people to replace their previous solutions to problems and issues, which could include doing nothing about them at all. “Remember that the market decides whether something “new” is an invention or an innovation, not you. Innovation really needs a meaningful connection – have to connect with our customers, uncover those key insights, understand where the unmet needs lie and how best to meet those needs.”
So, the core tenet of innovation is that it is all about change that adds value. The trick for would-be innovators to understand though is that “value” is composed of three parts: 1.) Value Creation, 2.) Value Translation, and 3.) Value Access. You need to deliver value in all three of these dimensions and know how cumulatively powerful they are together. “They don’t add up together, they multiply.”
Value Creation – This is the easiest part of innovation to explain. It’s all about making things more efficient, more effective, make something possible that was not before, helping customers achieve psychological and emotional benefits. But know that this is just the start. The next step is crucial.
Value Translation – The most important part of innovation is helping to translate that value that you have created so users understand how that innovation gets into their lives. If it is an incremental change (doing something slightly better), it is easier to understand. If your innovation is a bigger change from where things are (more disruptive), it takes more effort to explain. The farther down the spectrum towards disruptive, the more you need to plan for, budget, and educate.
Value Access – This part of innovation is usually talked about as “friction reduction”. It’s about making it easier to use, to navigate, to organize or manage, designing so easier to start or providing a place where people can truly experience the new innovation by getting personal instruction on how to extract the value. Apple created centers, started development conferences, essentially built an ecosystem around how to get more from their innovation. Know that strategic partners can help add additional value here.
The discussion then switched gears to look at what we know about the nature of change itself.
Braden stated that the ability to be more innovative and create change in an organization of any size requires vision, fluidity, agility, but, most importantly, it requires leadership commitment and firm-wide alignment; a shared buy-in and ability to sustain it throughout the process. The key differentiator between firms in all this is their rate of speed – of being faster than the competition. “It’s about how fast can you innovate and change. Speed enables or disables.”
Firms need to be aware of their potential “change gaps” within their firms:
- Speed of hiring – if lower than your growth you may be squandering your potential or level of success as you can’t keep up and others enter.
- Speed of innovation vs. competition – if have an internal mindset that everything is a priority, nothing gets to finish line or gets there slowly. Need to be fully committed to innovation as top 1-2 high priority item.
- Speed of market understanding – if slower than speed of market change setting yourself up where customers are changing faster than your ability to react to them.
- Speed of insight dissemination and acceptance – ability for ideas to move through the organization so opportunities don’t pass you by.
- Speed of idea commercialization - product or service development process should be agile enough so can grab opportunities quickly.
- Speed of internal change – if slower than outer external change, you will get run over from behind.
Why the need for all this speed? It was pointed out that the pace of overall innovation and change in our world is accelerating: it took the telephone 70 years to go from 0-90% usage, cell phone moved to 70% adoption in 15 years and smart phones will no doubt be substantially faster that. The pace of technology creation and adoption is accelerating.
At the same time that the average lifespan of S&P 500 firm had a lifespan of 61 years, now it’s down to 8 years. This means that established, successful companies are finding themselves irrelevant faster. Examples given of Kodak, Blockbuster, Circuit City that fell by the wayside. Even mainstays such as McDonalds and Walmart are starting to run into trouble with slowing earnings, bad international expansions, due to not challenging their core assumptions and staying connected to their customers.
With all this change happening, there is a growing need to adapt much quicker and that leads people to feel there is this innovation imperative, the need to create more innovation. But at the same time, structurally, many companies just aren’t set up to deliver continuous innovation. Even when some companies reach moments of brilliance and create a new product or service which makes the company successful, that can also create the seeds of their own destruction. This happens when they feel that their new offering is the ultimate solution, and that is only thing they know how to do well. The real solution is to “adapt to the new world as it comes along” and keep changing, keep innovating.
Specific suggestions were given on how to refocus to increase a firm’s internal speed of change:
- Get everyone on same page - create a common language on innovation. Start with a vision, a specific strategy, goals and definition of what innovation means for the firm. “Create shared understanding, a shared set of beliefs and ownership. Get real agreement and momentum so everyone not pulling in different directions.” Brendan mentioned that he is completing work on a new collaborative, visual change planning toolkit that “literally gets everyone on the same page”. He also mentioned that he is looking for firms to work with as case studies. Volunteer firms to help contribute to his book.
- Increase speed of decision-making - determine who the decision-makers will be, make clear who they are, know what data needed and pull that together, develop a specific decision criteria, even go as far as have a designated decision room and have everything there, then, time box it by setting in advance time limits for decisions. One of the key ways to kill innovation is have delays in making decisions.
- Increase speed of commitment – be prepared to go fast by having all your ducks in a row. Get people used to going fast by providing a process and tools they can use and trust.
- Increase speed of resourcing – know that your resources are not just financial and data, but human resources including a new way of thinking. You need your people to go outside of job description/requirements and you need resources outside of your organization. Liberate and incorporate vendor partners, customers and employees and all their skills. Develop staff so they can do 80% in job description but can also do 20% to grow to be an asset to the firm over time, so they can contribute their full skills/talents not currently being used in their primary existing role or job description. This also becomes an excellent retention strategy.
- Increase visibility of change effort – need strong leadership sponsorship, clear communication, and investment in building your culture. Anticipate resistance and replace fear of unknown with curiosity. Innovation and change are team sports.
Since most companies don’t currently have the capabilities to do ongoing sustainable innovation, how can firms start building these capabilities? A suggestion was offered as one way to go about this is to partner outside of the organization. Strong strategic partners can help identify weaknesses, bring in service providers to help bolster your efforts and weak spots. This kind of outside-in collaboration can help you get prepared to go fast. Working on this in advance of the need gets you ready for when you push the “go” button. But, it was emphasized that you need that vision and commitment first to innovation and change for that to work.
Another suggestion was to use some of the many change management models available like Kotter’s Eight Steps, which are all quite useful in a big picture way, but Braden disagrees with Kotter’s emphasis on short term wins being hugely important. As explained before, he feels the core concept is the speed of change, of how fast you absorb and adopt change. ”It’s all really about the momentum, not just focus on early completions or quick wins. Focus should be on more regular wins and an agile approach, sprints of a duration that the company can cope with. There are problems where people have early wins and celebrate but do not keep up the momentum.”
At the intersection of innovation and change is the need for speed, strong leadership and making the right external partnerships.
The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial services firms. We position our members with the necessary ongoing innovation resources and coaching to drive and facilitate their growth, differentiation and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors -- Innovation Equity Partners, Pershing, Voya Financial, Ultimus Fund Solutions, Fidelity, MeridianIQ/AdviceIQ, and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines). For more information click here.