Igniting Innovation- Digital Business Transformation Part1

Innovation can come from anywhere or anyone and can lead to quantum gains in productivity or revenues.

 

Editor’s note: this is part one of a two part article.

Digital Business Transformation (just another word for innovation) is one of the latest buzzwords pushed down into the organization without any process defined on how to gain employee buy-in and drive success. Innovation can come from anywhere or anyone and can lead to quantum gains in productivity or revenues.

But like any other successful program, innovation must be approached as a process. Small business owners and IT staff need to establish viable innovation processes and programs that get employees excited to gamble on suggesting and contributing to innovation.

Innovation programs can be extremely successful. Studies have shown that innovative enterprise and small business offerings drive revenues and improve margins.

In fact, wealth creation truly comes from new innovative solutions, in that they provide companies with higher margins than their traditional offerings. Moreover, out-of-the-box approaches to standard operating procedures can reduce the cost of operations significantly, and, as always, every dollar saved goes directly to the bottom line.

However, the issue most small business owners have is not with innovation but with creating the environment that facilitates the production of creative solutions. Three components must be in place for this atmosphere to work well – an effective, open, transparent process, supportive management, and meaningful incentives.

The Plan

Every program begins with a plan and this is no different.

Executives need to determine the vision, goals, mission, objectives, and scope of the innovation program. Some companies seek to use this process to make major gains or business transformation while others see it as merely a continuous improvement effort opened to all players.

Thus, it is important that, as a first step, executives decide what role the innovation program will play, who can participate, and how it will be communicated and rolled out.

The program’s vision and objectives

The program’s vision and objectives need to be clearly established and agreed to by all relevant senior management.

In fact, executives should be satisfied that they have properly included or excluded those eligible to participate, as it can impact company morale. RFG has found that some companies open the program to business partners, customers, and suppliers as well.

Small business owners should recognize that individuals that are external to particular functions may still be able to provide creative solutions to problems, as their “outsider” or user view may give them a better perspective than those on the inside.

Innovation programs gain traction by both traditional communication modes and word of mouth. For the latter to play a critical role, executives will need to provide open access to the program and incentives strong enough to activate employees’ juices to want to play.

Therefore, executives need to build a communication plan that not only makes people aware of the program’s existence at its inception but pushes them to want to contribute as the months wear on.

Thus, as part of the program, the company should publish on a quarterly basis (or post on a company innovation Web site) information on how the innovation program is progressing and adding value to the enterprise. Metrics should be provided as well that show the success of the program. The metrics should at a minimum show the number of innovation suggestions submitted and the benefits derived as a result.

Management Support

Small business owners need to have management buy-in at all levels for the program to work.

Managers that are non-supportive dampen worker support and can inhibit suggestions from being offered. A best practice is to have executives and managers supporting the program but, for the most part, external to the process itself.

Management support is best accomplished through an innovation incentive component as part of their performance plan.

Other best practices are to establish an executive steering committee to evaluate the suggestions and to build a small team that can rapidly prototype or model (within days or weeks) the new processes or solutions for further evaluation or actual development.

Some companies have incorporated innovation into executive and employee performance plans.

How this is done depends upon the corporate view of the program. That is, if it is viewed as a continuous improvement program, then this is needed so that those units impacted by change are incented to want to cooperate and not actively or passively resist change.

For programs designed to be global in nature, innovation becomes part of the corporate responsibility component of an executive’s performance plan.

Other organizations develop employee innovation programs that have incentives not tied to performance plans but are supplemental programs.

This approach is valuable when the goal of the program is more strategic and all-encompassing. This method is appropriate when trying to create new products and services or enhance processes that cut across a number of business units.

For example, companies that are trying to change their business models are looking for input into ways to improve all small business  processes in all aspects of the business.

In part two I’ll cover: The Process, Meaningful Incentives and share a summary with takeaways.