Learn the most pressing challenges that you will encounter when putting an innovation program into action – from budgeting issues to incentivizing employees to participate.
This is the second installment of an exclusive three-part series of articles from Alex Goryachev on how CEOs can create a roadmap for successful innovation programs.
Welcome back to my “Roadmap to Innovation” series, where I guide you through the essential steps for creating an innovation program with lasting impacts on the culture of an entire company or organization. Last time, I wrote about getting started on your innovation journeys – identifying which types of innovation align best with your business strategy and building your teams. (Read part 1 here.) In this installment, I’ll explore some of the most pressing challenges, obstacles, and pitfalls that you will likely encounter as you put your program into action – from budgeting issues to incentivizing employees to participate. Let’s get started with funding and budgeting.
Funding: Show Me the Money
Introducing a new program requiring additional staff and resources into the budgeting mix can be a little unsettling, even for the most lucrative enterprises. Because innovation is an ongoing, ever-evolving effort – not a one-and-done exercise – it’s a little trickier to plan for than a traditional R&D or product development initiative. At the same time, the pace of change across industries is simply too fast to get hung up on itemizing expenses and waiting for approvals on funding. Nonetheless, you need the capital to support these innovation programs, as the survival of your organization depends on it.
According to KPMG and Innovation Leader’s Benchmarking Innovation Impact 2018 report, 70 percent of innovation executives say that innovation programs are funded through the annual budget. Twenty percent said their innovation budgets came from separately governed investments; and 10 percent said they had a different approach, such as a hybrid of annual/separate budgets, or even “ad hoc” or “as-needed” funds. So, which works best for your program?
While every business differs, I strongly suggest creating a completely separate innovation budget, especially if you are focused on transformational innovation. Not only will you encounter fewer challenges down the road, but you’ll also have greater flexibility, allowing you to rapidly pivot to address new market trends, evolving business goals, and unexpected turns in the program itself. Even if a separate budget does not seem feasible now, get the conversation started with your financial team and ensure buy-in from your executives to support you when the time comes.
Turf Wars and Politics
Although funding and budgeting are major challenges for budding innovation programs, the top obstacle identified in KPMG’s study included politics and turf wars. For large companies in particular, overlapping efforts lead to a lack of strategic alignment and lost focus. Similarly, cultural issues, such as “not invented here” syndrome, as well as an organization-wide aversion to risks and negative stigma around failure’s impact on career future, are hindering innovation. This must change.
However, there is some good news for the C-Suite: according to KPMG, insufficient CEO support was the least-cited obstacle to innovation. Keep up the good work, but my experience has shown that strong commitment from the top helps prioritize and fuel enthusiasm around new and ongoing innovation programs. This especially helps to overcome the barriers of mid-management resistance wanting their teams tied to traditional, spreadsheet mentalities to “make the numbers” on a quarterly or set timeline.
Lead by example, encourage risk-taking, and reassure them that failure is not the nail in the coffin for an idea; it is an opportunity to fine-tune or shift focus. Innovation can take time and multiple tries to bring an idea to fruition.
Inspiration and Incentives
The final, and perhaps most important, obstacle to innovation is the challenge of inspiring your employees to join in on your innovation programs. Even with C-level buy-in, innovation simply won’t work unless you have full support and involvement from employees across all levels and functional areas within the organization. This is because innovation is all about people, not technology. I have found that innovation can come from anyone, anywhere, at any time. The most transformative ideas might spring from individuals, but turning them into marketable solutions or services has more value as a cross-functional team effort. Therefore, you need to empower your diverse group of employees, of all ranks and roles, to tap into their inner entrepreneurs and form or join venture teams to co-develop the most innovative outcomes. It’s crowdsourcing at its finest.
As you set up your innovation programs, establish significant recognition and rewards programs to incentivize employee participation. This could include PTO, cash bonuses, sabbatical time to “incubate” their ideas, and recognition by leaders in companywide meetings and publicity. Notably, KPMG found that almost half of the organizations offer some sort of recognition or award for employees’ best ideas. We do this at Cisco with our annual Innovate Everywhere Challenge (EIC). Mimicking a startup environment with angel investors and mentors, the EIC inspires our 74,000 global employees to collaborate and co-develop on venture teams. We have some 40 “My Innovation” programs to engage employees, including a quarterly Innovator Award to existing company teams that exhibit our “Attitudes of innovation,” and we share the winners’ project story across the entire company. Employee recognition – no matter how small – goes a long way.
This is just a snapshot of some of the innovation obstacles your company may encounter, but I highly recommend mapping out the possible challenges and their potential solutions before getting too far into your program. In the meantime, turn a sharp focus on your most valuable innovation asset – your employees – and consider how you can lead by example, show them how to overcome fears, and set them up for success.
In the third and final part of this series, I’ll dive into delivering and measuring the success of your innovation program. Because innovation is an abstract concept – a state of mind, like happiness – many CEOs and business leaders don’t know how to measure it. I’ll also share some of the most common characteristics of mature innovation programs and discuss how you can emulate them. Meanwhile, keep the ideas flowing and start paving a clear path for the next steps in your innovation journey.