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    Assessing Your Innovation Capabilities #08 Innovation Newsletter

    Whether your organization is large or small, public or privately held, service or manufacturing, its future growth ultimately depends on its capability to innovate, to renew its offerings and itself repeatedly over time.

    Knowing what it takes to develop those capabilities can be elusive. Even firms renowned for innovation aren’t sure exactly what combination of elements led to past successes, and whether they have the ability to replicate that level of success in future.

    Why bother with formal assessment?

    Getting a reliable view of your innovation « current state » provides the necessary baseline for constructing a strategic approach to developing systemic innovation capabilities. Formal assessment can reveal information about gaps in your company’s strategy, infrastructure, and processes–information that might conflict with management’s preconceptions.

    It can also reveal overlooked capacities and capabilities that can be leveraged. Moreover, a well-designed assessment ensures that you are taking into account not just your R&D or product and service development functions, but all areas that may affect your ability to consistently generate top-line growth.

    Commonly cited barriers to effective innovation include organizational problems such as inadequate funding, risk avoidance, « siloing, » time commitments, and incorrect measures. Embedded in even this short list is a wide range of systemic issues. Every organization needs to prioritize what’s most important in light of its specific goals, competitive environment, industry, and business situation. A comprehensive approach to assessment can take all those factors into account and weigh them appropriately, allowing you to make the best strategic choices and investments in developing innovation capabilities that will effectively impact your top line, without killing your bottom line.

    What goes into an innovation assessment?

    To be truly useful, an innovation assessment should provide a comprehensive view of your innovation capabilities – not focus just on your processes for idea generation and product development or your overall « climate for creativity. » In order to develop systemic capabilities, the assessment should cover the key elements of strategy, leadership, and infrastructure.

    Those three core elements of an innovation system break down into an array of specifics, including:

    •  » How innovation links to your business growth strategy and brand
    •  » Your organization’s role in its field and markets
    •  » Funding and risk management policies and processes
    •  » Leadership capabilities in relation to change management, coaching, and support for innovation
    •  » Portfolio management and governance processes and practices
    •  » Perceptions and definitions of innovation throughout your organization
    •  » Organizational structures and processes for idea generation and collaboration
    •  » Performance metrics and incentive systems and their impact on innovation and growth
    •  » Pockets of expertise and innovation practices and tools across the organization

    Mini-case: The value of starting with a simple assessment tool

    One mid-sized, process-industry manufacturing company had a successful growth track record, using a business model they described as « finding lost value in targeted acquisitions, optimizing based on best practices, and becoming the leader in that niche. »

    Their model allowed for incremental improvements, and they had the essentials of a lean improvement system in place, but they were interested in finding out whether they could do something game-changing and move beyond « best practices » to « next practices » within the confines of their business model.

    The company used a preliminary innovation assessment tool, with questions answered individually by a team of top leaders. The group then convened to articulate the essential components of their business model and to discuss the results of the diagnostic. Using just this preliminary assessment, the executive team was able to identify top-level gaps they would need to close in order to pave the way for the kind of growth they sought. They also distinguished key differences among their several business units-primarily in their markets and product maturity-that meant different opportunities and strategies for innovation. With just this simple assessment, the team was able to formulate a vision of what long-term organic growth based on innovation would look like for their company, and pave the way for more specific planning, assessment, and change tailored to their situation.

    Key takeaways

    •  » Innovation assessments should be comprehensive, covering strategy, structure, and processes.
    •  » Assessments can reveal hidden weaknesses and strengths that affect your company’s ability to generate strategic top-line growth.
    •  » Preliminary diagnostic tools used can help top-level teams articulate the specifics of their company’s situation, formulate a common vision, and pave the way for more detailed work.

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