Five Best Practices for Innovation and Strategic Growth

Professor James Heskett, Baker Foundation Professor, Emeritus at Harvard Business School, has published a new book – Stall Points.  The book is based on quantitative research of business failure and cause.  Of four hundred corporations that have been included at some point since 1955 in the Fortune 100 and ninety foreign based corporations, innovation and growth for fifty companies was reviewed.  In each of these industry leaders, the authors found that growth increased up until the “stall year” – a phrase coined in the text to denote a change in growth curve.  Once the stall year was reached, growth dropped significantly and each group of leaders found it difficult, at best, to regain the momentum previously enjoyed.  

 

There are a number of reasons for a growth stall.  Returning to Heskett’s research:

·        87 percent identified within manager’s control.

·         Management’s perception that they were un an “unassailable competitive position.”

·        A breakdown in innovation characterized by slow product development, decentralized research and development, or reduced funding for innovation.

·        Diversification from core activities.

·        Lack of leadership whose core competency included growth and innovation.

 

Innovation is a catalyst of increasing value to a system (i.e. a business model, an industry, goods, or services).  The research conducted provides focus on the need to hardwire and sustain a culture of innovation within their organization.  Creating value for a system is typically a longitudinal process requiring nurturing, sustainability, and champions.  

 

All too often a colleague or employee is characterized as the “out of the box thinker” within the organization and without the appropriate nurturing and shielding from others will leave the organization – on their own or forced to exit, because they did not fit the mold.  If this same individual is supported by an organizational celebration and communication of new, different – innovative, thinking they will flourish and evolve into a driver of strategic and financial growth.  

The recession that started in 2008 is forcing healthcare organizations – hospitals, technology, device, pharmaceutical, to revise budgets and projections.  The leadership team that maintains innovation is a core function and discipline of the organization will not feel the pain of growth stall.  Budgetary restructuring across the board is good management; deleting all investment in innovative projects highlights the positioning of innovation as ancillary to the core business model.  

Evolving a culture supportive of innovation is a purposed process  like any other process with corresponding key learning’s or best practices.  Five best practices to ensure hardwired innovative growth include:

 

1.         Cultural Alignment.  Innovation assumes its own life track when there is alignment with the organization’s culture.  If the destination of the healthcare system is one which requires constant change; adapting to that change; and, introduction of new and/or disruptive technology, organization culture should provide the support and process.  Evidence of this is through verbiage and annual budgetary commitment aside from operations or capital budgets.

 

2.         Multifunctional, integrated teams.  Silo or independent innovation consists of limited scope and vision.  Bridging disciplines through collaborative and facilitated thinking expands the locus of control and broadens the skill set to create innovative thinking.

 

3.         Champions.  The team is essential and a senior level champion provide value and importance to the innovation process.  A senior champion serving as sponsor offers two unique values:  (a) entry outside of a silo or business unit into the organization-at-large and (b) the shield required from those favoring the status quo.

 

4.         Cross-business pollination.  Pollination in nature appears random and ever-present.  IN reality, pollination is purposeful and focused.  Pollination of ideas in the organization is as directed and purposed.  Building the multidisciplinary team or choosing the champion requires alignment of role, understanding of the designation of organizational strategies and objectives, and harnessing required investments supportive of trial and error.  The opportunity to “spread” key learning’s or best practice principles is essential.  

 

5.         Innovative technology, programs, or services are a tactic and not a strategy.  If the organization has been able to hardwire an innovative culture, each new product is a tactic supportive of the vision or journey’s destination.  Tactical innovation is enveloped within broader strategies – service, products, technologies, or competencies.  The destination is to beat the competition.  Innovation therefore serves a how the strategy is achieved.

 

 Professor Heskit’s conclusion is that organization’s who are not successful are so because “innovation suffered from a concentration on smaller and smaller niche opportunities, brand extensions, or generally ideas with small business impact.”  

 

The five best practices for innovation success provide guardrails to navigate strategic growth and creation of value that will differentiate the organization.  Alfred North Whitehead, a mathematician, scientist, and educator said, “Ideas wont keep.  Something must be done about them.”  Proactive and strategic management of innovative ideas and processes benefits the thought leader, leadership, and the business model.

 

 

Reference:  Matthew S. Olson and Derek van Bever, Stall Points: Most Companies Stop Growing—Yours Doesn’t Have To (New Haven: Yale University Press, 2008).