Even if a company hires the most talented individuals, ineffective processes and procedures will hinder a company’s prosperity. In addition, having a rigid structure that doesn’t respond well to change can limit a company’s ability to grow. Mastering a few strategies for managing disruptions in processes and procedures can give your company a competitive edge.
Finding Organizational Fit In Employees
A company can increase their success by devoting resources to finding the right person for the right job. Even if the person is highly capable with an impressive background, if they aren’t a good match for the organization, the effects can be felt across the entire company. Work closely with managers to develop a list of desirable employee characteristics. Also, potential employees should have the potential to grow within the organization.
Understanding Your Company’s Strengths
According to the Harvard Business Review article “Meeting the Challenge of Disruptive Change,” there are three critical factors that influence success:
1. Resources. When evaluating resources, don’t just look at technology and equipment. Expand your thinking to your company’s branding, current customer base and success with vendors.
2. Processes. When considering your processes, evaluate your company’s current communication processes and framework to determine if it’s formal or less formal. Determine if the current style is still a good fit for your company and if it can accommodate new products and services – or will it bog down the process, and hamper efficiency? Once you’ve identified areas that need improvement, you can create an action plan for change.
3. Values. The last factor that helps a company understand their strengths is analyzing corporate values. Values aren’t just the core values posted on your company’s website. They extend further than this. Values include how employees operate during their daily tasks, how they handle customers and prioritize daily tasks. As a company grows, it becomes increasingly important that employees are trained to operate in a way that fits the company’s values and strategic vision. Organizational values should not just be listed on paper. They should become a part of the company’s culture.
Maximizing Your Strengths
Once your company has fine tuned the resources, processes and values, it is time to focus on identifying opportunities for innovation within your company. For example, in the Harvard Business Review article “Meeting the Challenge of Disruptive Change,” Merrill Lynch introduced the Cash Management account. This development allowed clients to use checks to tap into their equity accounts. Merrill Lynch marketed this feature to customers and the response was positive. Finding ways to provide customers with new innovations, while capitalizing on your company’s strengths and values, will allow you to create more opportunities for revenue. Also, make sure that your company has a framework that allows frequent innovations.
Fostering Innovation
Although the majority of innovation is positive for a company, at times, it can also be disruptive. For example, new innovations that go unnoticed by customers create a disruption. Many companies do not have a process for dealing with these disruptions. Creating strategic plans to deal with these issues will help your company handle these challenges better.
Creating Successful Teams
When refining your company’s processes and procedures, consider forming a team dedicated to the new challenge. The size of the team will depend how well the innovation fits within the organization’s current framework. For example, if the new innovation doesn’t fit well within your framework, consider hiring a larger team to manage the task closely. These individuals should be recruited from other business units across your company. However, if the innovation is a good fit within the current structure, create a very small team within your company’s current employee base. Each player on the team should have a specific function to move the idea from concept to market.
Enhancing Capabilities Through Acquisition Activity
When looking to purchase capabilities, companies often acquire a new company. However, during this process, senior managers should evaluate the company processes and values. For example, according to the Harvard Business Review article “Meeting the Challenge of Disruptive Change,” if an organization has been purchased solely for its process and values, it shouldn’t be integrated into the parent company. This will jeopardize the new company’s processes and values (which is why you purchased the company in the first place). Instead, allow the business to function as a stand alone company.
Taking the time to evaluate your company’s processes can get rid of roadblocks and frustration, allowing your company more opportunities to grow and prosper. Making changes to ensure your company has the right processes and procedures in place will support innovation and your company’s core values.
Resource:
Clayton M Christensen and Michael Overdorf. “Meeting the Challenge of Disruptive Change.” Harvard Business Review, March-April 2000.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy,” “Selling Your Business the Easy Way,” “Enhancing Your Business Value…The Climb to the Top,” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or click here to email Mark. .
Monday, September 14, 2009
Building an Innovation Portfolio: Avoid the Classic Traps
Creating innovative products and services doesn’t just allow companies to expand market share – it provides an opportunity to enter new markets and come up with new processes to enhance productivity. When tackling these projects, there are many pitfalls and roadblocks along the way. Projects that don’t have enough direction or too many constraints can face problems. But, learning common mistakes provides an opportunity to enhance innovation and achieve your goals.
The Balancing Act
In some ways, tackling innovation is like a balancing act. Many companies struggle to strike a balance between maintaining current research and development projects while adding new projects into the mix. Having a healthy mix of innovation in different life cycles will allow your company more opportunities for growth.
Broaden Innovation Strategy
When presented with a new innovation opportunity, executives typically evaluate the opportunity’s potential for high margins. Ideas with low margins may be rejected assuming that revenue opportunities are too small. However, rejecting ideas on these assumptions can limit your company’s ability to grow and expand to new markets. Instead, research all viable opportunities (even the small ones) to determine the long-term potential.
Also, don’t get caught up in chasing the next huge hit. The potential for high margins lure many companies into chasing after the next big thing. While it’s possible to come up with the next hit on the market, don’t forget to diversify. This way, if your “huge idea” doesn’t hit the big time, your innovation portfolio is diverse enough to provide other avenues for revenue. Find a mix of high and low risk opportunities to diverse your company’s innovation portfolio.
For example, companies looking to expand innovation should have a few “potential high revenue” opportunities at the top (yielding high margins and a premium pricing point), several promising midrange ideas and a larger base of ideas that are in the early stages of planning but still have promise. This pyramid approach has achieved high results for many companies.
Make Processes More Flexible
Stringent rules and regulations don’t create an ideal environment for innovation. Although new projects shouldn’t have free reign, there needs to be a balance between having a rigid structure and creating a system with more flexibility. According to the Harvard Review article “Innovation, The Classic Traps,” creating a reserve account for unplanned expenses resulting from innovation can help your company have more flexibility.
Break Barriers Across Departments
The task of innovation shouldn’t be limited to a handful of employees and executives. It’s important that those who are involved in daily business activities be tightly connected with innovators. For example, your business could create an innovation committee, charged with coming up with new ideas, running “real life” scenarios, and getting input from employees on the front line. This will help close the gap between the “idea generators” and those who are charged with executing and delivering the new products and services to the end users.
Look Beyond Technical Skills
When choosing the players on your innovation team, don’t just choose individuals with technical skills. They should also possess a high level of communication and interpersonal skills. Having team members who possess these skills will help break the barriers across business unit lines. For example, in the Harvard Business Review article “Innovation, The Classic Traps,” it highlights Williams-Sonoma’s e-commerce group, which choose a manager that wasn’t a technology expert, but was highly skilled in assembling a strong team of employees. With this expertise, she was able to build a team with diverse skills to generate and implement new innovative ideas that helped the company grow.
The people in charge of innovation should also be natural leaders. Although the leader doesn’t need to be an expert in the specific venture, they must be able to solicit support, partner with internal experts and execute innovation to drive success. It is important to find managers with the ability to get employees passionate about ventures. This will drive creativity, teamwork and success in your innovation projects.
Look Outside of Product Innovation
Innovation teams shouldn’t be limited to creating new products or services. In fact, they can create ideas that make distribution or marketing more efficient, increase customer value and drive down costs. Having a good mix of product, service and business operation innovation strategies will help make your innovation portfolio more diverse and positively affect your revenue.
Balancing your company’s innovation leadership, team players and mix of ideas won’t just help your company come up with better strategies – you’ll benefit from better execution as well. Companies can also learn from past mistakes and implement those lessons for future success.
Resource:
Rosabeth Moss Kanter. “Innovation, The Classic Traps.” The Harvard Business Review, November 2006.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy,” “Selling Your Business the Easy Way,” “Enhancing Your Business Value…The Climb to the Top,” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or click here to email Mark. .
The Balancing Act
In some ways, tackling innovation is like a balancing act. Many companies struggle to strike a balance between maintaining current research and development projects while adding new projects into the mix. Having a healthy mix of innovation in different life cycles will allow your company more opportunities for growth.
Broaden Innovation Strategy
When presented with a new innovation opportunity, executives typically evaluate the opportunity’s potential for high margins. Ideas with low margins may be rejected assuming that revenue opportunities are too small. However, rejecting ideas on these assumptions can limit your company’s ability to grow and expand to new markets. Instead, research all viable opportunities (even the small ones) to determine the long-term potential.
Also, don’t get caught up in chasing the next huge hit. The potential for high margins lure many companies into chasing after the next big thing. While it’s possible to come up with the next hit on the market, don’t forget to diversify. This way, if your “huge idea” doesn’t hit the big time, your innovation portfolio is diverse enough to provide other avenues for revenue. Find a mix of high and low risk opportunities to diverse your company’s innovation portfolio.
For example, companies looking to expand innovation should have a few “potential high revenue” opportunities at the top (yielding high margins and a premium pricing point), several promising midrange ideas and a larger base of ideas that are in the early stages of planning but still have promise. This pyramid approach has achieved high results for many companies.
Make Processes More Flexible
Stringent rules and regulations don’t create an ideal environment for innovation. Although new projects shouldn’t have free reign, there needs to be a balance between having a rigid structure and creating a system with more flexibility. According to the Harvard Review article “Innovation, The Classic Traps,” creating a reserve account for unplanned expenses resulting from innovation can help your company have more flexibility.
Break Barriers Across Departments
The task of innovation shouldn’t be limited to a handful of employees and executives. It’s important that those who are involved in daily business activities be tightly connected with innovators. For example, your business could create an innovation committee, charged with coming up with new ideas, running “real life” scenarios, and getting input from employees on the front line. This will help close the gap between the “idea generators” and those who are charged with executing and delivering the new products and services to the end users.
Look Beyond Technical Skills
When choosing the players on your innovation team, don’t just choose individuals with technical skills. They should also possess a high level of communication and interpersonal skills. Having team members who possess these skills will help break the barriers across business unit lines. For example, in the Harvard Business Review article “Innovation, The Classic Traps,” it highlights Williams-Sonoma’s e-commerce group, which choose a manager that wasn’t a technology expert, but was highly skilled in assembling a strong team of employees. With this expertise, she was able to build a team with diverse skills to generate and implement new innovative ideas that helped the company grow.
The people in charge of innovation should also be natural leaders. Although the leader doesn’t need to be an expert in the specific venture, they must be able to solicit support, partner with internal experts and execute innovation to drive success. It is important to find managers with the ability to get employees passionate about ventures. This will drive creativity, teamwork and success in your innovation projects.
Look Outside of Product Innovation
Innovation teams shouldn’t be limited to creating new products or services. In fact, they can create ideas that make distribution or marketing more efficient, increase customer value and drive down costs. Having a good mix of product, service and business operation innovation strategies will help make your innovation portfolio more diverse and positively affect your revenue.
Balancing your company’s innovation leadership, team players and mix of ideas won’t just help your company come up with better strategies – you’ll benefit from better execution as well. Companies can also learn from past mistakes and implement those lessons for future success.
Resource:
Rosabeth Moss Kanter. “Innovation, The Classic Traps.” The Harvard Business Review, November 2006.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy,” “Selling Your Business the Easy Way,” “Enhancing Your Business Value…The Climb to the Top,” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or click here to email Mark. .
Subscribe to:
Posts (Atom)
Posts
