Building a Successful Innovation Competency Model

Barbie: Welcome to episode number two of the 2018 Conscious Conversations Series. Today, I’m speaking with Raphael Vitón, Axialent’s Global Transformation Lead, as well as, Doug Stone, founding partner at Drive Strategy in Chicago.

So, we’ll start with the first question. Why should growth-oriented organizations focus on both innovation competency and culture?

Raff: At the same time. Simultaneously. That’s kind of the idea. Why should they do both?

Doug: And if you just focus on one, without focusing on the other, I think what you set up inside the organization is an imbalance. And if you’re focused only on the competency of innovation and get very process-oriented, it feels as though, as an employee group, if they follow steps one, two and three, of course at the end, they’re going to innovate. And that’s not always the case.

Raff: Right.

Doug: And if you focus on culture only, you end up working on a lot of good ideas about how to behave, and how to treat each other, but when you leave those culture environments, where you’re really focusing on the culture, you go back to your day-to-day. And I think, what I’ve seen inside of large corporations, is that there’s really two areas in which the company has competency. There’s an area inside of an organization that is reliability focused, and there’s an area inside of a company that’s futurist focused, or eventuality focused.

And the model that I would like to help people think through is based on Maslow’s hierarchy of needs. Because I think it’s easy for us to understand, right? We understand that there’s this physiological need at the base of everything. If we don’t have a place to stay, if we don’t have roof over our head, if we don’t have food that we’re deficient in some way, and we can’t focus on anything else. And, after that comes the safety need of how am I making sure that I’m guarded against any unintended consequence or any unexpected situation.

Raff: Yeah, known.

Doug: Yeah, known. Yeah. Then, once you get past those deficiency needs, once you feel safe and that you have roof over your head and food coming, now you can start to feel these growth needs. Where do I belong? In what place do I belong? Then, esteem, like how am I contributing to the larger good of my community or the world? Then, at the very top of growth is really self-actualization. How am I being my best self an is that best self-involved in growing our culture, growing our values…

Raff: Maximizing all that we can bring to the table.

Doug: Exactly. So, I think the way to look at this is there’s this reliability system and this is what a lot of companies really focus on. They’ve got revenue and production, right. That’s the roof over your head. If you’ve got revenue coming in, you’ve got food, and if you can produce your product, then you’ve got shelter.

I think then, after that, you start to look at metrics and KPI’s and governance. This is when companies start to get to a size where C level people like a CFO and a Chief Operating Officer become very important in the state of the organization. Hey, these are the metrics we want to hit and this is the type of spending and budget levels that make it so that we will have a profit at the end of the year.

Then, after that we get into belonging. Who are we as a brand or how are we positioned inside of our industry? Are we the number three player? Are we the number fourth player? Are we a big company? Are we a small company? Then, after that, we start to get into that strategy of how are we going to use our excess resources in order to create an advantage for ourselves that our competitors don’t have? Then, finally, how relevant are we? Do we actually set the pace of the industry? Are we developing an organization that brings value to our customers at a reasonable exchange?

I know that a lot of people who are listening can relate to this inside of their organization because a lot of times it is the focus of the organization. Every shareholder meeting, this is, the reliability of the organization is one that’s talked about.

Raff: So, this is what this model on the left is, what every multinational organization, the big corporations that we work with. They’re all really strong here. They’re great at this.

Doug: Absolutely.

Raff: Otherwise, they would have never grown into the scale that they are.

Doug: That’s exactly right. That’s exactly right. So, a lot of companies feel like once they’ve achieved this, then they all of a sudden get these questions like, “Oh, are we stale? How are we going to survive to a hundred years that we think this company can survive because we have this scale and we have this presence. We have this relevance inside of our industry.”

So, then we start to look at the system inside the organization that’s looking at the future. It’s saying, “Hey, here’s how things are changing and here’s how I can use this profit, this core competency. How do I utilize that and how I do make sure that we’re maintaining all of these good, reliable flows of revenue and production.”

I think on that side, we’re really talking about demand and distribution so your sales team, your marketing team, sometimes even your product development team. You are looking at this and saying, “How is demand out in the marketplace changing? And how are distribution channels shifting that we have to stay on top of and aware of?” That’s really your physiological. How do we get our product to market and how do we have that marketplace understand the value that we bring to them in exchange for money, time, or information?

On top of that, I think that this group of people really looks at trends and consumer segments. This is when organizations start to say “We have a very specific type of core competency that appeals to a very specific attitude and behavior, that we can’t to everybody.” In fact, a lot of times on this eventuality systems side, you start to interact with the reliability side in saying, “We might have bad customers that we want to get rid of.” Now, the reliability side is always like “Oh, no. All customers are good customers.” The eventuality side would say “Well, I think there’s a better customer for us and let’s define them”.

Raff: Yeah.

Doug: Then, as you go higher into the growth needs and start to look at consumer and value chain insights, we start to look at how are we going to operate belonging to a larger value chain and whether that’s partnerships that start to have with other companies or with your supply chain. That’s part of the eventuality system. Then, a vision for where the organization’s going, and ultimately you hear a lot of companies talk about their purpose. So, your conscious capitalism. There’s driving this sort of idea that our company has to have a purpose bigger than just making money and we’re a part of it.

So, I think these two systems exist inside of every company and, what you’ll find with innovation competency is it’s not a third system on top of this. What it really is it’s filing the gap between these two systems and it really is a competency to bring these two worlds together without demeaning or devaluing either one of them. Or, what I see a lot of times is peopling giving the eventuality group inside of the organization all responsibility for innovation.

Raff: That’s where is usually happens, over there on the right.

Doug: That’s right. That’s right. And they better do and, when they hand it back over to the reliability system, this group of people goes, “Well, that’s not as good as what we have today.” Of course not. It’s a new idea. You have to parent it. You have to make it more efficient and effective.

Barbie: Welcome to Episode Number Two of the 2018 Conscious Conversations Series. Today, I’m speaking with Raphael Viton, Axialent’s Global Transformation Lead, as well as Doug Stone, founding partner at Drive Strategy in Chicago.

Is building a culture of innovation something that a company can address directly?

Doug: Yeah. I think addressing the culture issues directly without committing to building the competency is where I see a lot of companies get into trouble. And so, if we look at the innovation gap as being something that we’re consciously devoting resources, and capabilities, and time to, between these two current systems, the Reliability System and Eventuality System, I think then, what you do is you start to build up these competencies with then affects culture.

So, really, the first place that … And this is in the deficiency area, that I see revenue and production to manage distribution, they have meetings and they talk at each other, but if you can help them co-create together. If you can help them understand how to come together and not have a meeting and tell each other well, I think there’s this sort of demand out there and I think if we can distribute it this way, and then the revenue and production people say well, that’s not how we’ve done it before. And we’ve tried that before and it hasn’t worked. But if you can bring them together to solution-solve, to really have co-creation events where we’re using creative problem solving techniques.

And there’s a group out there called Sipsy, and they have studied how to bring people together from very different backgrounds and help them be creative together.

Raff: So the idea of engaging with experts and the expert ways of doing co-creation help eliminate a lot of that unnecessary, unhealthy conflict, but until you’ve actually practiced with the real expert ways of doing it, until you’ve been introduced to, and are more aware of the organizational mindsets that exist for good reason, not because anybody doesn’t want to be innovative, for good reason certain mindsets exist and prevail and we need to learn how to shift those over when we’re trying to co-create.

Doug: And so, I think the next area where you start to work up the hierarchy, you’re still in a deficiency mode, but it’s to prototype and test. On the reliability side, I think what happens is, hence you want to prototype a lot of existing product, and just incrementally change it, because that’s the fastest cheapest way to do it. Say, I already have a product, what happens if we do it in red?

I know for the manufacturing process, on the eventuality side, they want to prototype things that would maybe change the entire business model. Different ways to actually fund the project, or different ways in which the revenue is gonna be shared with partners. And that’s scary to the reliability, inside the system, inside the … the ability … the next competency, too, is you say, hey, we’re gonna learn how to prototype and test, not just existing products incrementally, but brand new products or service ideas, or even changes to our business model, and we’re gonna figure out how to make decisions. We’re gonna make decisions with both of us feeling, both systems feeling as though they’ve been heard and their needs and their talents are being brought to this.

Then, all of a sudden from a cultural perspective, when we are innovating, when we’re in the innovation, competency space, these two parts of the organization can get together and agree, this is what needs to be prototyped. The least cost to get to a point where we can test it to make a good reliable decision. So, the reliability engine is loving this, because they’re going, good, we’re testing things, we’re using benchmarks, we’re understanding it. The eventuality engine is going, this is fantastic, because, not only can I prototype existing products incrementally, I can actually come up with ways in which to prototype brand new services, brand new products. And get out there and get some evidence as to whether the need in the marketplace is there yet, or it’s evolving and what type of things are influencing that evolution of the need.

So, it really ends up being, again, a very important cultural learning that prototyping should be part of the culture. And I see companies succeed most when they start prototyping internally. When they start saying, I’m not gonna just develop the prototype of what the consumer is going to experience and pay for, but I’m going to prototype what that’s going to do to our organization from a process perspective, from a manufacturing perspective, from a distribution perspective.

After that, we start to look at … now, we’re into the growth phase. Now, this is the part of the hierarchy where we’re saying, how do we start to not just focus on the deficiency needs of our innovation competency, but how do we really grow it? And I think that’s creating innovations assets and process.

You have to have journey flows of what the consumer experience is. You have to have these maps of what are the influencers along the way that are going to influence whether our products or services adapted. We have to be able to have these assets and processes in place. So, between strategy and vision, we start to see companies that are starting to mature and have a portfolio management approach for new ideas. That they are taking all of their assets and their process, which is developing ideas, and they’re managing it on a quarterly basis a portfolio of innovation ideas, that are, are not thrown into one bucket. Definitely, they’re focus on … Some of it’s focused on their term, iterations to current product; but some of them are creating a competitive advantage in the industry.

Having innovation in assets and process, having portfolio management skillsets, allow you as an organization to say, we all collectively took a risk on that thing, and it was smart to move it forward to that next step.

Barbie: Welcome to Episode #2 of the 2018 Conscious Conversations series. Today I’m speaking with Raphael Viton, Axialent’s global transformation lead as well as Doug Stone, founding partner at Drive Strategy in Chicago.

How do I identify which people live in which system? For example reliability, eventuality et cetera.

Doug: Yeah. I think the reliabilty people are the easiest to spot. In the worst situation, they’re the people in the organization that are blamed for stopping innovation. Of course, your fiance department is going to fall into this group. The funny thing is when I co-creations and I ask for a finance representative, a legal representative or an operations representative, manufacturing or distribution, I get the funniest looks.

Like why in the world would you invite these people in? And I can tell you multiple stories of these individuals being involved early on in co-creation, and being able to get roadblocks out of the way of the project very early on. That’s the reliabilty group and they should be invited into the process.

The eventuality group are a little bit more difficult to identify. A lot of times sales, distribution, marketing, corporate strategy will be in that eventuality side. They will be looking at acquisition targets that may  have developed technology or market position that would be very valuable to the company if it acquired them.

If you really work on your innovation competency what you get are reliabilty people that know when to lean on eventuality people, and appreciate the skills and insights that they have. And you have eventuality people who, want to make sure that when they hand something over to the reliabilty group, that they’ve worked out all of the things that, that group is going to have large issues with to make it profitable and productive and efficient.

And so I think what you wind up with as you start to work and are curious how this model affects the things you are going to fund, the roles you’re going to create in organization, the way in which projects are judged to be successful or unsuccessful and the assets that you’re going to bring forward, is really the ability to say I have these two types of people, and I’m going to put them in environments and give them process.

I’m going to give them assets so that they can work together. For it to pay off, to have any return on this competency, you need to have a culture, an individual and collective understanding of how these two forces, operational mindsets work together inside of an organization to create good innovation outcomes.

It’s the companies that have been known to have a good innovation competency, a portfolio of ideas to time their entrance into utilizing that new technology, that are going to succeed. I think when you approach innovation competency as we have two systems that need to work together, here are the ways in which we can bring those two groups together, that innovation process becomes very specific to you, your organizational culture, your DNA and it feels right.

Everyone can be part of that future. When you fill this innovation gap, and you’re saying instead of isolating it out and saying we are now off to innovation-land, and these people are blessed with innovation competency. Everyone’s involved. Everyone’s knows and feels as though the organization is adapting to the new changes in markets and technology and financial systems. That we’re becoming a company that can survive, regardless of what change we see.

And everyone’s involved in helping flex both of these muscles and at the same time with different expertise. So it’s how do they work together? How do we manage the tension? How do we stay in the tension to create really strong innovation outcomes?

Barbie: Welcome to episode number two of the 2018 Conscious Conversation Series. Today I’m speaking with Raphael Viton, Axialent’s Global Transformation Lead, as well as Doug stone, founding partner at Drive Strategy in Chicago.

What approaches work best for companies that want to embrace innovation as a competency?

Doug: I think you have to look at and say, “Have I fulfilled these deficiencies first?” When my organization gets together cross-functionally, what does that look like? If those meetings look like battlegrounds or they’re sniping afterwards, then you know that you have to work on co-creation. You have to bring in expert co-creation facilitators, and you have to point them at a business problem that’s solvable so that people can get the feeling for what’s it like to work together cross-functionally and to solve a business problem or business opportunity.

Company wants to embrace innovation, they first say, “Can I get a cross-functional team together and have them be productive? Coming out of that productive co-creation event, can we increment an idea forward?” And more and more prototypes that had a higher and higher fidelity, so that everyone’s coming along.

Ultimately, I like to see companies start to practice portfolio management, and that’s an evolving competency inside the organization that can start out very lightweight with just understanding what are the four different quadrants of innovation ideas. Whether it’s an incremental evolutionary idea, whether it’s going to differentiate us in the marketplace, whether it’s something that we … it’s easy enough to do, but we know the markets not big enough for the reliability people to throw money behind it, so we have to partner in some way. We have to get creative about how we’re going to explore that marketplace. And then your shoot-for-the-stars innovation ideas that are … we’re not sure if the market’s there and it’s really hard to do. So how do we just preserve the right to play in that space? I think that that’s another way in which companies have embraced innovation competency. Every innovation idea, fundamentally … Companies that say, “We have an innovation budget, and we’re going to spend that budget in order to bring the organization together to tackle some issues that are going to affect us in the future,” is the key.

The mistake I see a lot of times is someone in the organization is given responsibility for innovation, slapped onto their title. And they’re asked to sort of Tom Sawyer the whole thing and have people join because innovation’s cool. And they don’t have the budget to support to hire a facilitator for a co-creation event. They don’t have the budget to prototype and test things. They’re trying to take marketing budgets, or user experience budgets, and saying, “Oh, well, this is part of the product development process, so you give me your budget in so that I can do this innovation thing.” I think that’s … There has to be a commitment of budget to innovation to fill the gap. And that that individual responsible for that can go to both sides of the organization and say, “I’m bringing resources. I’m actually bringing resources to the table, and not just taking your time. I’m not taking your budget. I’m not taking your process and your product time away from you. I’m giving something.”

And I think with this model, what I hope people get curious about is a lot of times, that budget will be given and that person in charge is supposed to come up with a process. It’s like, “You need to come up with a process.” And that’s really the first stage of growth. And if they haven’t already made sure that you can co-create, prototype, and test, I don’t care what process you put on top of the organization, it probably isn’t going to root itself into the organization. So, as that budget is allocated, I think one of the ways in which to really make sure it’s spent right or reduce the risk that it’s not going to return on the investment, is to look at the organization and say, “Can you do these things? Can you do them reliably?” And if people say, “Great, I’m going to a co-creation event. I know that’s different than a meeting. I know that’s different than a presentation. I know I’m going to act differently.” And people are valued appropriately in that environment, that everyone’s not expected to be creative. They’re expected to bring their expertise into a co-creative event.