Companies that develop and innovate using technology platforms put several practices in place. They regard functions such as IT and analytics as centers of value rather than of service or cost. They tend to centralize innovation (44% of both strong and disruptive innovators use a centralized innovation model), and they make sure to have staff 100% dedicated to innovation. They follow a structured approach rooted in a clear strategic vision; their organizations enable innovation; and they are supported by specialist expertise. Their approach features tight alignment between the business functions and IT, sound system architecture, a partnership attitude (both internally and with external resources), and, more and more frequently, an agile style of innovation development.
Adopting these practices is far from easy—companies encounter a host of organizational and cultural hurdles—and it typically involves a journey that is measured in years. The challenges can be daunting: breaking down organizational silos, shifting to an agile process, moving from a heavy IT architecture to modular systems, and overcoming internal resistance.
One of the most difficult—and important—organizational and cultural shifts is moving from a traditional “waterfall” approach to idea development, in which stopping a project is seen as tantamount to failure, to an agile approach that sets as many ideas racing as possible and quickly and happily kills off the ones that fail to show potential. Companies that make this change also become good at taking in ideas from all kinds of sources, including internal idea labs, external scouting, thought leader monitoring, vendor relationships, crowd sourcing, and academic partnerships.
Companies that want to pursue more technology-enabled innovation can start by taking the following steps, distilled from the best practices of global leaders:
- Deliberately allocate budget and resources to technology innovation. Approaching the challenge as an extra or add-on responsibility will not work. Establishing a cross-functional, dedicated R&D lab is often a good way to start.
- Put in place appropriate incentives for individuals to pursue innovation. Organize innovation contests, provide rewards and recognition, and (where appropriate) include innovation in job objectives.
- Foster a test and learn, fail fast and fail cheap mentality. Encourage risk taking by actively reporting on both successes and failures. Communicate explicit approval of management’s willingness to try and fail.
- Encourage a collaborative approach between IT and business units. At companies that are strong innovators, IT is no longer in its own silo. Instead, technical talent is integrated into business units and innovation teams.
Technology-driven innovation is hard. But the payoff is big—often extending well beyond a single new product to a platform or capability that can enable other innovations for years to come.
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