There are 9 Critical Success Factors that a truly innovative organization must have in order to create & sustain a culture of innovation. The first is: A Compelling Case for Innovation.
For me, this is the most important success factor, and it’s the one that is least understood. It’s quite simple; without management communicating a critical need for innovation to the whole organization, then having the other 8 success factors in place is meaningless. However, there is a spectrum on this success factor, and each extreme can have the opposite effect from the intended one:
The Compelling Case for Innovation (CCI) Spectrum
The consequences of no Compelling Case should be obvious. The consequence of threatening ones may not be so obvious. Here are three companies that represent the extremes of the Compelling Case for Innovation spectrum:
- No Compelling Case (Bad) - When we started working with a rum company over 20 years ago we asked them in a series of 1-on-1 interviews, “What business are you in?” The answer was “The rum business.” When asked what business they wished they were in they said, “The rum business.” So, not surprisingly, all their innovation focused on rum line extensions; critical to the core business, but not very farsighted. It took over 15 years before they understood they were in the beverage alcohol business, at which time they went on an acquisition spree that quickly turned them into a player more broadly in spirits. They used their Core Competence in channel distribution to create immediate shelf visibility for those acquisitions, and the brands grew at an even faster rate. And, one could claim they still haven’t thought outside the box on that still-too-narrow definition of their business. Moral: No Compelling Case=no innovation; but, with a strong & visible Compelling Case the organization is motivated to innovate. And, theirs was a channel strategy, not a new product strategy. Innovation happens in many ways.
- Mid-Spectrum Compelling Case (Healthy) - A few years ago we were interviewing several senior and mid-level managers at a major computer company. When asked how important innovation was to the future of the company one interviewee looked up at the ceiling for a few seconds and then said, “Let me put it this way. Here we are with a campus of 21 buildings. Pretty impressive! What do you think it’s like to wake up every morning knowing that in five years we could be twice our size or we could be the campus of a local college?” Some industries have to be forced to change, and some need to in order to just stay in the game.
- Threatening Compelling Case (Dangerous) - Another client was one of 40 divisions of a large conglomerate. After several years of corporate management pushing for innovation and not getting it, a new president was installed in the division. In his first 18 months he was the visible and highly vocal champion of major, breakthrough innovation. The company was beginning to “get it.” This was great. He was creating and inspiring his organization in a very healthy way. However, when the corporation’s CEO told the division’s executive team that they had 24 months to turn their business around or he would sell them, he inadvertently created a dangerous, potentially threatening Compelling Case. Why? Because it increased the risk of the division’s innovation team not being able to stretch, to be willing to play with absurdity (“If at first a new idea doesn’t seem totally absurd, there’s no hope for it,” Albert Einstein”). This is a classic example of what we call The Difference Between Intent & Effect.
How compelling and how well communicated is your organization’s Compelling Case for Innovation?