I believe many leaders now know innovation isn’t an event. In the past they set up ‘innovation labs’, places with bean bags and hoped this would foster solutions to help solve their future development roadmaps, unlock deeper customer insights and ensure a sustainable business.
But really, innovation is a process and a fundamental factor in the success and application is having the right mindset. To be able to carry yourself and your business through any process of change and creation. Ideally, you want small, committed teams that are supported in the right way so that they can make valuable lasting changes.
To solve the challenges of tomorrow we can no longer use the techniques, thinking and processes of yesterday.
We need a radical re-think of how we identify, nurture and accelerate talent. Empowering teams to create the breakthroughs of the future.
There’s no point having an incredible team of innovators and putting obstacles in their path every step of the way, whether those obstacles are internal policies and procedures, senior team buy-in, or whether they’re tangible resource deficits like budget, access to technology and partners outside of your normal supply chain.
Why Most Businesses Don’t Innovate
Budgets and funding are often sighted as the reason a lot of business fail to innovate. Together with the pressures to show early returns from those investments. Historically experimentation cost a lot of time, and time is money, so it was hard to justify investing in new products and solutions(that might fail) when you have a perfectly good product right now you know is selling? Requiring detailed business cases and feasibility studies way too early in the innovation process.
There’s something in the innovation business that’s talked about a lot, and that’s Three Horizon Thinking Framework. Three Horizon Thinking looks at the three ways in which we create value over time and grow our businesses.
The first horizon is where most businesses focus, and many businesses don’t leave. Driven as part of the DNA in a linear world, one in search of LEAN operations. To look for productivity and efficiency gains to increase and extend the time and value of core revenue products and services.
You see this all the time in business, through something as simple as a repackaging campaign: they’ve bought product X from us before, so let’s make a small change to the design/style/ingredients/components and get them to buy it again! This kind of ‘innovation’ and development fits soundly within the first horizon.
How to Push Your Business Past the First Horizon
The second horizon comes from experimentation and exploration. This is ‘new product/service development, as an evolution your core. This often gets less priority or resources because with it comes an element of risk. It costs you time and money: two of the things you’ve been trying to reduce and get a handle on with horizon one. If you want to cut your costs by making yourself (or your team) more productive, you don’t want to spend man-hours on people thinking about solutions to problems you don’t have yet. This is why some teams leave it too late to get to this horizon, and always stay in horizon one. Resulting in disruption from an external competitor.
In fact, most still struggle to land value fast enough in the second horizon, with new product launches taking over 18 months on average, they don’t even reach the third, which involves imagination.
This is visionary thinking, people getting creative and dreaming up new visions of the future.
Organisations stuck in the past and working a liner timetable and roadmap of growth think “disruptions of tomorrow” are just too distant, and they’re much better off focussing on the here and now. Driving value from the urgent, and missing the important.
The truth is ‘tomorrow’ is already here, in a sense of the disruptions coming from the imagination and creation of breakthrough new products, business models, and services. With the convergence of exponential technologies, influencing new products in Horizon Two and Horizon Three can come into reality much faster. That’s why we see so much disruption when a new start-up the scene, they’re bringing this innovation into being. And often with entirely new business models, as they have no barriers and biases to protect an existing value stream.
The problem is, people see Horizon Two and Horizon Three as ‘blue sky thinking’- something that won’t deliver a return on investment quickly enough in order to be worth the investment.
What these businesses don’t is without Horizon Two and Horizon Three, they will never unlock their full potential. Plus, ultimately, risk becoming replaced and irrelevant. We have seen this in the retail sector with the likes of Sears and JCPenny losing over 90% of their market value in less than 10 years, from $32.4B to $1.5B combined. The same period that saw Amazon, who were valued at less than JCPenny back in 2006 to now over $726B valuation (that’s over 4,000% increase in the same period and in the same market sector).
So how do you engage in rapid experimentation without risking huge amounts of time and money into it?
One answer is actually quite simple: you condense the process. We have developed a fast track ‘LEAPS’ process that helps companies accelerate months worth of R&D a matter of days. And you start with one simple step: changing your mindset from a Horizon One, protective/efficiency mindset, into a Horizon Two and Three innovating of experimentation and imagination
This means you need to start thinking differently. Not just creatively, but radically different. You need to change your mindset from an attitude of ‘low-risk, heavy-justification and can’t’, into an attitude of ‘why not — let’s give it a try’.
Youth and naivety are often sighted as rich sources for innovation, simply because they see what could be done, not what can’t be done. With the right mindset, process, and stimulation you can ensure your future is bigger than your past. To imagine a new future with bravery and commitment, with an environment to freely experiment… know great things can happen.
What Your Business Can Do Now?
Start by asking some key questions…
Do you believe your is innovation ready? Have you outlined how many experiments you are going to run this year, month, a week? Have you built a culture of imagination, do you encourage bold, ambitious thinking?
What is the big, motivating challenge you want to solve? Where do you see the future value? If you would like us to help stimulate your team and to think bigger, to think boldly and to build a playbook and rhythm for rapid experimentation, to reduce risk and give you a fighting chance to be here tomorrow, then start with our Mindsets for innovation Scorecard. It’s free and will help begin the conversation.
Start with this and you’re already well on your way to not only future-proofing your business but making sure your business is one of the pioneers carving out that future.