Bridging the gap between the generation of ideas and their execution
Innovation is important to every organisation but the successful development of ideas into business outcomes can be elusive. This study looks at how businesses can bridge this gap between innovation and execution.
This innovation-execution gap is the focus of a report from Cass Business School and VMware, authored by Professpr Feng Li, Head of Technology and Innovation Management at Cass.
The report, Innovating in the Exponential Economy, reveals that the gap is becoming more difficult to bridge. The pace and unpredictability of today's competitive environment - characterised by industry disruption, an uncertain political climate, rapid technological innovation, competition, and the blurring of sector boundaries - means that businesses can't afford to wait for certainties before committing to new ideas.
In order to help bridge the innovation-execution gap there, the study offers the following advisory points:
Don't dismiss 'digital disruption'
For years businesses have been repeatedly urged to embrace digital transformation, inevitably leading to weariness with the concept.
This is dangerous. On average, industries are still less than 40% digitised, meaning further radical disruptions are inevitable. Businesses must continue to adapt to developments in cloud, AI and machine learning, big data, Internet of Things and more, as these lead towards a new type of exponential growth potential, which could see many losers but the winners take all.
Innovation is not always about creating something new
Few 'new' business models are based on unprecedented ideas. New technologies however do give companies access to a broader range of business models than previously available. They enable businesses to select models from one domain and adapt them for another. They also enable the adoption of multiple business models as a portfolio.
An organisation could deploy several business models to tackle different market segments or develop a range of new niche products by monetising different stages of work-in-progress. The portfolio model enables companies to hedge their bets across a range of opportunities, to enhance financial resilience within the broader context of continual change.
Innovate by experimentation
The traditional linear relationship between innovation and execution, rooted in a level of guarantee and pre-defined outcomes, is outdated. Companies need to be able to green-light an idea quickly, implement course corrections when problems arise, and learn on the go. Strategy making and execution should be intertwined, based on continuous monitoring of the environment, regular redefinition of path and destination, and frequent course corrections. Failure to do this can see new ideas become obsolete before they are implemented.
This does not mean reckless action should ever be taken however. Timing is critical when it comes to pursuing emerging opportunities, and strategic focus must be maintained.
Do not think in isolation
Bridging the new innovation-execution gap poses significant leadership challenges around Culture, Risk, Technology, and Impact. These challenges are closely linked and must be addressed both independently and together:
- Changing Culture is easier said than done, and unintended consequences can arise. Any attempt to change culture without an understanding of the underlying assumptions and repercussions is bound to fail.
- For innovation to succeed, Risk is unavoidable. Risk management is too often treated as a compliance issue. Business leaders must develop new risk management systems and adopt new risk management techniques while encouraging people to experiment with new ideas.
- To continually manage the delivery of innovation at the requisite pace, cultural changes need to be supported by the right Technology infrastructure. Businesses must make the correct architectural decisions. They must also be able to scale resources at speed across the required range of devices, applications, and clouds, confident that everything is secure.
- Measuring the Impact of this change is a tool for business leaders to facilitate continual innovation. Simply measuring what is most tangible - such as money and time invested in innovation, or the number of new products resulting - can restrict innovation. Measurement should be fully aligned with strategic priorities and intended outcomes, and able to change and evolve with the strategy.
In summary, the survival of many businesses depends on their ability to understand the rapidly changing business environment and to bring the execution of innovation in line with it. Failure to bridge the innovation-execution gap will prevent companies transforming at the pace they need. Understanding this across the entire business is key. It will challenge the existing culture, risk management, technology infrastructure, and even the very notions of 'success', as business leaders build the capabilities to navigate a future path rooted in uncertainty but also opportunity.
The study Innovating in the Exponential Economy is available for download at the link below.