A Step-By-Step Guide for Business Innovation

May 31, 2011 by David J. Neff and Randal C. Moss (*)

Innovation, true institutional innovation, makes indelible, positive impacts on a business’s corporate culture and ability to drive revenue. When implemented, successful innovation programs can attract top talent, improve staff retention, drive new lines of business, and create an agile organization able to adapt to changing environments.

A culture of innovation requires executive leadership to engage the entirety of their staff to take ownership of innovation development, and incorporate it into their daily job functions. Every employee has a unique view of the organization, and can identify opportunities to better serve their constituents. Identifying these gaps should be an organizational priority, because each gap is an opportunity to innovate a new program or fill a need.

These days, it is insufficient to rely on a suggestion box in the break room to drive innovation. You need to present your employees with the resources and support necessary to effect a change on the problem they have identified.

Step 1: Create Opportunities for Awareness and Innovation

When the American Cancer Society initiated its Futuring and Innovation Center in 2002, they were inundated with ideas on how to solve constituent challenges. The Center drove a cultural change within the greater organization by developing a structure through which even the most junior staff were able to submit ideas and participate in their development. Beyond the value of the new programs, and beyond the new revenue from them, The Center fostered a culture of individual responsibility and gave every staff person the tools and opportunity to make lasting and meaningful changes to the way that the organization operated. The lesson? Encourage your employees to extend themselves outside of the prescribed job descriptions.

Additionally, Royal Dutch Shell PLC was a pioneer in organization awareness, able to engage their entire company — top to bottom level. Shell developed and implemented an innovation identification and development program called “Game Changer,” which actively sought outside ideas for energy production, distribution, and even new sources that could drive profitability and overall growth of the company. Shell calls out to its entire network asking “If you have a creative mind and you believe your invention can transform the energy industry, perhaps you should be speaking to us. We invest in novel, early stage ideas that could impact the Energy System to help you get them from your mind to ‘proof of concept.’”

But awareness need not solely be an external effort. Air Products and Chemicals considered awareness as an internal challenge. Air Products employs a vast array of engineers with diverse background and interests. However, this vast resource was not being tapped, simply because the interests and skills sets of each engineer were hidden. Air Products recognized the challenge and created an internal system to catalog all of their engineer’s technical expertise and passions. Now, project managers leverage the system to create high relevance ad-hock technical teams that align people with their technical skills and passions. The result is better products and engaged employees.

Step 2: Take A Systematic Approach

In the Innovation and Commercialization 2010 McKinsey Global Survey, one of the biggest challenges expressed by participants was the need for better organization of innovation. In fact, 42 percent of survey respondents said that improvement in innovation organization would make a profound positive impact on their ability to drive innovation.

Interestingly enough, “organization” was closely followed by “developing a culture and climate that fosters innovation” as the second biggest challenge. The report is telling when it says, “Organizational factors, including innovation-specific processes and links to support functions, remain a challenge. As hard as it is for companies to implement organizational changes in increasingly complex environments, the results suggest that when companies make the effort, they will experience more success with innovation.”

The lack of a highly functioning innovation system is one of the preeminent barriers to developing a culture of innovation. An innovation structure provides individuals with great ideas the resources and corporate support to usurp the standard business development process.

The Shell Game Changer is a strong example of how a large organization can act nimbly by creating a separate pathway for ideas to route. Game Changer relies on a stage-gate process to bring in, evaluate, validate, test, and launch new innovations. The American Cancer Society leveraged the success of the Shell system and adopted a similar framework for their innovation development program called Springboard. Both programs took a regimented and systematic approach to innovation development, passing hundreds and thousands of ideas through screens until they were left with only the most viable innovations. At which point, those ideas received not only funding, but developmental support.

Step 3: Turn Ideas into Business Reality

Here is an easy guide for transforming all those wonderful innovations from words on an email, to actionable programs or products:

1. Discovery. Gather business concepts from your staff and volunteer network. Create challenges for them by posing particular questions and asking for solutions, and have an open channel for people to send in their unique ideas for consideration.
2. Scoping. Give concepts an initial review against your carefully selected criteria. Some key criteria are: Scalability, Sustainability, Cost Basis, Tie to Organizational Mission, and Capacity for Execution. This is where your process begins to pay off. By weeding out unsustainable ideas early on you preserve development energy and funding for viable ideas.
3. Create a Business Case. Once approved, engage the person who submitted the idea to draft a business plan of their concept. The business plans should thoroughly outline the mission, goals, evaluation tools/metrics, and resources to test the viability of the idea as a prototype. A review committee should consider a completed business plan as a formal application for funding.
4. Conduct Constituent Market Research. Engage the idea submitter to commission a market research study to determine what demand exists for their concept. Ideally, you already know the problem it is going to solve, and the value it will bring your customers or constituents. Now you need to see if there is a market for it. Your research can be as complex as engaging a firm, or as simple as creating an online survey.
5. Development and Testing. Create a rapid prototype to prove the concept works. We suggest that you aim to prove the concept within a nine- to twelve-month time frame. We strongly encourage limiting funding to encourage bootstrapping, and keep the effort focused on proving the viability of the concept, not creating a full-fledged program.
6. Launch. If chosen for implementation, work closely with the idea submitter to identify the resources and department support best suited to deliver the program to market, and arrange the smooth transition and success of the new program.

From the outside, brilliant business innovation may seem like art. But it’s more science than you think. We work in nonprofits, where innovation is the name of the game: Now, you know our strategy for success.

(*) David J. Neff and Randal C. Moss are the authors of The Future of Nonprofits: Thrive and Innovate in the Digital Age.

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