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Is There An Innovation Formula?

How Ideas Flourish In Business Cultures Focused On Empathy

Innovation—devising new ideas and taking them to fruition—is about more than the adoption of new technology. It involves new ways of thinking and doing things, creating new processes, building and modifying business models, adapting to market changes, and most of all, finding ways to work collaboratively.

Companies need to innovate primarily for these reasons:

  • To meet customers’ needs: While customers’ needs are constantly changing, sometimes they don’t know what they need. Innovation lets you predict changes in the market and provide creative solutions to consumer needs and wants.
  • To scale growth: Respondents to the Deloitte Innovation Survey cited growth as one of the main reasons for innovation. Two-thirds of respondents said they develop in-house innovation processes to spur growth.
  • To attract better employees: Creative, talented, and skilled people gravitate to companies that innovate because they want to be challenged and learn new things every day.
  • For brand and product differentiation: Along with growth, differentiation from the competition qualifies as a core reason for companies to pursue growth.

In researching my new book “Mean People Suck,” launching in October, I sought to answer this question: Is there an innovation formula that SMBs and enterprises alike can use to engage employees and drive them to transform company growth?

Turns out, there are three factors common to businesses with high levels of innovation: strong support for idea generation at all levels, the existence of a culture favorable to employee growth, and a staunch C-level focus on empathy.

Let’s explore these factors and look at how they can help foster innovation in your company to take your brand to the next level. Companies can increase the frequency and tendency of employees to hatch ideas, which lie at the core of innovation, in a variety of ways.

Increase Investment
Structural support for innovation in the enterprise is inevitably driven by investment in two things: R&D and people.

Vicky Kell, director of innovation, R&D at Invest Northern Ireland, wrote that “long-term commercial benefits, efficiency, productivity, competitiveness, and increased sales” made investment in R&D a “no-brainer.” Governments have been the first to realize this; for example, the Ministry of Enterprise, Trade, and Investment in Northern Ireland has created an 11-year strategy to ensure that innovation spurs economic growth in the region up to 2025.

It’s also important to train your people to keep their skills current. Cushing Anderson, program vice president, IT education and certification at IDC, said the degradation of professional skills over time was a “knowledge leak” and claimed it could “kill organizational performance in as little as a couple of years.” Fundamental training in innovation isn’t part of any science, technology, or commercial academic course, so it’s up to companies to train their employees how to innovate.

Follow Evolving Customer Experiences
Innovations rarely spring from eureka moments or flashes of genius in the lab. They’re usually the result of diligent searches for answers that customers need, inconsistencies or unexpected changes in the market, and evolving consumer experiences that force a company to alter course.

For example, have you ever been lost in a home improvement store, looking for that one item you need to finish a project? The research that Lowe’s did of their customers’ in-store experience pointed them to create Lowe’s Vision, an app that uses augmented reality to help their customers find the products they need.

Partner With Stakeholders And Other Brands
Strategic partnerships with vendors, communities, other brands, and even competitors can prove to be the catalyst for innovation to help you gain reach and market share in new or niche markets.

BMW and Louis Vuitton might not be the most obvious partners, but they built on their shared values—luxury and high-quality craftsmanship—to run a co-branded campaign in which Louis Vuitton designed an exclusive, $20,000 four-piece luggage set that fit perfectly into the BMW i8’s rear shelf. “This collaboration with BMW epitomises our shared values of creativity, technological innovation, and style,” said Patrick Louis-Vuitton, head of special orders for the company.

Favorable Company Culture
A supportive, encouraging, and open work environment provides the seeds for innovation across cultures. It relies on three primary factors:

1. Diversity: Numerous studies have shown that racial and gender diversity increase the creativity levels among teams significantly. Culturally diverse teams are more likely to develop new products and take them to market significantly faster than homogenous ones.

Innovation is sparked in diverse teams by the presence of what INSEAD Assistant Professor Sujin Jang calls “cultural brokers,” people who have multicultural experiences and act as a bridge between people from different backgrounds, enabling them to share information, integrate knowledge, exchange ideas and build upon them, unleashing creativity and innovation.

The effects of cultural brokerage are more pronounced in teams that demonstrate a high level of “psychological safety,” as Jang’s research revealed. Daniel Coyle, author of The Culture Code, backed this up when he says, “Smart cultures have leaders who atone early, have fallibility and vulnerability, [and who] say, ‘We don’t have all of the answers, we expect you to mess up, and we want you to use that as a learning moment.’”

2. Availability of additional resources: In her book “The Innovation Formula,” Amantha Imber described challenge, autonomy, and recognition as the individual-level factors that spark innovation from team members. However, they need organizational support in the form of time and money to bring their ideas to fruition.

Companies encourage autonomy in principle; however, as Imber wrote, many times they’re “in for a penny, but not necessarily for the pound.” Not only do they need to give employees self-set time off and provide them with the necessary training, but if they want to create a culture of innovation, they should also budget for micro-funding—mitigating risk by allocating capital to a large number of ideas that show promise.

One of the best examples of corporate micro-funding is Adobe’s Kickbox—an “innovation kit” given to any employee who asks for one—consisting of a Starbucks voucher, a chocolate bar, a guidance sheet on how to innovate, and a $1,000 prepaid credit card.

3. Incentives and rewards: Recognition, while being a driver of employee engagement, is also one of the key factors that spurs innovation. In her book, Imberexplains how financial rewards will increase motivation up to a point but are less effective for employees who are skilled, knowledgeable, and challenged by their roles. In such cases, a public recognition program keeps innovation thriving in the workplace.

Coca-Cola Amatil, one of the biggest bottlers of Coca-Cola, holds an annual award ceremony to recognize innovators who have done amazing things at the company.

“Innovation is a professional stress release because it allows you to positively talk about how to solve something, or to talk about how to bring a new idea to life from scratch,” said Derek O’Donnell, who created the recognition program. “There’s energy injected into everybody who attends, even if they weren’t presenting.”

Executive-Level Focus on Empathy
Top-down innovation is the norm in large companies, where executives contribute to innovation through thought leadership. They can do so in different ways.

1. Encourage innovation: Managers who encouraged their employees to express even their most ridiculous ideas eventually win the game of creativity. These “champion leaders” support and bolster innovation from the ground up.

The C-suite must take on the mantle of being “champions of creativity,” as Adobe CMO Ann Lewnes put it. “Creativity will remain central to great marketing,” she told CMO.com. “Today’s CMOs must have a growth mindset, be agile, and push the boundaries of innovation. This means celebrating risk-taking—whether it’s with new channels, partnerships, or experiences—and instituting a culture of testing where you can constantly iterate on and improve the customer experience.”

The Harvard Business Review revealed that when leaders show genuine interest in what people are saying and doing, it prompts others in the organization to do the same. Humble and empathetic leaders are role models for employees, and they drive innovation by rekindling their curiosity and encouraging them to ask the right questions

2. Understand customer intent and personalize the customer experience: Microsoft CEO Satya Nadella has been instrumental in putting the company’s focus on its customers through several innovative practices in product design and user experience. For example, after consulting with the gaming community as well as occupational therapists, Microsoft developed an adaptive controller for the Xbox One for disabled gamers.

“Empathy is at the core of all innovation,” said Nadella, as he outlined in March at the Adobe Summit how Microsoft innovates to get the customer experience right.

At the same event, Microsoft CMO Chris Capossela also advised companies to “put the customer at the center of not just storytelling, but also in the products that the organization builds and each of the touch points with the customer.”    

For “Mean People Suck,” I interviewed Steve Lucas, SVP, Adobe and author of “Engage To Win.” Lucas made it clear that companies need to “engage customers, not market to them” in order to innovate. “We must engage them early, engage them everywhere, and do so in meaningful ways at all times,” he said.

3. Innovation and marketing alignment: Innovation is understandably a top priority for most organizations. However, they need to invest as much time, money, and resources in marketing their products as they do in building them.

Marketing is not merely the function of acquiring and keeping customers. It needs to be aligned with the innovation process if business goals are to be met. Further, marketing-innovation alignment helps businesses discover unknown customer needs, understand perceptions and behaviors that affect a product’s appeal, and develop an ecosystem around the entire customer journey.

It reminds me of one of my favorite marketing quotes from Peter Drucker, a management consultant, educator, and author who inspired my own career in marketing: “Because the purpose of business is to create a customer, the business enterprise has two—and only two—basic functions,  marketing and innovation. Marketing and innovation produce results; all the rest are costs.”

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