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What makes our organization really innovative? This is probably the most frequently asked question by management today. But do they ever get a straight answer? Common sense tells us that innovational strength is desirable, but now this view is supported by hard evidence.  A new study shows that 70% of surveyed European companies claim that innovation as their most important critical success factor and 85% of respondents claimed that the focus on innovation is only going to increase over the coming years (Accenture 2012).  So this is all very encouraging, but what does it take to become a master of innovation?

I’d like to start my recommendations for those who want to assure that their company evolves into an innovative organization with three offbeat assertions:

  • First: Burn all bonus plans.
    Each reward system is built on the possibility of planning. But we’re living in a highly dynamic business world (if this is news to you, you’ll not be in business for long), all plans have a short life nowadays, so sooner or later employees find themselves faced with the choice of “Do I do the reasonable and necessary things or do I run for my reward, focusing on the achievement of KPIs?”  Innovation reflects the fluid nature of the changing business environment and rigid reward systems, tied to a structured business planning cycle don’t. The two things are incompatible. Period.

  • Second: Prioritize Leadership vs. Controlling
    The classical management methodologies (“the MBA tool set”) work on the assumption that knowledge-based controlling systems must to be installed in each corner of the organization. In this situation issues are caused by poorly executed or missing standards and policies. Where companies with this mindset feel their innovative power is decreasing, their natural reaction is to establish an “innovation management system” based on their traditional linear control approach.
    For such companies could I suggest that moving away from measuring and managing towards empowering middle management (team leads and area managers) to facilitate innovation within their company? It seems more promising. 
  • Third: Ability outperforms Knowledge Management

Knowledge, as tangible and storable data, is a great tool to deal with recurrent challenges. In other words, knowledge management is a treasure trove of experience you can open, to mitigate the same or a similar issues should they pops up again.  Innovation, on the other hand, is by definition new, unmet, unknown and sometimes elusive. Given this difference, you need to provide a framework when trying to encourage individuals and organizations to explore the unknown and this framework is very different from those associated with knowledge management. Master classes, working with prototypes and unconventional training  are important elements of what I like to call “competence facilitation”.

Admittedly, these three topics don’t constitute an exhaustive To-Do list for companies looking to foster innovation.

But if we were to complete the list what critical things have you seen to be the critical activities that enable companies to become innovative?

Sapere aude!

Kind regards

Werner Wagner


SAP Business Transformation Services EMEA

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