Interview: What’s Required For Real Business Innovation?
When you ask organizations how they rate themselves on various aspects of innovation, the one factor that consistently scores lowest is the ability to implement a “system of innovation” – a defined, consistent and effective innovation process.
Gerrit Kotze, a Business and Innovation Architect at SAP will be presenting a session on The Principles and Practices of Effective Innovation Management at the SAP Innovation Forum in London on March 11th. I caught up with him by phone to hear more.
What’s your background?
I started out as an SAP applications consultant, then moved over to organizational change management and transformation management. Over the years, I’ve been involved in a number of very large transformation programs, and for the last three years I have been focusing on business innovation and helping our customers on techniques for effective innovation management.
What is business innovation?
The term has been much abused over the last few years. It is much more than just design thinking workshops. In fact, innovation is a challenging undertaking. To be successful requires a repeatable and rigorous system of innovation. Creativity and ideas are essential ingredients. The seeds of innovation are provided by individuals, but innovation is a team effort that turns ideas into reality and delivers tangible outcomes.
The single lowest rated key success factor for innovation is consistently the lack of a defined, consistent and effective innovation process. It scores between 2-5% when set against other key success factors such as Culture, People or Leaders.
We can differentiate business innovation from other types of initiative such as continuous improvement, efficiency, optimization, transformation etc. by its purpose. The purpose of business innovation is to create new future value for the organization. This connects innovation very strongly to strategy since the focus of strategy is to consider the constantly changing context and envision the future to define the best competitive position to achieve future goals.
Now that we see the importance of strategy it is also important to consider the question of how will we innovate. What are the focus areas? A very useful reference is the work of the late Princeton political scientist Donald E. Stokes who defined four categories of research that help to determine successful models of innovation: Pasteur’s Quadrant
Most innovation portfolios will cover several types of innovation based on risk and potential value, but it remains interesting to note that there is evidence that supports a higher success rate in radical or breakthrough innovation achieved by those organizations who pursue the Pasteur Quadrant model. In this quadrant there is a quest to advance science based on identified needs. In this quadrant it is also worthwhile noting that technology is a main driver for success – advancing the science around a technology.
In the US, the Defense Advanced Research Projects Agency (DARPA) is a good example: they have produced an unparalleled number of breakthroughs over the last 50 years such as the internet and GPS using these techniques. They attack big problems that cannot be solved without pushing the boundaries of technology, and the result is discoveries that upset the current trajectory and can disrupt long established businesses. Sometimes these trends are evident for a long time. For example in the UK think about the impact of internet shopping on HMV.
How can organizations be more innovative?
There are a number of aspects to consider here. The framework around all of these I refer to as the ‘System of Innovation’ and from this an organization will need to constantly adapt to both internal and external change. When I work with customers I use an innovation audit framework to understand what goals they set for innovation and how they hope to achieve it.
For example, I was called in to work with a global luxury goods vendor. They were incredibly creative and idea rich, but they were being successful despite their internal systems and processes: governance and co-ordination was not clearly defined, multiple groups worked in silos and they all faced continuous pressure on urgent short terms priorities. I advised them on the design and establishment of an innovation lab within a defined system of innovation and this resulted in a number of major innovations that were introduced into their businesses.
Organizations need a working system of innovation that includes strategy, a portfolio approach, processes, people and infrastructure. Once that is in place and working, an organizations can move into a proficient and connected idea management process and even to open innovation.
I believe SAP is an example of a successful innovation company and we have a lot we can share with our customers. For example the former CIO Oliver Bussman (now at UBS) spearheaded a very aggressive program to leverage the mobile capability through mobile device adoption and relevant content. As a result he was able to agree a dedicated percentage of the IT budget to earmark for pure innovation projects at his discretion. In addition we have great experience in setting up innovation labs, getting the most value out of them, and turning our own breakthrough inventions such as SAP HANA into successful products.
I think there’s an opportunity to help our customers get more innovation from the SAP platform. The message around how to use ERP has now fundamentally changed. In the past, if you wanted efficiency and long-term low total cost of ownership, the recommended approach was a standard SAP install. SAP HANA offers an exploitable and flexible platform that can be used to define new business processes, drive data driven insights to support new business models and business ventures.
Another example is new user interface solutions such as SAP Fiori. There are business process models to help you get the best value from SAP, but you won’t get the full value of the system unless people can use it in an optimal way. This involves a lot of design behind the scenes.
An SAP Innovation Architect offers the expected level of experience in defining and running projects, plus orchestrating the extensive SAP inputs, but they are also ‘Designers’ of business solutions or business architects. They don’t need to know all the technical details, but they have to understand all the requirements from a business strategy point of view, and be able to orchestrate the appropriate applications and technology.
I believe that SAP can ultimately be a leader of innovation stewardship: not only providing great products but also helping our customers exploit them in innovative ways, leveraging our deep expertise in different industries and the extensive SAP business ecosystem.
What are the biggest misconceptions when it comes to innovation?
One that jumps out is the fundamental confusion between idea management and innovation management. The classical scenario is to invite participation from employees and generate lots of ideas. But the problem is that ultimately most of them are not useful. You need to have a number of things in place before you can get the quality of ideas to a decent level.
To fix this, you need to involve, motivate and sustain engagement with the right employees. If they do the same things each day, they’re not going to get inspired by new things. To get more than ideas for continuous improvement, research shows us that you have to flood people’s minds with a lot of new information – and this is where Design Thinking can play a great role. Then you need to have a practical system in place to be able to handle the flow of ideas, prioritize them, and rapidly turn them into a prototype.
What’s the ideal profile for somebody to attend your session?
First, it’s suitable for both IT and business, because both have a role to play in creating and maintaining the system of innovation. It should be interesting for not only those involved in innovation, but also the people managing them as well as the organizational leaders who need to understand how to implement a system of innovation in their business.
Thanks for your time!
The Principles and Practices of Effective Innovation Management
Gerrit Kotze, Business and Innovation Architect, SAP
SAP is at the heart of enterprise application innovation with our products that we combine into the digital enterprise -Cloud, HANA, Analytics and Mobility. This digital enterprise allows business innovation through product, process and business model innovation. It also demonstrates SAP’s own innovation capabilities. As an innovation enterprise SAP also helps our customers to become capable and mature innovation enterprises themselves. Innovation is imperative, but not easy. In this session SAP Services will share the principles and practices of effective innovation management that underpins our own success story.
This post first appeared on the Business Analytics Blog.