How to move the needle on innovation

As CEOs continue to call employees back into the office, their reasons often include the deleterious effects of remote work on innovation. There is some basis for these claims: A recent study found that the number of email exchanges between MIT research units dropped by 38% during the pandemic lockdown. Its authors equated the volume of email with the weak ties that are crucial for the dissemination of information and ideas on networks, and thus concluded from the drop in traffic that remote work slows down innovation. But no matter how much weight you place on this finding, it’s a stretch to equate the success—or failure—of a company’s innovation efforts with the number of back seats.

The truth is that innovation in large companies is a perennial challenge for leaders, no matter where employees work. The late Clayton Christensen and other researchers detailed the obstacles to innovation that arise when industry-leading companies are confronted with disruptive technologies. Large companies also struggle to turn innovation investments into financial results: In 2018, consultants from Strategy&, PwC’s global consulting business, examined 15 years of data drawn from the company’s Global Innovation 1000 research, an annual analysis of the 1,000 public companies that spend the most on R&D, and concluded: “There is no long-term correlation between the amount of money a company spends on its innovation efforts and its overall financial performance.”

The truth is that innovation in large companies is a perennial challenge for leaders, no matter where employees work.

So how can leaders move the needle on innovation in large companies? I turned to Lorraine Marchand for answers. Marchand served in a variety of executive and board roles, including a previous stint as general manager of the life sciences division of IBM’s Watson Health (now Merative), before writing The Innovation Mindset: Eight Essential Steps to Transform Any Industry—a practical guide to developing innovation skills in an organization— and founding your own innovation consultancy.

Here’s your list of ways to make your business more innovative.

A personal innovation mindset. “You can’t talk about innovation without considering culture, but I see it in a very practical way: it has to be more than philosophy and ideology,” says Marchand. “Creating the right culture has to start at the top with an appreciation and dedication to innovation.”

Looking at the innovation-savvy leaders he has worked with, Marchand discovers that they all have a passion for problem solving, an insatiable sense of curiosity, and a willingness to embrace change. “They like to participate in transformations and don’t mind a little ambiguity,” she says. “They also appreciate the fact that even though they are there to support shareholders, they are going to allow innovation – new products, services and ideas – to flourish.”

Weaving innovation in business. Enabling innovation includes devoting resources to innovation in an integrated way. “A major pharmaceutical company created a small start-up unit made up of its ten best project managers and gave them [US]20 million dollars and 18 months to see what they could come up with”, recalls Marchand. “But the effort was not built into the business; it was not supported by the company’s incentive structure or social structure. At first, the project managers were very excited, but very soon they felt isolated and worried about what would happen to their careers if they didn’t reach their goals.” The unit was disbanded.

Marchand believes that using an enterprise-level venture capital model is a more effective approach. This approach cuts across departments and functions. “Anyone can submit an idea, and there is a pool of funding and other resources available to pursue great ideas,” he explains. “Because innovation stays within units, managers learn to be innovation leaders while hitting their numbers with tried-and-true products and services.”

Everybody an innovator. To weave innovation into a business, leaders must equip employees properly. “One of the mantras you often hear from leaders is: ‘Don’t bring me a problem; bring me three solutions,’” ​​says Marchand. “The problem is that most employees don’t have the skills to break down a problem and get to the root cause. Therefore, they do not understand what they are solving. You get a lot of solutions that try to fix the symptoms of the problem, but don’t actually fix the problem.”

Common types of innovation training will not solve this dilemma. “It’s very popular to have people walk into a room, give them a box of building blocks, and tell them they have to build something within certain constraints,” says Marchand. “These are fun exercises and get the creativity flowing, but they don’t provide anything you can take to work on Monday morning.” Instead, leaders must teach and train their people in a rigorous process.

Employees must be able to identify and deconstruct problems. “They should be able to formulate concrete problem statements,” says Marchand. “What are we trying to solve? And why, and who cares? And is there a client for this? We have to make sure that we are solving a problem that the customer cares about and that they are willing to pay us to solve it.”

Next, employees need to know how to solve problems. “Now come up with three solutions and put them through a risk matrix. Pick the one you’re going to make into a minimally viable product and try it out,” adds Marchand. “And most importantly, go out and talk to customers. I can’t count how many times I’ve been taken to product development sessions where engineers have designed prototypes and are starting to go into production without ever speaking to customers.”

Marchand devised his “Law of 100 Clients” to avoid this situation. “A hundred customers can’t be wrong,” she says. “Don’t proceed until you’ve asked each of them about their needs and whether your solution can meet them.”

Make it safe to fail. “You hear this a lot, but it’s true: if you want an innovative company, you have to make it sure to fail,” says Marchand. “Say what you want about Jeff Bezos, he embraced the ‘fail and learn’ idea. He created a culture that allowed, even encouraged, people to try to innovate and not succeed at it.”

Marchand picked up on this idea while working at IBM with an effort he called Fail-safe Fridays. It was a weekly stand-up with his direct reports, each telling something he had done that week that hadn’t worked, and the group trying to learn from it. “The idea is to make it okay to try things and have them not work, as long as you use it as a learning opportunity,” he explains.

All of the ideas above offer leaders powerful ways to drive innovation in their companies. As for those leaders who are still obsessed with the need for co-location, Marchand suggests getting over it.

“Remote work is the new norm,” she says. “Leaders must encourage and allow for diverse viewpoints and broad participation in the innovation process. They should combine new collaboration tools and technologies with the same skills used to encourage socialization, engagement, and meaningful contributions when people are brainstorming in a room.” In short, she fosters innovation by bringing employees together wherever they are.