CHAPTER 5

INNOVATING EXCELLENCE

So what does innovation have to do with delivering world-class customer experiences? The old days of inventing bright shiny objects to bring in more sales have given way to disruptive innovators using a powerful range of tools to out-invent their competition. It’s through this innovation that we build out amazing customer experiences. We gain actionable insights and then turn them into beautiful experiences across a wide range of customer touchpoints.

If innovation is the secret weapon—and it is—then how do we innovate?

I’ve been directly involved in innovation for a quarter of a century. Over the years, my consulting business has practically turned into an “innovation hazmat team” because we spend most of our time mopping up after failed innovation initiatives.

The good news is that I’ve learned an enormous amount about why innovation fails in most organizations. Put bluntly, I’ve seen so many innovation disasters that I can tell long beforehand what will work and what won’t. From this experience and knowledge, I have developed a very simple system that ensures innovation success every time.

It’s easy to dismiss the need to develop an innovation infrastructure in your enterprise because, after all, you’ve made it this far without one. If you believe that the marketplace is not disruptive and that customers are not demanding more, then perhaps you can dismiss the need to innovate. However, this isn’t the case. In fact, there is a direct corollary between incremental innovation and mediocre customer experience.

THREE SIMPLE STEPS TO DRIVING INNOVATION

I’ve boiled down what I’ve learned into a three-step system for driving innovation excellence. While it took me years to understand and develop these steps, like the best inventions, they’ve turned out to be surprisingly easy to implement.

Step 1:
The Innovation Readiness Assessment

If you went to your doctor and she prescribed a heart medication without doing any tests or examining you, you would justifiably be suspicious. How about your mechanic? You bring your car in for service and, without even looking under the hood, he claims you need a new transmission. Unless the doctor or mechanic has some sort of X-ray vision, you would turn around and walk out.

The same is true of organizations. You cannot set up an innovation program without first doing a thorough assessment and diagnosis of the problems you are trying to solve and what is currently being done about them. To determine if your organization is ready for an innovation program and what it should look like, you need to start with a good assessment.

Surprisingly, most organizations begin work on innovation without doing a complete and thorough self-examination. Remember, innovation is a delicate ecosystem consisting of hundreds of moving parts, including customer types, expectations, sensory input, price/value sensitivity, collaborative environments, and so on. To succeed, you must have the systems, methods, tools, and processes necessary to make innovation real in your enterprise.

Getting Ready for Your Readiness Assessment

For years I tried to get in shape and lose weight with no sustained success. I followed the diets and the fitness programs, but nothing truly stuck. I always reverted to where I’d started from, or worse. It wasn’t until I hired an expert—a fitness trainer who had the outside perspective, training, and experience necessary to help people like me—that I was able to make fitness and health real and long lasting.

Likewise, I have found it best in business to have an outside expert conduct an innovation readiness assessment (sometimes called an innovation gap analysis). For most organizations, it is critical that the assessment be done by a company that specializes in innovation best practices. These companies have trained experts with an outside perspective. Just like my fitness program, for best results, it needs to be done from the outside looking in.

A client told me that before his organization reached out to me, it had conducted its own self-assessment. Here’s how he characterized it: “Conducting your own innovation readiness assessment is kind of like doing your own tonsillectomy. It’s going to hurt and you’re not likely going to have a good outcome.”

Should you decide to do your own assessment, first get training on innovation best practices to get a good perspective on what’s really required. Meaningful customer training is essential because none of us is born an expert in customer experience; we need to develop the skills. Most organizations hire really great people to do customer service but then shove them out without any training. (In our business, Lassen Innovation, we provide customized training specific to the job title. Many other companies do too, and they’re just a Google search away. Remember that all training should be customized to the unique needs of your organization and should be specific to the job title; for example, sales staff gets one type of training, while executives get another.)

On the other hand, so-called innovation gurus are popping up everywhere, so make sure you choose wisely. The last thing most organizations need is to bring in a new level of bureaucracy, because bureaucracy is the enemy of innovation. Hire a company that has experience mopping up failed initiatives, and avoid any company that has a just-add-water solution. No template works. In our innovation management consulting practice, we have a simple process: Understand the client, build out an innovation roadmap, and then assist in its execution. This process offers the lowest risk with the highest return.

When I was a young man, I traveled to Zurich. Naturally, I had to buy a Swiss watch while I was there, which gave me the opportunity to talk to a Swiss watchmaker, a man with a tremendous body of knowledge and expertise related to the inner workings of clocks and watches. In the center of his store was a massive clock. The front was completely clear so you could see the intricate workings of this mechanical masterpiece.

The watchmaker talked about watches (and clocks) as delicate ecosystems. He told me that with any slight variation in mechanical tolerances, two things could happen, both bad: (1) The watch would come to a complete stop. Actually, he proclaimed, “Stopping is good,” explaining that when a watch stops, it’s telling you that it’s broken and you are prompted to get it fixed. (2) The watch continued running, but unbeknown to the owner, it was no longer accurate. The owner assumed all was well, and therefore the watch didn’t get repaired until the owner missed an important appointment!

And that’s where the danger lies. Innovation is like a watch or clock. It has hundreds of moving parts. If these moving parts are not all working in synchronicity, your innovation ecosystem collapses.

Many organizations have ticking watches and therefore assume they are being innovative. For example, a company’s new website might be attracting online customers, so the company incorrectly believes its entire innovation system is optimized and the information gleaned from the market is correct. The company assumes the methods of developing innovation are ticking along nicely, only to find itself blindsided by an existing or emerging competitor.

I would never dream of trying to tinker with my watch. It’s too complex. I know it requires an outside expert who understands the hundreds of moving parts and how to optimize them. Innovation programs also have moving parts that come together in a formal innovation governing structure. Like my watch, innovation programs are complex. Most organizations execute an innovation without going to an expert. Such organizations often omit the diagnostic and developmental stages and are not optimized through innovation best practices. Yet this is exactly what’s needed for best results. For this reason, proper innovation is typically designed and implemented using outside experts.

Step 2:
The Innovation Roadmap

Based on your innovation readiness assessment, you have determined if you have the correct resources, systems, and talent in place to get started. You also have determined where your innovation gaps are.

The next step is creating your innovation roadmap. Surprisingly, the overwhelming majority of organizations looking to drive enterprise collaboration and innovation never actually create an innovation plan. “Failing to plan is planning to fail,” as the saying goes, and this is certainly true when it comes to innovation.

My guess is that if you were planning to hire a vice president of finance, you would first carefully assess her qualifications, training, and experience relative to financial control and leadership. Then you would have detailed discussions about where you wanted the company to head and how you envisioned getting there.

Yet most stakeholders charged with the responsibility to execute on innovation have little or no training specific to innovation best practices. Building a roadmap is a key element of those best practices. This is why it’s so valuable to hire or have trained stakeholders who understand the working parts of innovation best practices.

Design an Innovation Roadmap

Once you have completed a comprehensive innovation readiness assessment, do yourself a favor and take the time to build out a roadmap that is customized to the uniqueness of your organization. Make sure not to skimp on how you build it. Good innovation initiatives provide significant and predictable returns on investment.

Studies show that the main reason innovation initiatives fail is that they were not surgically connected to the enterprise strategy. In designing your innovation roadmap, it is essential to make certain you’re using innovation as a way to serve your stated enterprise goals.

Step 3:
Innovation Execution and Measurements

In medicine, the correct medical pathway is for the doctor to perform a thorough assessment and diagnosis, develop a focused and quality treatment plan, and ultimately deploy and measure the treatment and results.

This linear, step-by-step approach makes great sense. It is also the perfect process for winning in innovation. Once you’ve completed your innovation readiness assessment and developed your comprehensive innovation roadmap, the final phase is execution and measurement. For this, you must determine how you’re going to measure success, fill all of your resource gaps, and launch with sustainable determination.

Different sources quote different ways of measuring innovation success. Some have three essential ways, while others have ten. For the sake of simplicity, I suggest measuring innovation success by determining how much it helped you improve a specific strategic initiative. How much better are you as a result of using that innovation best practice? For example, if your goal was to reduce cost, by how much was it reduced? For our purpose, we’re talking about how much an innovation has helped you improve the quality of the experience you’ve delivered to customers across their journey.

Innovation is a lot of fun and is naturally connected to the state of being human. We are creators. That’s what we do in the process of deploying innovation, and it’s incredibly exciting and rewarding.

The Six Cs of Innovation Success

I’ve been involved in many innovation initiatives over my years as a management consultant. I have concluded that there are six elements, which I call the Six Cs, that must be in play for any innovation program to succeed. Below I walk you through each of the six elements needed to bring a successful innovation program to your organization.

Complete: I believe 90 percent of all innovation programs fail because they are incomplete. As with watches and clocks, the innovation ecosystem is a delicate one. The various species of success must all be alive and well or your ecosystem will collapse.

In other words, you need innovation governance, training, systems, processes, tools, and technologies in place and ready to go. Leave something out and innovation becomes nothing more than a logo and a corporate buzzword. Your innovation readiness assessment, done properly, will make sure you have everything you need to be successful.

Customized: Every industry is different, as is every organization within that industry. Run from the purveyors of the one-size-fits-all solution. Innovation has to be handcrafted to align with your organization’s appetite for risk and opportunity and your specific and unique customer types.

It also has to be culturally aligned and realistic in terms of your objectives and how you measure success. By doing a complete innovation readiness assessment, you gain the insights necessary to know how to customize your innovation initiative to fit the unique and special needs of your enterprise and customers.

Culture: This is the life support system of innovation. If your organization is risk-centric and fears collaboration internally and externally, your innovation program is doomed. If you have a fear-based, noncollaborative culture, then chances are you have many other problems related to enterprise success.

Today, organizations need to attract millennial talent. They need to cocreate and collaborate, and ultimately they need to innovate. To do that, you have to be willing to “encourage courage.” Get your culture right because it’s the new enterprise mandate.

Collaborate: As an inventor, I know that very few innovators have created anything completely on their own. One way or another, people worked together to create that new product or service.

Most people fear collaboration because they’re afraid someone else will take credit. In some cases, they’re afraid somebody will outright steal their idea. However, I have learned that the best innovators are the ultimate collaborators.

Develop collaborative environments within your organization, create places and times for people to exchange ideas and innovate, and ultimately make collaboration part of your organization’s culture.

Connect: Being connected is an often used phrase, but in most organizations, people rarely have important relationships with others. However, innovation and collaboration require being connected. One of the best ways to stay connected is through technology, such as enterprise social networks and similar platforms.

You can also conduct brainstorming sessions, create innovation labs, and have other ongoing innovation activities. Deploy these tools to get creative people together sharing ideas and experiences and to help find more opportunities to invent exquisite customer experiences.

Customer-Centric: Essentially, there is a philosophical difference between organizations that master customer service and experiences and those that fail to do so. Innovation success derives from customer-centric organizations; innovation failure stems from those that are company-centric.

It’s paradoxical, but the more you focus on delivering internal enterprise benefits, the less you focus on your real enterprise benefit, which is a loyal customer. The more you focus outward, on your customer, the more inward success you eventually have.

INNOVATION: RISKS AND REWARDS

Every new human experience delivered to customers by a technology or service is an innovation. The way in which we architect these technologies and services is nothing more than an innovation created to deliver differentiated value to a range of customer types throughout a customer journey.

One way to look at the risks associated with innovation is to think of innovation as you would a stock portfolio. Incremental innovations are like low-risk, low-value stocks. In exchange for their low risk, they produce low monetary value. Incremental innovations are low risk and correspondingly deliver low customer and enterprise value.

The best innovators create a portfolio of high-risk, high-reward disruptive (or breakthrough or landmark) innovations in combination with incremental innovations. As you’re looking to invent new experiences for your customer, look across the range of innovation values to deliver innovation that spans the gamut of innovation risk and reward.

Incremental vs. Disruptive Innovation

The problem with most organizations is that their innovations are essentially accidental. Because these organizations have no formal process around innovation, they are not able to create high-value differentiated innovations for their customers. The bigger problem is that most of these organizations create nothing more than incremental improvements to an existing system or process.

Netflix did not invent better videotape or DVDs. The company did not make one small incremental improvement. Instead, it created an entirely new way to deliver affordable, high-quality, high-resolution movies on demand.

Netflix didn’t get stuck at the incremental level of innovation value. Instead, it leaped to the top as a disruptive innovator, completely changing the way we experience renting movies. And it reaped a mighty lot of rewards because of it.

In the fast-moving, high-demand, ultracompetitive markets we do business in, we need to create innovations that are both breakthrough and disruptive. In other words, we need to go beyond incremental improvements made to existing experiences to create new experiences that completely displace what went before.

Innovation, like so many other things in business, requires rolling up your sleeves and getting to work. Examining the total process of developing an innovation program is beyond the scope of this book, but I want to make it clear that innovation is required if your organization is going to master customer experience. Some of you may already have successful innovation initiatives under way. For those who don’t, I strongly suggest you begin this powerful best practice.

Remember, whether you’re selling a product or a service, you are in the customer experience business. Customer experience is not just a function of training your staff; it’s a design function. If you want to design something that’s going to succeed, it needs to deliver value to customers across each and every touchpoint.

Innovation is as much a philosophy as it is a business discipline. The philosophy begins with a customer-centered view of the universe. A fractional approach will result in failure, and even worse, you will lose credibility. Don’t deploy on innovation until you really mean to carry it through, and when you do, make sure you do it right. When you launch innovation initiatives, build in dashboards and measurements so you can see what’s working and what’s not. Build a team culture that encourages courage. Put structures in place that help you gain better insights from your customer-facing stakeholders. Beware of “just-add-water” innovation programs, because there is no such thing as a successful cookie-cutter approach toward winning at innovation.

Make your innovation initiative a beautifully handcrafted, custom program that fits the unique and special goals and culture of your business. Don’t forget, this is really a lot of fun, so make it buoyant, engaging, and worth your team’s effort.