by Cushing Anderson
It’s Thursday at 9 am, in the big boardroom at the very beginning of the monthly senior staff meeting.
You’ve all seen the numbers. While they’re not bad, we can see the trends and we need to change, fast. How can we become more responsive to our customers, improve our productivity, and breathe some life into our sales organisation? What do you think?
In various shapes, sizes and tones, this message is probably delivered every day worldwide in some boardroom or over some conference call, video conference or tele presence. The audience, often experienced men and women with different backgrounds, priorities and responsibilities will most likely come to a similar conclusion: We need to innovate, but how?
Executives, managers and supervisors around the world would typically respond with the classic activities from a management playbook–rewarding people for innovation, setting top-down goals, encouraging employee collaboration, and rallying employees around company strategy. These same executives, managers and supervisors would probably be graded pretty well on their ability to perform these activities; it’s likely their ability to perform were the reasons they were promoted to senior roles. But unfortunately, those behaviours don’t drive business benefits.
Seven high impact activities
Innovation – identifying and making changes in something established – requires an additional set of seven high impact organisational activities. Ricoh and IDC, the global technology market research company, looked at the business practices, organisational behaviours and business performance of more than 1,600 companies around the world. What was clear was that while classic managerial actions help align and direct organisational activities, by themselves these actions don’t result in innovation success. But, when supplemented by seven specific and high impact organisational priorities, innovation impact and organisational performance dramatically improves. The high impact activities are:
- Encouraging risk taking
- Tolerating failure
- Encouraging thinking outside the box
- Pursuing innovation across teams
- Ability to iterate and improve solutions rapidly
- Looking outside the organisation for best practices
- Pursuing innovation at the individual level
While the seven high-impact organisational priorities shouldn’t be a surprise, the direct and measurable correlation to business impact was clear. Simultaneously, the value of more classic activities to help outperform the competition is limited.
To support that claim, the graph below shows how important managers’ view each of thirteen organisational behaviours plotted against the actual importance of those activities at predicting superior performance.
The behaviours in the top left box are those that are shown to have the highest correlation to superior business outcomes, but executives believe are not as important. In contrast, the bubbles in the bottom right box are those that executives feel are most important but actually have less correlation to superior business outcomes. Additionally, the size of each bubble corresponds to how well executives believe their organisation performs each activity; again, executives believe they are doing the activities in the lower right better, and in the upper left worse comparatively worse. The opportunity for improvement is clear.
Relative impact of organisational behaviours – Isolating seven high impact activities
Executives are focused on classic management practices like communicating and rewarding success and setting top-down innovation goals, but these behaviors are less associated with superior business outcomes than the seven high impact activities including encouraging employees to take risks, tolerating failure, and looking outside their organisation for best practices. These high-impact, innovation behaviours are in the blind spot for many executives. To be more responsive to customers, improve productivity, and maximise sales and outperform the market, executives must focus on those high impact activities above all others.
In research to be released in June, Ricoh and IDC will expand on these findings and also will describe:
- The relationship between organisational strategy and innovation,
- The right amount of money to spend on innovative R&D, and
- The impact of information technology on innovation and organisational performance.