Ideas are easy; innovation is hard. Ideas are exciting, but innovation is scary because it is all about change. The changes required by minor innovations are easier for customers and organizations to absorb. But the large changes generated by major innovations often disrupt not only the market, but the internal workings of the organization as well. This requires organizations to become increasingly flexible and adaptable. And companies that successfully innovate in a repeatable fashion have one thing in common: they are good at managing and adapting to change and complexity.
People often fail to imagine just how the change injected into organizations by innovation ebbs and flows across the whole organization’s ecosystem. Innovation creates a complex web of change not just for customers, but also for employees, suppliers, marketing, operations, and many other groups. Let’s explore some of the change categories visualized in this framework using an Apple iPod example from my book, Stoking Your Innovation Bonfire:
1. Changes for Customers -- Any major innovation requires a company to imagine for the customer something they can then imagine for themselves. Go too far past your customers’ ability to imagine how the new product or service solves a real problem in their lives, and your adoption will languish.
Customers had to try and imagine Apple as more than a computer hardware manufacturer, and begin to see them as a company to trust for reliable consumer electronics. They also had to imagine what it might mean to download music digitally (without any physical media).
2. Changes for Employees -- Major innovations often require employees to do things in a new way, and that can be uncomfortable, even if it is only your employees imagining what you are going to ask them to help your customers imagine.
Employees had to acquire lots of new knowledge and skills. Apple support employees had to learn to support a different, less-technical customer. Other employees had to learn how to effectively build partnerships in the music industry.
3. Changes for Suppliers -- Innovations that disrupt the status quo may require suppliers to work with you in new ways. Some major innovations may require suppliers to make drastic changes akin to those they had to make to support just-in-time manufacturing.
Apple had to work with suppliers to source components at the higher volumes and shorter lead times required for success in consumer electronics. This meant finding some new suppliers who could handle the new volumes and market requirements.
4. Changes in Distribution -- Often big innovations disrupt whole distribution channels and this can cause challenges for incumbent organizations (think Compaq and big box retailers versus Dell Direct).
Going into consumer electronics meant that Apple had to build relationships with the big box stores, including companies such as Target, Walmart, and Costco. They also had to build a completely new distribution system -- iTunes -- for distributing digital music.
5. Changes in Marketing -- New products and services, especially disruptive ones, can require marketing to find and build relationships with completely different types of customers and/or require marketing to speak to customers in a different way or to reach them through different channels.
Marketing had to begin moving the brand from computing to lifestyle, including changing the company name from Apple Computer to Apple in 2007. Marketing also had to learn how to connect with mass market consumers, and help them imagine how this new hardware/software combination would enhance their life -- no small task.
6. Changes in Operations -- In addition to changes in the supply chain, the organization may have to adapt to major innovations by hiring different types of employees, re-training existing employees, accounting for revenue in a different way, or going about production in a new way.
The Apple iPod was an experience sell, which highlighted the fact that Apple didn’t really have a place where they could help customers experience their products. This led to the opening of Apple retail stores. Apple’s finance and operations had to adapt to the change from low-volume, high-price items to high-volume, low-price items. Apple also had to build out a resource-intensive online operation that didn’t exist before (lots of IT investment).
Note that the chart has arrows going in both directions, but not simultaneously. There is a push-pull relationship. At the beginning of the innovation process different groups influence what the innovation will look like: new production capabilities, new suppliers, ideas from partners/suppliers, component innovations, new marketing methods, etc. But as the innovation goes into final commercialization, the direction of the change becomes outwardly focused and more complex.
The changes prompted internally and externally by innovation make it necessary for the organization to:
1. Plan for the complexity of change
2. Become increasingly adaptable and flexible
3. Reconfigure to support the changing keys to success
4. Systematically approach their innovation efforts
5. Have strong leadership support for the changes required
6. Create clear, passionate communication of the value of the innovation so that internal and external partners and customers can see the promise of the new solution and why they should support and adopt it
It should be clear that as an organization is imagining how to take their creative idea and transform it into a valuable innovation in the marketplace, they also should be imagining all of the organizational changes that are going to be required and how they will implement them. This is no small feat, but with proper planning, organizational learning, and adaptation over time, any organization can improve its ability to cope with, and even anticipate, the change and complexity that come with implementing their next major innovation.
So keep stoking your innovation bonfire and you will have the energy to tackle even the most complex innovation challenge!
Braden Kelley is the author of Stoking Your Innovation Bonfire from John Wiley & Sons. Braden is also the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy, and @innovate on Twitter.