In their experience as academics and consultants, Dr. C. Brooke Dobni and Dr. Mark Klassen have concluded that many organizations need something to improve their organization’s innovation, but they are not quite sure what. Through their research, they have learned much about assessing an organization’s culture of innovation and the practice and implementation of innovation.
Dobni is the founder of InnovationOne, a research and management consulting firm.
Dobni and Klassen have discovered that innovation is most successful when two factors occur. First, it succeeds when there is executive leadership support for a culture of innovation. Second, it succeeds when there are systemic approaches to embed and reinforce innovative behaviors.
Their article, “Linking Innovation Measurement to an Implementation Framework: A Case Study of a Financial Services Organization at the Front End of Innovation,” appears in the June 2018 issue of the Journal of Innovation Management. It outlines a case study of an organization in the financial services sector, and reports on the progress of a sustained, deliberate approach to improve innovation and business results. In addition, the organization improved it business results.
The research highlights the relationship between an innovation-culture-assessment model, the scientifically developed InnovationOne Health Index, and its use as a framework to manage the implementation of innovation activities in the financial services industry.
By actively observing the organization, including two cultural assessments over a four-year period, the researchers showed that an innovation assessment model is successful as an approach to advance the innovation agenda in the organization.
The business context for their case study is one facing many industries. The financial sector in recent years has seen an increasing complexity of product offerings combined with customers with higher expectations. Innovative products such as the mortgage-backed securities, exchange-traded funds, and derivatives are now commonplace financial instruments available to the mass market. Technology, the internet, and non-traditional competitors and business models, as well, are critical components of infrastructure that is reshaping the financial sector.
The research findings of this paper should interest practitioners looking to advance their innovation platform. They will find the framework useful as they plan initiatives aimed at advancing their innovation goals—and put in place measures to track their progress, make adjustments, and achieve improved business results. The research findings will also interest academics looking to conceptualize a broader implementation framework that is closely associated with the innovation measurement.
Over the four years studied, the financial services organization was able to improve its innovation capability. Specifically, the researchers learned the following:
- The drivers that improve innovation are related to employee skills and creativity, organizational learning and technical and financial support. Investments were made in customer service and innovation training and to improve general operational processes that were inefficient.
- The organization had major infrastructure process and technology gaps related to customer information, business intelligence and general operational processes that were inefficient. These customer and business intelligence gaps meant that the organization no longer had the critical insights on how their customers’ needs were changing and how to serve them. Without intimate knowledge of customer needs and how the industry and technology is changing, innovation falters. Larger information system and process improvements projects were launched to improve customer relationships and business intelligence, including the implementation of a new banking system.
- Knowledge management is key to innovation. The important drivers are 1) generating and disseminating knowledge related to the industry, competitor, and clients, and 2) being able to make value-added decisions in respect to that knowledge.
The technology and process improvements mentioned above helped executive leaders understand how customer needs and the financial sector were changing. With this knowledge executives were able to understand what changes they needed to make and the strategic direction for innovation. However, two gaps remained, the inclusion of information from partners and alliances for open innovation concepts and developing a process to disseminate this knowledge to the employees. These two gaps were ultimately closed by implementing a knowledge management project which gathered and disseminated information to the workforce and innovation teams. Through this process, the organization ultimately launched products and services that created better value.
- The organization needed to improve its processes directed at the ability to execute initiatives. To improve execution, the organization created an innovation team armed with a mandate to “get things going” and a budget to achieve the innovation goals. The team was comprised of a cross-section of employees from the organization, ranging from senior managers to operational employees. Prior to the intervention, senior managers were responsible for achieving goals, the decision-making structure and the implementation environment. To a certain extent, this did not change. The innovation team, however, gave management a new tool to assist in the execution and created a culture where employees were more active in decision making and execution, as well as embedding the innovation culture.
- The innovation team had a wide-open agenda. For example, they developed programs such as “innovation moments” that ensured all working groups in the organization were allowed time to “blue sky” ideas to achieve innovation goals. For specific projects, SWAT-like teams were assembled and given the mandate to solve problems or enact opportunities. The innovation team was also responsible for providing direction to innovation projects. In some cases, projects were deemed, “quick wins” and executed immediately and without sanction by the SWAT teams, whereas larger projects such as information system improvements were labeled as a key innovation projects subject to a charter. The innovation teams were given the resources to advance these more significant projects.
- One of the traditional adjustments the organization made to its implementation environment was to change its organizational structure. The structure become more customer-centric and aligned with functional areas grouped around product and service offerings as opposed to core functional areas such as finance and human resources-which became support entities within the structure.
- Finally, performance management systems changed to accommodate innovation goals and reward employees for ideas, or successful implementation of innovative projects.
The organization improved its overall InnovationOne Health Index score over four years. It also achieved its highest net income ever, improved its business success, and was named “top 100 workplaces in Canada” at the end of the five years.
What Dobni and Klassen learned from this action research case study is that pursuing an innovation culture can be accomplished on a systematic and planned basis. Initially, organizations can benefit the most from investments in leadership, and discussions around innovation. It is also essential that employees be allowed to be creative and empowered. Economic and competitive issues are not treated solely as obstacles, but rather as imperatives for innovative change.
Innovation is a challenging, and the key question becomes one of how C-suite executives should focus their limited time and resources on a handful of key drivers that support innovation. CEOs that get innovation have already communicated a strong case for change, obtained senior leadership resolve, and have strategically analyzed the innovation activity choices to execute innovation through an integrated approach.
The article includes a literature review, insightful analysis and further insights on innovation and the implementing of an innovative culture. It can be downloaded from the Journal of Innovation Management
About the authors:
Dr. C. Brooke Dobni is Professor and Hanlon Scholar for International Business, Edwards School of Business, University of Saskatchewan, Saskatoon, Canada, and the founder of InnovationOne.
Dr. Mark Klassen is the Assistant Professor, Edwards School of Business, University of Saskatchewan, Saskatoon, Canada.
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting. Victor, Dr. C. Brooke Dobni and Ed Colby are Managing Partners of InnovationOne. Victor consults and provides “hands-on” support for innovation, global talent strategies, developing agile leaders and teams, and other strategic initiatives. Contact Victor Assad at VA@VictorHRConsultant.com. Visit http://www.victorhrconsultant.com for valuable free reports. For research on innovation visit http://www.InnovationOne.io.