Innovation is one of the most important issues for credit unions. It is the key to growth and critical for the execution of long term strategies – created by listening to employees and members, collaborative thinking and trust. In discussions with credit union clients, it is clear that the challenges of risk-averse cultures, continous learning and strengthening leadership teams and boards are priority issues.
Two innovation articles among many have proven useful as data points in this discussion. An HBR article written in the depths of the Great Recession in 2009, Innovation in Turbulent Times, describes the characteristics required for successful collaboration. It takes us through a fashion industry case study that portrays the conversion of non-stop creativity into fruitful business outcomes. Also noteworthy is Accenture’s 2012 Innovation Survey of over 500 executives, published as Why Low-Risk Innovation Is Costly.
HBR examined collaborations between successful pairs of fashion executives: one being “right-brain” creative and the other “left-brain” commercial. Continual innovation occurs in fashion as the “brand” is constantly reinvented and products that “consumers didn’t know they needed” are sold.
When the creative director can constantly generate new ideas, imagining a holistic picture by seeing every innovation as a component to fit the whole, and the “left brain” brand manager provides analytical decision-making, this produces a continual innovation environment.
HBR identified characteristics common to these successful “right brain/left-brain” fashion industry duos. With some adjustment, we can apply the attributes from HBR’s research to collaborative teams of any size:
- Be aware of strengths and weaknesses and realistically assess what each team member does well and where help is required;
- Draw on capabilities to the proper degree and at the right times, applying complementary cognitive skills and balancing working styles and decision-making approaches among team members;
- Put the team’s interests ahead of individual interests based on trust and focus on mission;
- Utilize observations that spark idea transfer and insight based on raw intelligence;
- Apply relevant knowledge and experience to challenges faced;
- Include frequent and direct communication to create a culture with stronger communication skills;
- Continuously ask why and why not, becoming comfortable with questioning and challenging basic assumptions;
- Commit to the success of the business and the team.
Two-thirds of the executives polled in Accenture’s Innovation Survey see innovation as required for realizing their strategic goals. More than half, however, felt their organizations have a “sluggish” innovation process and just 18% of CEOs believed that their strategic investments in innovation are paying off. This poor track record is beginning to negatively influence other companies from risk-taking in the future.
Two main factors have impacted the achievement of higher returns: 1. A focus on product line extension and renovation (an approach pursued by 64% of survey respondents), rather than a broader portfolio of bold, big ideas; and, 2. An over-emphasis on the innovation process itself without a focus on bringing ideas to market with a strategic business model that focuses on the customer experience.
Organizations that have a comprehensive, formal system in place for innovation, however, do report better outcomes. CEOs can support systemic innovation by creating an innovation department and deploying a “chief innovation officer". Shared “capability platforms” for innovation operating across departments create economies of scale through software, and social networks. Instead of just product innovation or line extension, business innovation becomes a start to finish value chain of bold challenge and freedom within a framework that integrates elements of product, service, technology and a personalized approach to the customer. Over 85% of the executives surveyed said personalization was important to their approach.
Lateness to market was cited as a top reason for innovation failure. A comprehensive approach emphasizes speed to market and flexibility. Ideas are tested fast, fail fast, and then the process is repeated; it is counterproductive to wait for perfection. The organization values the lessons from failure as they do from success, and they are applied in each new attempt.
As in the fashion industry example, creativity to generate ideas is balanced with analytics to limit unprofitable projects. A sole focus on budgets, resource allocations, and timelines can waste the innovation investment. The power of Big Data and social media integrate customer personalization into development processes to mitigate risk.
When the organization supports its innovators with a collaborative culture and comprehensive systemic approach, it reduces obstacles and sets the stage for innovation success.
Stuart R. Levine is chairman/CEO of Stuart Levine & Associates
Contact: (516) 465-0800 or stuartlevine.com