Recently, I presented at the Chief Innovation Officer Summit (CINO). The CINO conference management asked for my thoughts on the following questions. I thought inKNOWvations readers may also be interested as well.
Q: Do you think that the word innovation is overused or used too broadly in corporate communications today?
A: It is misused and misunderstood because it is used too broadly. From Sopheon’s perspective it is important to bring clarity to the term innovation to put the term in the context of the enterprise – similar to other enterprise-wide systems such as ERP, CRM, and SCM. Simply stated, one trend we see to bring clarity to innovation intent is the migration to Enterprise Innovation Management (EIM). The challenge in communication is similar to Resource Planning in that it can mean many different things to different people, when you insert enterprise to the front of it, it is specific. Innovation by itself can be melded to mean nearly anything to anyone. When combined with enterprise and management, these provide a clear context as to the intended purpose.
Q: What do you see as the key responsibilities of a Chief Innovation Officer (CINO)?
A: A key CINO responsibility is to provide leadership for a company to achieve sustainable profitable growth through innovation. The CINO provides leadership direction to create Innovation Governance, process and execution. They work across the C-suite to agree innovation metrics to manage. Further, they communicate such innovation metrics with ambition towards improved performance across the enterprise.
Q: What do you believe are the most important elements of spreading innovation within a company?
A: Without a doubt, the most important elements of spreading innovation within a company are transparent and explicit communications of your innovation strategy, how it is linked to both top-down corporate strategy, and the day-to-day decision making which drives cross-functional engagement to achieve stated initiatives supported by tangible metrics that can be managed.
Q: How much of innovation is about a willingness to take risks?
A: Depending on your definition of risk, I will answer this in a different way. One of the core behaviors required for innovation is the ability to say “no” to some investments in order to say “yes” to more promising investments. If this decision-making is done without risk/reward consideration it is highly risky, and then yes, “willingness to take risk” plays a very important role. However, if one applies portfolio management principles to your decision-making, then it reduces the willingness to take risk because it is all about accepting levels of risk that do NOT put the overall enterprise at risk. Rather, it represents dramatic upside when successful. If innovation is putting your company at risk, it is likely because you don’t have a balanced portfolio. To incorporate portfolio management into your decision-making requires the willingness to change behavior, not accept risk.
Q: Do you believe that P&L is the best way to judge the success of a new innovation?
A: No, P&L is far too broad and is not specific to Innovation success. Many companies have business metrics such as NPD, or NPV or IRRI or other metrics specific to their innovation performance that are more relevant. For example in the case of 3M, they have something called New Product Vitality Index (NPVI). It is a metric to measure revenue from products introduced within the past five years. It is important to choose metrics, that if managed, you can track if your innovation investments are improving business performance.
Q: Where should a CINO sit within the company?
A: By the nature of the title itself, all C-levels sit at the CEO table. Perhaps another thought-provoking question is “Should every company invest in a CINO?” I would say it largely depends on the innovation maturity of the company. Not every company has innovation governance and this will often determine if a company ready for a CINO.
Q: Do you believe that new “spreading innovation” ideas, like shared work spaces, are a fad or a long-term solution?
A: It will be a fad for those companies that view it as a “project” to put in place. However, it will stick in those companies where it is simply the way they do business, a part of the culture.
Q: How much of spreading new innovative thinking is about communication?
A: It represents the beginning. Without sharing, you don’t have a chance to improve innovation thinking. However, communication itself will not improve innovation thinking that specifically affects the performance of the business. There are broader cultural and behavioral factors that play significant roles. Innovation governance, strategic top-down connection answering that very important question Why?”, and in determining which areas do we need to innovate, and the linkage of innovation performance to professional performance are all examples.
Q: How do you gain buy-in throughout the company for new, innovative thinking approaches?
A: It is simply the expected way of conducting business. Many of the things I shared in my earlier responses need to be in place and it starts at the top. I have found those companies that feel it is important enough to measure and compensate their executives against performance have a dramatically higher chance of creating buy-in throughout.
Q: How would you define innovation?
A: In the context of enterprise innovation, I would define innovation as the competency required to deliver long-term sustainable profitable growth.
If you are also interested in some of my other observations from the CINO Summit, read my recent post called “Chief Innovation Officer Summit (CINO) Debrief: Back to the Innovation Future.”
Andy Michuda is president and CEO of Sopheon. He is an internationally recognized expert and speaker on the use of innovation management tools and best practices to improve critical business processes, such as new product development and innovation performance. A pioneer in the field, he began designing and guiding the implementation of knowledge management and new product development solutions for Fortune 500 companies and other large multi-nationals in the early 1990s. Connect with Andy on LinkedIn.