University of Melbourne Professor Danny Samson has extensively studied innovation in companies. He shares his insights with PWPro.
It began in 2009 when the Commonwealth Government asked if I would like to conduct some case studies on highly innovative companies. The Department of Industry, Science and Research, as it was then known, wanted to get an idea about what the practices were for some of Australia’s most innovative companies.
We started by creating case studies of 10 manufacturing companies. From those case studies I found some common themes as to what these companies were doing well in respect of their innovation capability.
Next I took it upon myself to go much further and I did a whole bunch of further case studies beyond the manufacturing sector. On the back of this research, I partnered with the Australian Institute of Management who allowed me to survey its members.
Something over 2000 of AIM’s members filled out a comprehensive survey, which was based on the case study and other research that we had done. From that we were able to identify and determine with statistical significance what the differences are between ‘highly innovative’ and ‘lowly innovative’ organisations.
There is a suite of practices that are done much more, much better and much more intensively, by highly innovative organisations. I’ve detailed
these below:
Leadership of Innovation
The first area in which highly innovative organisations work much harder and more intensively, is leadership.
Innovation is a priority for the company from the board down. In local government, this means the council members and CEO! You see this leadership in the organisation’s strategy. You read statements about these organisations aspiring to be more innovative, you see it prioritised, and therefore you see it resourced.
Innovative leaders don’t just ‘talk the talk’ as they say, but they ‘walk the walk’, leading by doing.
Innovation strategy
The second key identifier of an innovative company is that they define an innovation strategy. An innovation strategy is a set of statements, which defines the domain over which the innovation will take place.
So, you don’t say ‘we are going to be innovative in everything we do’. That is not a focused strategy statement. You might say we are going to try and be more innovative in a certain aspect of our products and services, or our processes, etc.
Innovation system
At the highest level of the organisation there is a properly defined set of innovation processes. This means that there is a systematic approach to capturing and evaluating innovation within the organisation. Then resources are allocated to develop the most potentially valuable of the ideas that come through.
That begs the next question: where do these ideas come from. In the highly innovative organisations they come from all stakeholders. Employees in particular are trained and are motivated to put forward innovative ideas at all levels of the organisation.
Culture and behavior
There’s a culture of coming up with innovative ideas and providing those best ideas to the organisation so that it can capture them in what we call the ‘Innovation Funnel’: where the ideas go in and they are developed and evaluated and tested, and the best ones come out the other end.
Environmental and social conscious
Another interesting finding that came out of the research is that organisations that are highly innovative tend also to be much more active in sustainable development.
This means that they are more likely to be proactively doing things in respect of environmental and social outcomes. The same underlying proactivity that makes an organisation innovative makes an organisation active in this sustainable development space. When you are motivated to improve your environmental social and community outcomes, it stimulates innovation.
Taking risks
When you are in the land of innovation, I like to say, you have to appreciate that not everything that you try is going to work. That immediately says, if we are going to be taking some risks, let’s get good at it and these organisations have an acceptance of it, an understanding of it and they know how to calculate it and consciously decide, ‘if we are going to take some risks, which ones?’.
Absorptive capacity
Innovative organisations are good at evaluating and transferring the best of their ‘new stream’ ideas into their mainstream operations – this is a term that is sometimes called ‘absorptive capacity’.
The welcoming of new initiatives of their mainstream operations is strong such that ideas will be welcomed and therefore innovations can be successfully scaled up. Only by scaling up can you turn innovative ideas into commercial and stakeholder value.
Point of difference: measuring innovation
A key differentiating factor between a highly innovative organisation and a lowly innovative organisation is the attention that’s paid to measuring innovation outcomes and translating those into organisational outcomes. Remember: “What gets measured gets done!”
It’s not particularly easy to become a highly innovative company. If it was easy, we’d see a lot more companies being really good at it. But there’s no question that there are enough companies in Australia that are successful at systematic innovation to demonstrate that where there’s a will, there’s a way. The rewards are huge for all stakeholders.
Apply to Local Government
I’d say it is really hard to do much significant innovation if senior executives are not on board. You will be frustrated by the lack of resources, the lack of recognition of the work and that there is no measurement and recognition of it. So one of the first things to do is get the senior executives in local government on board.
An innovative approach can only take root at the bottom if it takes hold at the top, because that’s where people are authorised to actually change priorities.
If you are going to prioritise innovation then that can’t be done from the bottom corner of an organisation. That has got to be done by senior people to make it a legitimate part of an organisation’s overall strategic approach and then it can take hold through the rest of the organisation.
I would say that local government is not as different from the rest of the economy in the sense that in local government, you have got to be innovating to make any forward progress.
Oxford University Press will be publishing Professor Samson’s book on the topic of innovative organisations later in the year. This includes a diagnostic by which an organisation can assess its innovation strengths and weaknesses, and plan its forward strategy.