‘Innovation’, ‘big data’, ‘the cloud’, ‘sustainability’, and the list goes on. Business loves buzzwords. There’s no two ways about it, every technology wave, or generation has it’s lexicon.
I came across a great quote from Henry Ford’s autobiography in which he speaks about ‘making to order’:
Ask a hundred people how they want an article to be made. About eighty will not know; they will leave it to you. Fifteen will think that they must say something, while five will really have preferences and reasons.
It’s a simple way of categorising the market, and may also give us a view of the challenge in the context of buzzwords. If we look at the term ‘innovation’, and we asked the next 100 people that we heard use the term, ‘what’s your definition of innovation?’, then it’s likely that only a minority would have a clear definition to hand.
When I talk to functional professionals, such as the contracting and commercial, legal, procurement, finance, or supply chain communities, the term innovation can often cause them to glaze over. Whilst they use the term, they are often unsure of what it means in the context of their roles. These professionals are increasingly key enablers in innovation and therefore to unlock their intellect we need to address this.
In a recent piece of research that we performed in collaboration with Innovation Fixer and IACCM, a summary of which can be found here, we looked at innovation through a number of prisms to help understand the challenges, and help de-mystify the term. The three broad definitions that we used were:
With the increasing importance of commercial innovation (click here for a definition) organisations are increasingly calling on their functional professionals to support the strategic planning, and product/service life-cycle management processes. Strategic innovation is about the role played, and contribution made, to the development of our organisations market offerings. This is usually done as a part of a multi-functional team and driven by an existing process or approach. What is required is a mindset, skillsets, and toolsets that is open, and complementary to the creation of new opportunities.
This is about our ability as professionals, to both improve what we do, and how we do it. This could be, for example, focused on our services to the organisation, the processes, and policies that we’re responsible for, and the practices that flow out of them. Whilst predominantly this is likely to be internally focused on business innovation, it can also have a significant impact on the products and services that we provide to the market.
Transactional or project innovation is increasingly important in a world where many contracts are longer term and therefore have to consider the challenges that this brings. As the contract ‘ages’ it has to be able to flex, adapt, and continually improve. We’re often competing to beat the baseline that we set on day one and therefore innovation is a key component of success in this.
By sub-dividing innovation down to this next level it’s far easier for professionals and teams to understand where they can play for maximum advantage and benefit. From this, it’s possible to work with the organisation to prioritise areas of improvement, up-skill the team in terms of relevant mindsets, skillsets, and toolsets, and most importantly measure and articulate the progress and successes.
From experience, it’s not a linear process starting at strategic innovation and working down to transactional innovation or vice versa. Most likely the starting point will be a mix of transactional and operational innovations. This combination builds credibility with the business, and projects, which often then enables the right to play in the strategic area.
If we, as professionals, can develop and implement innovation strategies focused in these areas then the prizes are big, IACCM research has shown that an average organisation leaks about 9% of turnover through contract management issues. Innovation that stemmed some of this would certainly get the attention of most C-suites. So what processes and strategies do you have in place to unlock that value?