Strategic Innovation

Hannes Erler walks us through what innovation and transformation truly entail. Innovation is “more of the things that are new to the world and to the company, but must not have a bigger dimension on change.” An example of innovation would be smartphones; “it changes how fast we can communicate” . It coincides with how smartphones work and “, especially the young people, they have a completely different way of how they want to see the world.”

Now, ask yourself; what is innovation without transformation? Transformation “are the real game-changing things that fundamentally change not only technology as well as behavioral and societal things.” How do you go about making something that will not only change in form, but also is globally attainable? How does it work and can it work? It’s two sides of the same coin like Erler says there is the explorative side where you are allowed trial and error, and then there’s the exploitation side where failure isn’t what you want on the menu.

A good plan of action to possess when implementing a new system or new idea is that it “must safeguard the sales of tomorrow morning.” Meaning you should always account for if things don’t yield how you’d want them to, but “on the other hand, this innovation strategy has to build a very good guardrail for the bigger things of tomorrow.” There are two sides to every coin and to every outcome.

That leaves us to decide how and when to “pivot” your new startup. There are three pieces of advice Mr. Erler gives us. One being you have to start from within to “be very honest with yourself.”; yes the idea is neat, but ask yourself “where are the problems, or what do we have to solve”? The second key here is intuition, like when something just doesn’t quite feel right; you’d abandon it and if something feels right, then you’d jump on it. That intuition you have can either make you decide whether to continue on with your strategy, completely abandon your idea, or merely tweak what you already have to gauge how it’ll affect the world. The third key point is courage; courage to walk your own path, courage to pitch your idea, and the “courage to go for the unconventional yet obvious miles.” All of these elements serve as the blueprints you will have to ensure something grand and useful for everyone.

Innovation Spend & Trends Report

Access the Innovation Spend & Trends Report Now

The FEI and All Things Innovation community completed an extensive survey covering what folks are thinking, how they’re spending and the issues they face. Per the results, this is a senior-level, experienced, cross-industry group. The biggest strengths are helping the business do more with less and having an “impactful influence on the business.” The biggest opportunities are “creating new/next gen products” and “guiding enterprise strategy.” That said, the top challenges, weaknesses and threats are around “balancing short-term innovation with long-term thinking.” “Business resistance to change,” is a major issue. When it comes to collaboration, lack of time, money, and goals not being aligned are the top issues cited. These strengths and opportunities, weaknesses and threats are historically consistent for the innovation function.

Thank you to our contributors who provide expert commentary and answer some of those questions within this report:

  • Mike Hatrick, Group Director IP Strategy & Portfolio at Volvo Group Trucks Technology, Volvo
  • Navin Kunde, Associate Director, Head of Open Innovation – The Experience Collaborative, Clorox;
  • Zeinab Ali, Vice President R&D Transformation at Campbell
  • Gail Martino, Senior Program Leader, Unilever
  • Daniel Krauss, Director, Portfolio Lead, EY

Innovation Intelligence

Chris Varley defines innovation simply: “Innovation is a non-obvious solution to a problem that once it takes hold in the marketplace, it not only becomes obvious, it becomes the new standard.” Varley cites the innovation of automobiles. The problem of a faster, more reliable form of transportation existed, but until the automobile took a firm hold on the marketplace, it was not the standard. Now most Americans would not know how to live day-to-day without at least one or two cars per family!

But innovation is not the same thing as transformation. He references the many transformations that occurred as a result of the innovation in the automobile industry – from roads being paved to homes being built further away. Transformations are dependent on innovation; they cannot stand alone. “Transformation is when a host of innovations that are interlinked begin to happen together, ” Varley says. Transformations naturally result when a truly new innovative idea, service, or product hits the market. Innovation is the goal of companies that want to successfully stand the test of time.

So, what do you need to start innovation? People. “You can’t innovate in a vacuum. It has to involve individuals and people coming together around the idea to make it truly take hold,” he explains. This is true inside and outside of a company. “The first thing you need to do if you want to think about innovating within your company is that you have to see how you are viewed from the outside.” Understand how the public views your company, and then see how closely that correlates to your mission. If public perception of aspects of your company are unknown, innovation can help generate growth! “The innovation strategy is around experimentation, quickly and at low cost.” Investing millions into innovation does not make it more or less successful. Pay close attention to how the world interacts with the industry you are in. “The marketplace will tell you when it’s time to pivot.”

Setting realistic expectations for innovation are important, however. “The biggest challenge is that none of these things are going to happen overnight,” he states. There are many small changes, conversations, and trial and error sessions behind the scenes that occur before an innovation is ready to hit the market. And once an innovation has taken hold, there is really no time to relax. “It’s a continuous process,” Varley states. Almost as quickly as one innovation hits the market, it may be time to start doing some R&D for the next one!

Innovation As Constant Change

Being innovative is part of a business and if a company is just undergoing transformation after transformation, that is a sign that they are not being innovative enough, warns Navin Kunde.

Every now and then something will happen that will force everyone to transform. The pandemic has compelled some companies to be transformative about their relationships with employees. Many companies already went remote before COVID, adopting digital technologies for online meetings and even a hybrid working environment. “These companies didn’t need to take a huge action at the beginning of the pandemic”, says Kunde. As it turns out, the concept of digital transformation is just the result of a neglected innovation process that had to be enforced.

The world keeps changing and what matters most is not the size of the company, but how they position themselves for success. Given all the changes happening outside, any size business needs to be aware of external factors happening outside the organization. To be innovative, it takes consistency and discipline. Some external factors such as competitive intelligence, consumer behavior and the possible impact of emerging technologies should always be on the radar, according to Kunde. If everyone is talking about the metaverse, companies can update their strategy to be innovative about this new trend instead of waiting until they are forced to do something. This will prevent the company from transforming “in a massively disruptive kind of way”.

If people believe that disruption leads to change, for Kunde this is the exact opposite. “Change is constant, but disruption, similar to transformation, happens when you ignore change for a long time”. He believes that changing and being innovative is even more difficult when the business strategy is working well, because it goes against human behavior. At Clorox, Kunde’s team supports the innovation process by building a scientific advisory board based on external input to open the eyes of the business leaders to what is happening, but it is the leadership’s choice to choose whether they need to adjust their strategy or not. In this innovative process, he also highlighted the importance of good leadership, specially the general manager, who needs to balance short term and long term mindset in response to changes.

To “pivot “or “not to pivot,” the word is just overrated in this industry, says Kunde. The real question is how businesses are updating their strategies according to the inputs they receive. To Kunde, to pivot is the process of adjusting the strategy according to the learnings along the execution process. In other words, if the learnings go along with the strategy, there is no need to shift direction, if the inputs diverge to the strategy, then it is time to pivot, advises the Head of Innovation. “You don’t pivot for the sake of pivoting. You are pivoting based on the learnings you are getting, based on the strategy you are trying to win in the market given external conditions”. At the end of the day, pivot is just a tool to be applied according to the inputs collected. It is true that some industries are less predictable than others, and therefore will need to pivot more. Regardless of the industry sector, a clear strategy and goal needs to be sustained even if it is necessary to pivot on the execution front.

Success relies on the ability to balance incorporating changes into the business strategy without changing its essence, but at the same time knowing when it is time to move on and to shift in a different direction.