Alexandria Q.'s Key Ideas from The Invisible Advantage
by Soren Kaplan

Products, services, and even business models become commodities over time. If organizations do not continually invent and reinvent their competitive advantage, they risk being disrupted into obsolescence.

Culture is the only sustainable competitive advantage. It’s the invisible secret sauce that drives employee engagement, innovation, business growth, and continuous reinvention.

Every organization must unlock its innovation culture in its own unique way.

What works for Google and Apple might actually kill innovation in other companies. Effective best practices must be artfully adapted to the unique personality of your organization.

• Metrics give us direction. Leaders set goals and measure progress; often this focus on easily measured metrics like speed, efficiency, accuracy, or profits.
• Innovative behaviors are difficult to quantify, and most companies don’t have innovation metrics. What we decide to measure determines what we get. If we don’t measure innovation, we won’t get it.
• To create an innovative culture we need to promote and measure inventive behaviors in leadership, employees, and customers. Establishing these metrics is a process unique to each company, there are no standards.

Measuring profitability and the support of your customers is important, but it doesn’t tell you what specific behaviors will lead to more profits and more satisfied clients in the future. Your metrics need to define the end goal and encourage innovative practices.

Innovation metrics that define the end goal may include the number of clients who trade up to next-generation products or services, the business generated in new customer segments, or revenue from new markets. Metrics like these define goals, identify opportunities and promote innovation.

Once you have defined the end goal, you need to give people specific goals to reach our larger goals. Every employee should be aware of the importance they play in achieving the company’s goals and how they share responsibility for innovation.

• Communicate trust and acceptance of new ideas. Policy and business practices should align with words that encourage trust, learning, creativity, and innovation.
• On a leadership level, you should set goals that support innovation by focusing on the future instead of on daily operations.

Here’s a model that any organization can apply to set up its definition of innovation and take a portfolio approach to allocate its time and effort:

• 70% Incremental innovation: small changes in processes, products, services, strategies, etc.
• 20% Sustaining innovation: major advances in the core business for existing customers and markets.
• 10% Disruptive innovation: breakthroughs that change the game (new biz models, products, services).

Connecting your innovation intent to all three types of innovation helps link innovation to both the current and future direction of the organization.

Here are some examples of innovation intent statements that can do just that:

• Finance: To deliver financial insight that drives strategic business decisions, new market opportunities, and the innovation process.
• HR: To recruit and grow top talent that shapes the future of our company and that transforms the industry.
• IT: To provide tools and services that deliver insight for employees that accelerate innovation and optimize the customer experience.

Without the focus an innovation intent provides, people tend to think innovation belongs to someone else (such as Research and Development) and assume it isn’t part of their job.

The lack of a thoughtfully defined innovation intent also makes it difficult for leaders to create specific programs, processes, metrics, and rewards that shape values and behavior, because specific expectations and measures of success usually aren’t clear beyond the call for “more ideas.”