Ingenuity isn’t the preserve of a select few. It’s the fundamental driving force of humanity. It’s the thing that turned small villages into global cities, it pushes us all to go further, faster, and it’s central to innovation.
So, why do traditional business models quash ingenuity and the innovations it gives rise to? Why do they concentrate power at the top, giving it to those furthest removed from the day-to-day operations that can, when evolved, keep organizations ahead of their competitors? And why do they fall back on complex legacy structures and systems that slow the time it takes to get value from new ideas?
We’re at a tipping point in disruptive innovation, with one-sixth of organizations set to fail in the next five years because they can’t keep pace with change. It’s vital for old dogs to learn ingenious new tricks.
Here at PA, our work with businesses around the world has taught us organizational agility is the key to unlocking innovation. This is an understanding supported by our research – when we spoke to 500 business leaders internationally, we found that the most successful companies are more agile. The top 10 percent of businesses by financial performance are 30 percent more likely to display agile characteristics. Specifically, they center on their customers, speed up time to value, design for simplicity, build to evolve and liberate their people.
By focusing on these five aspects of agility, these leading businesses have teased innovative ideas out of every part of their organization, quickly discovering what works to stay one step ahead. If others are to keep up, they must do the same.
As customers increasingly see companies and brands as a means to an end, brand loyalty is diminishing. This phenomenon is something we call the Customer 4.0 revolution – a world that’s led by customers who are more outcome-driven. Organizations need to be able to quickly pivot to their empowered customer’s evolving demands.
Pay attention to what customers are saying and listen to their feedback. This isn’t just about finding out what customers want, but also about meeting their unmet needs. For example, the most successful businesses interpret behavioral data to understand if their efforts are impacting customers as intended.
Bring customers into the innovation process. Co-creation goes beyond traditional market research tools like surveys and questionnaires. In today’s hyperconnected world, it can be as simple as testing ideas through social media, or as involved as running day-long workshops with customers to get in-depth feedback in person.
Don’t stop there. With all that customer feedback, top companies constantly look for ways to prioritize innovation against it. Our research showed they have a unique ability to continuously re-prioritize products and services based on analysis of changing customer goals and demands. And they do so quickly.
Did you know the top 10% of financial performers are 30% more agile than the rest?
New competitors and changes in customer behavior can come about almost overnight, causing sudden and dramatic disruption. For incumbent organizations, responding can be a problem – legacy processes slow the time it takes to get value from innovation.
Overcoming this problem starts by taking the learnings from centering on the customer and reorganizing resources to deliver customer outcomes. Mobilize quickly in response to competition, outpace competitors when it comes to rolling out improvements and invest in moving from idea to launch at pace. That means investing leadership priority into taking innovations from concept to launch more quickly, rather than leaving delivery to the doers.
With those at the top invested in removing barriers, it’s possible to focus efficiency programs on delivering differentiated products and services more quickly, rather than cutting costs. By setting up the systems and processes to adapt and experiment with new products and services, businesses can get much more value than they would from short-term cost savings.
Finally, nothing compares with the real world when it comes to understanding what customers really want. So, minimize your research and lab work before getting innovations in front of real customers to understand whether they’ll succeed.
Setting up systems and processes to take innovations to market quickly is one thing, but organizational complexity can hold efforts back. In fact, 60 percent of leaders we surveyed said “complex organizational structures with too many layers of management” are a barrier to responding to market change.
To answer this challenge, build teams around products and services rather than skills. By having all the skills needed to deliver an innovation working alongside each other, it becomes easier to collaborate and move quickly.
Support these cross-functional teams by empowering people to make decisions. Not everything needs to be flagged to the top, and front-line staff often have the best information on which to base a decision.
What’s more, empowering people will naturally lead towards a flat organizational structure with fewer layers of management. Focused management is a powerful guide, but excess management is debilitating to innovation.
It’s not just products and services that must be innovated, whole businesses need to evolve. Too often we see organizations reluctant to change course and committed to ideas that used to work but now seem dated.
Key to evolving in line with the wider world is having flexible technology platforms. Old technology stacks serve specific functions and processes, meaning it’s hard to evolve them in response to changing demands. Modern platforms, on the other hand, are flexible, modular and typically cloud-based, meaning it’s easier to evolve them at pace.
Such modern systems also make it easier to collect data intelligently, curating it so advanced analytics and artificial intelligence can inform decisions based on less obvious customer trends. This lets leading businesses accept changes at any point in the development cycle because they have the data to prove what will work.
Flexible platforms and better use of data can also have a profound effect on your people, helping them be more responsive to change. If the people in an organization aren’t adaptable, the organization won’t evolve.
While agile systems and processes are vital to spurring innovation, so are people. It’s the people within an organization who use their ingenuity to innovate. And to get the best out of them, businesses need the right culture. Sixty-eight percent of the most successful businesses recognize agility is about shifting a culture, not just implementing a process.
Achieving fundamental culture change is about defining values and behaviors and weaving them into the fabric of everything you do. There isn’t a one size fits all approach. But by listening to your people, you can take a user-centric approach to build a dynamic culture that empowers them to contribute their ideas, enabling greater innovation.
Leaders are central to this. They can create a vision for the organization so people can connect with its core purpose and ensure the technology infrastructure and workspace are set up for collaboration. When people work together around a shared vision, they have the freedom to come up with innovative ideas.
By centering on customers, speeding up time to value, designing for simplicity, building to evolve and liberating people, organizations can become more agile, driving innovation in the process. That’s because when we focus on what people really want, find new ways to deliver it quickly, remove layers of management, adapt systems to flex with changing demands, and give real power to the whole workforce, genuine innovations are free to develop.
Our vision is of an agile organization. Where people work in aware, alert, inclusive and responsive teams. Where we tune into and bounce off each other, attentively and rapidly responding to our customers and competition. Always one step ahead.
Are you ready to become an agile organization and unlock innovation?
Ken Toombs is the Head of Americas at PA Consulting