The structures and processes that have been put in place to help organizations run smoothly and execute repeatable operations are often challenged by new ideas and systems, which is why innovation naturally runs into conflict in existing organizations. But it is within an established organization that innovative ideas have the best chance to thrive. Startups win most of the mythical glory — but research shows that over 70% of the world’s most transformative ideas came from employees working within the organization.
Ideas that overcome the barriers to innovation in an existing organization gain access to scale, resources, and capabilities that entrepreneurs cannot easily match. In order to propel your ideas through the web of internal obstacles, you’ll need a strategy to predict and conquer organizational value blockers.
Even the best ideas can get blocked if they appear to conflict with some element of your organization’s existing strategy. Successful internal innovators find ways to present their ideas so they enhance the organization’s current offerings. You’ll want to identify potential areas of conflict, then decide how to deal with them. The key is to closely examine these eight elements:
Gordon Bell, former head of Microsoft Research, holds numerous patents and has seen the progression of many technology innovations. He explained the most common reasons established organizations reject new innovations: “If it is too close (to the current business model), it’s going to get killed because it threatens to cannibalize the business, and if it’s too far away, nobody wants to back it. You try to find a min-max, not too hot, but not too cold... You have to look at how close your products are to an existing product/channel.”
Look for the magic middle ground where the position is appealing to your current and potential members and where your organization can uniquely deliver. Take the unique assets your organization already has — current members, the value proposition, and a recognizable brand — and explore how you could benefit from or build on them.
The more differentiated your product is, the harder it will be for members to compare your offer to the alternatives. This lets you charge more, sell more and create additional value.
Think more expansively about what your membership, product or service really is. Consider the overlooked-yet-related services that are a part of your core product. Peloton doesn’t see itself as a player in the fitness business, but rather it’s a massive member organization within the fitness experience category and the relationship-building business.
Identify the list of products/services you offer and prioritize the attributes your core member cares most about. From this list, you can determine which product and what mix of product attributes your members love that have the potential to disrupt the marketplace without disrupting your organization.
Many of the most successful business innovations have succeeded not because their product/service was superior, but rather because they offered a unique pricing structure. Amazon Prime converted transactional e-commerce customers into members. Substack helps writers monetize their work by implementing subscription pricing instead of advertising.
Review the accepted way of pricing your existing products/services and consider options such as affinity, service level, subscription, freemium, membership or community access.
Most internal innovators cite placement or distribution as their most difficult challenge. This is because your company likely has invested time and resources into distribution norms. Innovations in placement have been the starting point for numerous breakthrough businesses. Take Wal-Mart, for example. The chain became a booming success by placing stores in rural areas while competitors, such as Sears and JCPenny, focused on cities.
Negotiation is key to overcoming your organization’s resistance to placement innovations. Understand your company’s current distribution model and open lines of communication with leadership and partners to propose any changes.
Promotion is everything you do to communicate your offerings to prospects, members, partners, and others. It involves marketing, sales, communications, and public relations. Challenges can come from strict branding guidelines that limit flexibility or approval lag times that slow you down.
You’ll need to engage early to get to know key players. Co-creating and developing awareness of guidelines can speed up approval processes and garner support for your innovation.
Physical experience is often overlooked in most organizations. What your members experience with their five senses (sight, smell, sound, taste, or touch) can be a major source of competitive advantage. Consider Hilton’s DoubleTree, whose warm, chocolate chip cookies have developed a passionate following.
Define the moments in your member’s journey where you might innovate their physical experience.
Operational inefficiencies are consistently identified as one of the most critical barriers to internal innovation. You’ll need to learn to embrace, understand and predict potential obstacles and then circumvent them.
Review areas such as program delivery, sales, customer service, human resources, and technology development. For each area, predict the process issues you may face and look for opportunities to create a strategically disruptive situation. Additionally, having change management practices in place can help your organization streamline updates.
I spoke to innovation expert Alex Osterwalder who told me that culture is essential to strategy.
“Very few companies deliberately design and manage their culture, and that’s key to everything you do ... without managing the culture, you will never get innovation,” he said.
People-focused policies are the most important factors in whether innovation efforts succeed or fail. Reflect on whom you want to hire, how you will organize them, your incentive system, and your culture.
These barriers can test even the brightest and most passionate internal innovators, but remember that by identifying and preempting them early, you can create something truly transformative. Think through each element of your organization — positioning, product, pricing, placement, promotion, physical experience, processes and people. Identify where conflicts may arise and where opportunities exist, and leverage them to propel your new ideas to success.
Kaihan Krippendorff has made a commitment to helping organizations and individuals thrive in today’s era of fast-paced disruptive technological change. He began his career with McKinsey & Company before founding the growth strategy and innovation consulting firm Outthinker. His growth strategies and innovations have generated over $2.5B in revenue for many of the world’s most recognizable companies including BNY Mellon, Citibank, L’Oréal, Microsoft, and Viacom.A best-selling author of five books, most recently the Edison Award nominated, Driving Innovation From Within: A Guide for Internal Entrepreneurs. He is a member of the prestigious Thinkers50 radar group – A global selection of the top 30 management thinkers in the world to look out for. Thinkers50 also recognized Kaihan as one of the 8 most influential innovation thought leaders in the world considering him for a Distinguished Achievement Award in Innovation – given to the person in the world that has contributed the most to the world’s understanding of innovation in the past two years. Kaihan is currently ranked the Thinkers360 #1 Global Innovation Thought Leader and the Thinkers360 #1 Global Business Strategy Thought Leader in 2019. Kaihan is founder of the Outthinker Strategy Network, an exclusive network of Chief Strategy Officers from large organizations with over $1B in revenue. A trusted advisor to these Fortune 500 Strategy Executives, Kaihan is known for facilitating powerful conversations that create strategic clarity and yield actionable and impactful ideas for this diverse cross-industry group. Amidst his dizzying schedule of keynote speeches, consulting projects, ongoing research and writing, Kaihan still finds time to teach at business schools throughout the US and internationally (including NYU, FIU, and Universidad Americana). A regular contributor to Fast Company and other major business media outlets, Kaihan is an advisory board member for a blockchain-powered transportation platform, an international food processing/exporting company, and a B-corporation focused on sustainable products and lifestyle. He holds degrees from the University of Pennsylvania School of Engineering, Wharton, Columbia, and London Business Schools and a doctorate in strategy. With a mother from Bangladesh and a father from Germany, Kaihan brings a holistic, diverse, and global perspective to everything he does. His work has brought him to 58 countries all over the world. He speaks three languages and has lived or spent significant periods of time in Asia, Africa, Latin America, Europe, and the Pacific. He lives in Greenwich, Conn., with his wife and three children. Nobel Peace Prize winner Mohammad Yunus has said, "Kaihan shows that with a compelling idea anyone can change the world" and that message has made Kaihan one of the most sought-after speakers on the topics of business strategy, growth and innovation.
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