The Critical First Step of Innovation: Win over your internal customers

Innovation. It’s one of the hottest words on the lips of CEOs around the globe. “Innovate or die” is a mantra most senior leaders must live by, especially as competition heats up and business models shift. With today’s customers having full access to information anytime from anywhere, these well-informed customers have expectations that are constantly updating. This new customer norm (and the entrepreneurial companies who quickly capitalize on them) is driving the need to innovate. Reinvention - once thought of in cycles – has now become a normal course of business. Customers will not wait.

Executives in charge of innovation face a difficult directive: innovate, but whatever you do, don’t harm the base business! It’s an understandable mandate. Of course, you must innovate around your customers’ needs better than anyone else – that’s a given. And of course, you must not harm the company’s “bread and butter,” because the base business is how the company pays for the innovation in the first place. But how exactly do you innovate effectively while deliberately shielding those who are closest to the customer from the innovation?

Perhaps this very dichotomy is strangling innovation’s success…

Everyone knows that there is a battle going on for the customer, but there is an even bigger battle raging inside your organization – and it is this forgotten battleground where the war is truly won or lost. You can’t win over your customers if your ideas fail to get traction internally. After all, it is the power of your employees’ collective knowledge about the customer (your company’s “Organizational IQ”) that will determine whether or not your innovative ideas will be successful.

However, the things the company did to become successful in the first place act like antibodies that attack new ideas. Decision making processes, internal orthodoxies or beliefs about the customer or the competition, systems, political relationships, and capital form rules and “bumpers” that cement the efficiency of past success for the core or base business. Innovation, by its very design, challenges those norms.

Innovating Inside the company is a war of courage, both by those who accept the challenge to do something differently, and by those who act to defend the franchise that already exists. Over the last dozen years or so, conventional wisdom has dictated that innovation be counter-cultural and that the way to win that war is to actively work against the core engine, generally in order to force a seismic shift in the behaviors of the core. The hypothesis is that this inertia will eventually create enough energy and momentum to migrate your company’s business model just enough to allow it to pursue meaningful and permanent change.

I remember the attractiveness of this philosophy. As the executive responsible for instilling an innovation methodology inside a Fortune 100 company, I deeply believed that running counter to the core of an organization could produce the intended and necessary change, and that the result of this transformation would be a hotbed of ideas that would continue to revolutionize the industry, bringing immense benefit to the company and the customers we served. Subsequently, we created a small faction within the company charged with finding, nurturing, and maturing the next big ideas. A group of deeply committed individuals gladly joined in this journey.

In the end, however, what I found was that there was no shortage of ideas within the company – and no method of predicting from where or from whom they would come. In fact, there were so many ideas, and so many ways to gather them, that it became clear that ideas were not the problem.

The problem is the system – the processes, the talent, the organization itself – that allows an idea to live or die. At the heart of the innovation problem inside organizations is the battle with the culture, not the customer. And enabling the culture to serve the customer requires supporting actions.

This revelation prompted the creation of Innovating Inside and The ROIG Group’s “The 8 C’s of Successful Innovation.” Innovating Inside is a holistic system of deliberate integration, thoughtfully managed and anchored to two internal realities. 1) The organization’s culture and it’s interaction with innovation, and 2) the shareholders’ beliefs demonstrated by the valuation of the company, separated between how it is performing today and how it is expected to perform in the future.

Those who incorporate the 8 C’s of Innovation – implicitly or explicitly – into their innovation activities and tailor their innovation portfolio and approach to fill gaps in their organization’s results, will dramatically improve performance and return on investment from their innovation investments.