3 principles of innovative organisations

As if we needed reminding, the exponential increase in connectivity and information sharing is fundamentally changing the way organisations operate and innovate. I learned recently that the rate of data consumption by users of one major mobile phone network is doubling every four months! That’s a phenomenal rate of growth and most organisations, let alone people can barely comprehend the impact this is having. And the smartest organisations are responding proactively to this trend and doing one or more of the following three things and reaping the rewards:

1. Default to Open

It is no longer viable to only to share information or resources with your partners on a need to know basis. In fact the opposite true. Increasingly there needs to be a clearly defined case for why you don’t open up. A fairly extreme example would be the Mozilla Foundation, makers of the wonderful Firefox Browser, who webcast board meetings and delegate significant chunks of decision making and product development (and other business issues) to their developer and customer communities. A less extreme but no less important example is Procter and Gamble’s target for 50% of all new product and service ideas to come from outside the organisation. Smart organisations default to open, rather than closed ways of working.

2. Focus on ‘who?’ as much as ‘what?’

All too often innovation strategies essentially seek to support ideas in a vacuum. In other words a panel or committee will assess which ideas they feel has the best chance of success and then invest money at them without enough consideration for the route to market or the unmet needs. The success of such strategies is arguably not better than random. However the best thing an innovator can have is a paying client, not cash, and so the best innovation strategies provide bridge finance not pier finance. For instance Cancer Research UK achieved a significant return on investment through building and supporting the development of a social ventures community which generated new revenue streams such as Open Gym, a social venture which runs gyms in parks. And Virgin Atlantic are learning how they can buy from as well as sell to their frequent fliers through initiatives such as V-Jam which lead to new innovations such as Taxi2, a taxi sharing scheme.

3. Engineer Serendipity

It is increasingly said that your competition can come from anywhere. And the solutions to your innovation needs may well exist in other sectors and organisations. And your biggest innovation opportunity may well be outside of your current core market. For instance Great Ormond Street hospital halved the number of mistakes made in their intensive care unit, by partnering with McLaren, who are themselves now working with the National Air Traffic Control Service to improve their ability to make predictions based on numerous data sources. There is way too much reinvention of the wheel within organisations and so untapped potential in their networks. And the smartest organisations actively share or scan as a way to discover their future core business.

So in summary, smart organisations know that innovation never arrives on your desk fully formed – rather needs iteration, socialisation and combination – and they open up, focus on building networks not ideas, and actively seek to spot new opportunities outside of their core business. To paraphrase Bill Clinton “it’s the ecology stupid”.