Systematic growth and innovation amid uncertainty

To stay competitive in today’s fast-changing markets, companies need to be able to consistently innovate their business and in many industries even redesign their core business model. In order to do so, companies require a steady inflow of innovative and disruptive ideas as well as the ability to systematically transform these ideas into marketable offerings. The main challenge: there is often widespread risk aversion and fear of uncertainty at all levels of an organisation.

Systematic growth and innovation amid uncertainty

In a time when markets are increasingly competitive, and the cycles in which new and often disruptive offerings are being brought to the market are getting shorter, successful and consistently innovative companies rarely root their success in a few big strategic so-called “make-or-break” bets. More than ever, they depend on their ability to generate innovative ideas and to develop them into fully functional solutions for the market quickly, reliably and with manageable risk. As a matter of fact, sustainable advantage in competitive markets does not come from the superiority of any particular invention, but from the ability to develop innovative ideas systematically as well as to learn from mistakes during the development faster and more efficiently than competitors do.

Most top management teams struggle to truly transform their organisation into such innovation champions. The major obstacle is that the generation and the development of innovative ideas happen under highly uncertain circumstances, usually requiring a significant portion of risk-taking, rapid decision-making and acceptance of failure at all levels of the organisation. However, the reality in most organisations is that people generally have substantial risk aversion and do not know how to manage uncertainty; whether in management positions, where the fear of wrong decisions and loss of influence hampers a systematic and controlled development of innovative ideas; or within the development team, where the fear of failure limits creativity and prolongs the development process in an often inefficient way.

As the generation and development of innovative ideas is a process of ongoing discovery amid uncertainty, innovative companies create environments where discovery can flourish. These environments involve pushing boundaries, generating insights and conducting small and fast inexpensive experiments – all embedded in a systematic process of bringing new offerings to market quicker, more reliably and with less risk.

At Implement, we apply the Strategic Agility approach to support our clients in the development of the environment necessary for systematic innovation by establishing the structures, processes and tools to overcome the obstacles when dealing with uncertainty.

At a top level, we initiate and guide a strategic dialogue to help the top management to articulate a clear ambition and the corresponding strategic guidelines for its realisation, collectively carried by the top management team. To get this clarity on where the journey is headed is a prerequisite for achieving the goals and objectives for innovation in an organisation.

We then focus on increasing top management transparency and attention to innovative initiatives in order to facilitate rapid decision-making, dynamic resource deployment and strategic steering of individual initiatives. For this, we often introduce initiative portfolio management (IPM) which fosters a dynamic and highly effective approach to strategy.

At the level of individual initiatives, we count on our proven toolset for the experimental and discovery-oriented methodology GRIND (short for “Growth Initiative Development”). By carefully building hypotheses, performing controlled experiments and deriving conclusions from the collected data, we guide our clients through the process of reducing uncertainty for a specific growth opportunity, moving them systematically from the “back-of-the-envelope” idea to a profitable offering in the market. As the feedback from a CEO of one of our clients shows, this approach proves to be very effective.

“When we first realised that we would have to tackle the challenge of lacking growth in a more profound way, we thought that this would be a neverending construction site. However, Implement managed to bring us right on track from day one, pushing boundaries within our management team and the entire organisation in a thoughtful, but systematic way – finally allowing us to get a grip of our innovative initiatives and to alter the structures accordingly in order to truly boost our development of high-potential growth initiatives.”

CEO of one of our clients

There are five key measures that have proven to help our clients to systematically deal with uncertainty at all levels of their organisations:

1. Setting the stage for innovative thinking:

Communicating high management attention, articulating the pursued ambitions and establishing the clear expectation that innovation will push boundaries can be very effective. Demonstrating that it is okay to seek solutions under uncertainty, reimagining some of the organisation’s most fundamental assumptions about products, customers and business models, the mental space necessary for innovation is created and allows employees to dare to think differently.

2. Carving out time:

“What prevents you from moving more new ideas to market?”, we ask people who work for large companies. The most common answer is: “I just don’t have the time”. Providing the necessary resources for the development of growth initiatives is key. This starts with the initial make-up of the teams and needs to be guaranteed throughout the whole project. 

3. Experimenting systematically:

The process of experimentation when developing innovative ideas basically helps to reduce uncertainty – it just uses a different set of tools. The key concept is to test key assumptions in carefully designed low-risk market experiments in order to learn and adapt the developed offering. Following this method reduces the risk involved in bringing innovations to market by offering a better tool for making tough choices – a process for systematically testing critical assumptions with customers. Viewed through measures other than volume, margins, market share and revenue, the value of investing in experiments becomes clearer. Business experiments, successful or not, generate three kinds of value:

  • The first is insight value – that is, the insight into the unknown that comes from reducing uncertainty.
  • The second is option value – the option, upon resolving an unknown, to pursue, alter or abandon a course of action.
  • The third is strategic value – the value of relationships built with potential customers during the experiment as well as the value of knowledge gained to improve future experiments.

4. Limiting risks when experimenting by putting boundaries around uncertainty:

That means releasing some constraints while establishing others in order to guide the development team. A couple of basic tactics can be particularly useful here:

  • Setting a “time box”: Fixing time, usually two or three months, for resolving the most basic uncertainties surrounding an innovation project.
  • Managing decision points: When results of experiments are not as expected, and time is running out, it is the responsibility of the top management team to help the team evaluate the results honestly, change direction if needed, and sometimes pull the plug, freeing up mental and physical resources to try another approach.
  • Setting up guidelines: Far from hampering innovators, common-sense guidelines for innovation and experiments can speed up the process by reducing bureaucracy, as the development team is free to proceed without asking for permission every time.

5. Removing barriers within the wider organisation:

Beyond carving out time, the team’s progress down the innovation path can be accelerated by removing organisational barriers. Since the wider organisation often throws up roadblocks in response to perceived risks, educating employees at all levels and establishing a common language is crucial. Most managers understand both the urgency to innovate and the difficulty of doing so – however, they fear the risks to their job and area of activity. Relieving this anxiety can go a long way towards decreasing resistance, if not actually getting people to volunteer resources.

If your organisation also wants to build an environment where uncertainty is dealt with in a systematic manner, we are happy to tell you more about what we can do for you and your company.

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Implement Consulting Group