Typically, three factors influence the need for innovation in any organization: strategic themes that influence a company’s market or industry, technological developments that create opportunities and threats for current solutions and offerings and business model disruptions that create a need or opportunity for change.
Especially in the rapidly digitizing landscape, leadership in organizations needs to be constantly aware of the potential for change, whether driven by threats from competitors and new entrants or from opportunities that allow the organization to retain or regain its lead in the market. This awareness is driven both from a top-down approach and from the bottom-up learnings that come from innovation execution.
Top down, leadership has a strategic responsibility to present a vision for the future and a mission to obtain a specific position in that future market. The vision of the future market is fed by knowledge of relevant global industry developments, technological development and competitive actions in the current market. This vision is both reinforced and challenged by the findings of innovation within the organization. Innovation, therefore, is a double-edged sword: it serves as a control mechanism to test management hypotheses on its future vision and at the same time it serves as a discovery mechanism that presents its findings to management in order for it to refine its vision.
The Continuous Innovation Framework serves a role in exchanging this flow of information between the shop floor, where actual findings are being made, and senior management that seeks to translate vision hypotheses into concrete missions. The Innovation Coaches play a pivotal role in this exchange of information. In the upwards flow, they translate the results of current innovations into key learnings and best practices which they present to the leadership during the Innovation Day. In the downward flow, they safeguard the execution of leadership’s Value Goals, Focus Areas and Challenges into concrete innovative action.
Strategic themes are major themes that are of interest for the organization, such as major industry shifts, new legislation, changes in customer behavior etc. Examples of strategic themes may the global shift to renewable energy, GDPR legislation etc.
Technology drivers describe changes in the status quo initiated by the development or availability of new technologies in the marketplace. Even when these developments are not yet impacting the market they may require attention to research their future potential. Examples of technology drivers are BlockChain, Internet of Things, Augmented Reality, self-/driving cars etc.
Business Model Disruption
Business Model Disruptions describe new ways of offerings of products in the market that significantly impact the current way of offering products and services into the market, or to new customer groups. Examples are the quick rise of subscription-based business models (such as Spotify for music), servitization of software (greatly impacting the distribution based/upgrade business model) or the home-delivery model.