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The D Series: Tools to succeed at innovation

Innovation Culture

There is great interest today by organizations in developing innovation cultures.  And why not?  Creating a mechanism that perpetually harnesses the internal brilliance of your employees is a powerful thing.  Not only is this impactful for employee engagement but, done right, it will continuously delight your customers who will in turn delight your bottom line.

Creating an innovation culture is viewed by most as a daunting undertaking.  While characterized by complexities requiring detailed planning and skillful execution, it doesn’t have to be overwhelming.  Here are some simple techniques that can get you started.

Step One:  Have a Compelling Vision

Having a compelling vision starts with being crystal clear on what your future destination is, including the path to achieve it.  While the future destination should be aspirational and encompass emotional attachment, it must be accompanied by step by step plans outlining the direction in detail.  Your compelling vision should be reflective of your brand and resonate equally with your customers and employees.

Step Two:  Communicating the Vision

Once the vision is created and detailed, a robust communication plan needs to be developed and delivered to begin cascading the vision throughout the organization.  This goes far beyond sending a series of e-mails through various levels of your company.  A successful communication plan includes identification of the types of stakeholders as well as consideration for the various mediums, frequency, timing as well as messaging.  The heart of the communication should address the emotions that customers and employees will experience on the journey to the future destination.  Unaddressed emotions, good or bad, can stall the best planned initiative.  Communicating the vision is one of the first steps in creating a shared goal.

Step Three:  Always Keep the Customer at the Forefront

Like any journey, as your plan for creating an innovation culture unfolds you will face opportunities requiring pivots.  When faced with these junctures, be sure to always keep the customer in mind when determining the best route.  It is easy at times to become distracted by shiny objects along the way.  If you truly understand your customers and use them as the talisman for decision making, you should remain centered on the correct path.

Step Four:  You Just Have to Ask

Part of creating an innovation culture involves tapping into the hearts and minds of your employees.  And who better to understand how to delight your customers then those who work most closely with them.  And the best part, all you have to do is ask the right question to be able to mine this greenfield of opportunity.  Time and time again I am amazed at how few organizations have learned and are utilizing the powerful technique of asking questions.  If you haven’t yet tried this, here’s one to get you started.  Ask a front line employee “If you had a magic wand and could change one thing to make our customers’ lives better, what would you do?”.  Ask it often enough and you’ll begin to see where the pattern of innovation opportunities exist.

Step Five:  Celebrate Successes

Creating an innovation culture takes time.  Along the way you need to mark the milestones with celebrations.  This will help refuel your employees and reinforce the new behaviours you are trying to operationalize into your daily routines.  When creating an innovation culture you will need to celebrate near successes as well as the slam dunks.  Positively calling out selective “almost” wins will help reinforce “trial” behaviour and increase tolerance for risk by reducing fear of failure.  All essential characteristics of an innovation culture.

Creating an innovation culture is one that engages your employees to continuously delight your customers.  While not a simple undertaking, the destination is worth the journey and these five steps will help you get started.

What happened to the good old days of assets and profits driving valuation?

Originally published on October 2, 2015 as a Guest Column in The Globe and Mail:

It’s taken me a few months to get over my shock at the fact that a recent equity offering valued Airbnb at $25.5-billion (U.S.). That’s more than most hotel industry giants, such as Marriott International, Starwood Hotels & Resorts or Wyndham Hotels and Resorts, and, depending on the day, about the same as Hilton Worldwide.

I’ve been trying to find the words to describe this valuation, but the only one that comes to mind is “ridiculous.” Yes, I’m an innovation guy and a huge believer in the power of digital and the sharing economy. But, the finance guy in me cannot figure out a true rationale for ascribing such value to a seven-year-old company with few assets and growing annual losses.

What happened to the good old days of assets and profits driving valuation?

At its core, Airbnb is simply a technology-based booking system that matches renters and providers of short-term accommodations. This is a model that can be easily replicated.

I believe that one of the great hoteliers listed above should have already pioneered this niche. They all have different brands in their chains, serving different markets. One of them should have created the “lifestyle” or “experience” banner that does what Airbnb does – matching travellers with locally owned “rooms” that bring travellers closer to local people and culture.

All of these large hoteliers have the ability to book rooms online. They also have existing systems to review and monitor rooms, service, and customer satisfaction. Should one of them step into this space, I believe that Airbnb will quickly become a financial afterthought.

So how does this relate back to hard-working entrepreneurs like you and me, who are just trying to create some value for others and build a business that will fund our retirement?

In today’s unpredictable, trend-driven world, you have to ignore the hype and put caution first.

Entrepreneurs all dream of the big payday that comes when they sell their business to a motivated bidder. For some, that day will come. For most of us, however, the big cheque will remain just a dream. Most businesses haven’t been engineered to thrive, years from now, without their current owners. The doors simply close and the lights go out one last time.

Worse, many entrepreneurs simply aren’t financially ready for retirement. Their savings are light, because they’ve reinvested in their business in the hope of one day reaping a huge bonanza. So what happens next? The burden of retirement becomes shared by your whole family.

Sorry for the downbeat picture, but it’s one that I’ve seen repeated all too often. And it’s a storyline that’s exacerbated by what I see as the new investment algorithm: Hype > Revenue + Margin + Profit. All your work can be undone in a few months by focused disrupters or simple hype.

The good news is that there are at least two distinct ways to guard against retirement aftershock.

The first is to work hard to ensure that your company remains relevant. This may take more direct action than you’re used to. As Steve Denning reported in a Forbes article, “The average life expectancy of a Fortune 500 company has declined from around 75 years half a century ago to less than 15 years today, and heading towards five years if nothing is done.”

Whatever success you’ve enjoyed in the past, there is no more resting on your laurels. Stir up your team, re-engage with your customers, make things happen, create more value. And keep on pushing and prodding till the day you hand over the keys.

The second strategy is to think of your business as just another employer, and plan your finances accordingly. I have never believed in tying up all of my hard-earned capital in my business. Take some out, put it away and save for retirement (as the commercials tell us). What’s the worst thing that can happen? Significant savings and a big payday? I’ll get over it! Bottom-line: Global finance has a new valuation tool – hype. But it’s old-style asset-building that can help fuel your retirement.

Your brand should add something to consumers’ lives

The Canadian Business Top 25 Best Brands in Canada list for 2016 says to me that it takes more than size and huge resources to win loyal customers.  I admit to being surprised and heartened that brands like Imax, Saputo, Lululemon, Cirque de Soleil and Mountain Equipment Co-op have earned recognition.  Movies, cheese, yoga, mountain climbing and the circus… all of them friendly lifestyle brands.

It made me ask myself, ‘What do good brands and good friends have in common?’  They are both honest with you.  You can count on both of them to be consistent.    They’re available when you need them.  They make you believe that you matter.  And maybe most significant of all: spending time with them leaves you feeling better for the experience.  They add something to your life.

We know, as consumers, that our bank, our gas station, our grocery store and our internet provider are not our friends.  They are businesses who are beholden to their investors.  But we do have relationships with them and they can strengthen those relationships with us by modelling their ‘behaviour’ on the same qualities we look for in our friends.

As you develop or re-invent your corporate brand, you will be well served by surrounding your customer transactions with honest, reliable, supportive experiences for them.  If your customers can count on your brand and trust your brand, the chances are much increased that they will come back and also tell their friends.  In the end, a brand relationship is a people relationship forged between your people and your customers.  The rules of engagement aren’t really that much different than friendships.