Question
For the purpose of this question you should visualise yourself as a Marketing Consultant with a corporate client who is concerned about their inability to create new products and services. They are also concerned about their slowness in bringing new products and services to the market place, compared with the innovation and speed demonstrated by some of their competitors. Your client has one questions :what do we have to do in order to create an organisational climate which is characterised by innovation and speed? Draft your reply , in the form of a discussion document, addressed to your clients Marketing Director.
TO: The Marketing Director, ABC Co
FROM: Marketing Consultant
DATE:
1) Terms of reference
The specific concerns to be addressed are:
(i) ABC’s inability to create exciting new products and services
(ii) ABC’s slowness in bringing new products and services to the market
I will therefore consider the reasons that may lie behind the apparent lack of innovation and speed in the light of an internal and external audit. I will then provide recommendations for action needed to address these corporate weaknesses.
The nature of innovation
Innovation as a term defines anything which is new, whether transformational or incremental, radically different or merely a development from what has gone before. The processes of innovation are applicable to the organisation itself, its structure and ‘modus operandi’, but also of course to its products, services, marketing techniques and segmentation models. In short, innovation deals with the management of change.
Innovation is strategy based, it depends on good internal and external linkages, and it only happens when the organisational culture supports it and provides the enabling mechanisms for it to take place.
2. Analysis
By using the 7S Mckinsey model, the analysis will seek to expose the links between the structures, processes and culture of an organization, the opportunities for innovation and the competitive and market environment in which the organization works.
2.1 External factors – macro and micro
A full analysis must be undertaken of the environmental factors impacting on ABC’s business.
(i) Macro factors
Political, legal, economic, global, socio-cultural and technological factors must be examined. It may be that ABC have not embraced key technological developments relevant to their industry, preventing them from introducing new products speedily. The organisations also needs to be aware of any advantages they could get by working in a specific local or international environment? Some nationalities have particular skills.
(ii) Micro factors
The market, the competition, customers, suppliers, distributors and stakeholders must all be explored for their impact on ABC’s performance. For example,
Do ABC’s employees have a sufficient understanding of current market conditions and the needs of their customers?
What is happening in the market and what are their competitors doing?
Does the organisation know how they compare to their competitors
Is the organization bench marketing – 7Ps, R and D, and other areas? And are they learning from their competitors?
Is the company carrying out lengthy product research that enables the competition to steal their ideas?
Are they locked into a distribution relationship that prevents them from providing delivery promises such as ‘same day service’?
Have they an established network of relationships that provide them with a constant supply of suggestions about new product developments and ways in which to improve their services? For example, has the organisation developed any relationships with: universities, customers, distributors, suppliers, joint ventures, partnerships etc ?
Has an analysis been done on the key Opportunities and Threats emerging from this?
2) Internal factors – based on the 7S McKinsey Framework
2.1 Strategy – Successful innovation is strategy based.
Is there a director in charge of innovation on the board?
How does innovation strategy link to corporate strategy?
Are there clear objectives as what the organisation wishes to achieve ?
Is the search systematic?
Are their formal or informal procedures? Do they work?
How many man hours are given to innovation?
How many products have been launched over the past one, two and three year periods?
What is their rate of success?
How much revenue and profit has been generated by new products?
Is the company adopting a follower position ( me too) or is it taking a truly innovative stance and establishing a market leader position?
How much money is invested in innovation?
How is the organisation ensuring they keep their competitive advantage?
What does the product portfolio look like? If you could draw a Boston Consulting Group matrix, would they be dogs, questions marks, cash cows, dogs?
What do their product life cycles look like?
If you mapped them on to the innovation and diffusion curve would their end users be innovators, adopters, early majority, late majority or laggards?
Has the perception of their users been tested? And if so, have the products been repositioned?
Are there customer satisfaction measures in place – was it what the customer wanted?
2.2 Shared values
Successful innovation involves a learning process which integrates key behaviour into effect into effective routines.
• Is there top management commitment?
• Is there a clear sense of ownership and shared vision ? Is innovation places at the heart of the company culture?
• Are employees market-focused and encouraged to think of new ideas an d how to approach their work in a more innovative way?
• Is the culture of innovation translated into job descriptions, targets and day-to-day activities?
• Is success rewarded? And are key people recognised and supported?
• Is there a willingness to celebrate failure by learning from what goes wrong rather than punishing those involved?
• Does the culture support a degree of freedom that allows staff to experiment?
• Is there a culture of can do, and decision making – or are things always waiting to be actioned?
• How quick is the decision making – do people do what they say – or do people have to leave in order to carry them forward?
• Time management is an aspect of culture – does the organisation set realistic frameworks? And are people given time to think, reflect and be creative?
2.3 Structure
Successful innovation needs the appropriate structure.
• ABC should examine the nature and flexibility of their organisational structure, does it support innovation?
• Is it common practice to create ‘project teams’ when an idea for a new product or service is conceived?
• Is there a board appointment – an innovation director?.
• Does the organisation lend itself to secondments of key staff if the need arises?
• Is it possible for all employees to make decisions and/or request advice or authorisation in ‘real time’?
2.4 Style (of leadership and management)
• Is ABC’s leadership sending out the right messages about responding to market needs through their communications and by setting examples?
• Does the leader model the right behaviour ?
• Does the leader support innovative behaviour by ensuring three is an atmosphere of trust, honesty, reliability, stability – so that ideas can be developed, people have the freedom to speak up and be creative?
• Does the leader support the empowering of staff?
• Are managers committed to managing change or preserving the status quo?
• Is multi skilling and training supported?
• Do the leader know which values they support and are mirrored into the organsiation:
- innovation
- cost reduction
- market share
- profit
- sales turnover
- training
- creativity
- customer satisfaction
- customer loyalty
- initiative
- entrepreneurial spirit
- team working?
2.5 Systems
Successful innovation depends on good external and internal linkages
Is communication effective – does it go vertically, horizontally and in a two way mode?
Are their formal and informal procedures for collecting information internally and externally?
Are there formal and informal procedures for supporting relationships with the external environment?
How far are employees involved in continuous incremental innovation. For example are their formal mechanisms for finding and solving problems, are these methods linked to monitoring, measurements and appraisal? How successful is this? And are these linked also to customer satisfaction?
• Are systems are compatible with innovation and speed. ?
(This applies to recruitment, induction and reward policies as much as methods of disseminating information or making decisions. )
• Does the induction process introduce staff to the type of innovative behaviour the organisation expects them to exhibit?
• Are new staff told the rewards this type of behaviour receives?
2.6 Skills
Some people may not be naturally innovative – they will need to be trained. Innovation involves change, change can be painful – are people introduced to the notion of dealing with a more ambiguous environment?
• Are people trained to be innovative and creative?
• The nature of the training needed might cover areas such as creativity, speaking in public, making presentations, technology, coaching, time management, handling difficult customers, negotiation, handle conflict and the ability to deal with differences of opinion.
2.7 Staff
Individual
• How well do individuals and groups within the organisation function in their roles?
• Has any role analysis been carried out with staff to ascertain any of the following:
- How they perceive their role and their responsibility to innovate? Are they self imposing barriers on their own creativity, making unwarranted assumptions, failing to challenge what is obviously wrong, being negative?
- Whether they feel there are barriers in the organisation preventing them from being more innovative? Are staff encouraged to think up new ideas? And when they get new ideas are the ideas acted upon? Are there pressures to conform that inhibit new ideas, does the group process make people feel foolish if they step out of line?
- Whether they are resisting showing more innovative behaviour because they feel insecure? Frontline staff may feel motivated and have the competence to make speedy decisions to resolve customer queries – but without the willingness of line managers to empower them, staff will be frustrated in taking the initiative
- Are people involved early enough?
Intra group and inter group
• Is there any intra or inter group conflict preventing innovation and processes from speeding up?
• If there are tensions within or between departments these need to be addressed. An unwillingness to consult, communicate and liaise will certainly result in misunderstandings and delays.
• Is enough time and other resources given to people to do this In a market place where speed is all-important this will have a direct impact on business survival and success.
• Do you need a specially dedicated team that concentrates on innovation?
• Are their mixed role teams? ( see Belbin)
• Do they use cross functional teams?
4) Recommendations – how to create an organisational climate characterised by innovation and speed
• Execute research into the external factors affecting the organisation as outlined in the analysis of the macro and micro environment. There may be opportunities to adapt competitors’ products, exploit technological developments or research customer segments. Make sure you do some benchmarking.
• Execute research into the internal factors affecting the organisation as outlined in the Innovation Audit above. There may be opportunities to develop dedicated innovation teams, reduce systems bureaucracy, decrease the research timescale, outsource tasks and build better relationships.
• Analyse gap between customer-centric goals and reality- through individual
interviews, group interviews – a service gap analysis.
• Managing change
Based on what is found, for example the blockages are coming from outside the organisation, then within the organisation processes, group and inter group and individual behaviour . This will enable the organisation to help define what the problems are and help them to buy into the process of change.
Implement training programme that focuses on innovation and introducing a creative climate along the following lines:
• Define core competences, shared values and strategic vision that will endorse an innovative culture in both product development and process innovation
• Identify how success will be measured
• Ensure structure and systems support this
• Develop the style of managerial behaviour needed to support core competences and values through skills training
• Implement standards and further skills training; motivate staff to participate through linking into job descriptions, appraisal and reward schemes
• Make sure that all new staff who are recruited have profile conducive to the culture and are inducted into it
• Develop an internal marketing plan to ensure two-way communication to ensure that the process of change is kept in mind and becomes part of the culture so that
The organisation makes up new stories and myths about itself
- people say yes instead of no or yes but
- and people learn how to turn negative experiences into positive ones and make them something they can learn from
- break through habitual ways of thinking and find new ways of looking at things
- find ideas themselves and encourage them talk about them and develop them
- train people to learn ways of handling people who may disagree with them so that they learn how to manage conflict and get the resources they need to develop ideas
- train people how to present and talk in public
- teach them how to manage projects and make a plan
- encourage people to improve themselves
- help people to recognise the individuality of their customers so they can be truly innovative in meeting their need s – so we get Real Relationship Management
- create a climate of trust where being different does not mean possible exclusion from the group
I would be happy to advise ABC on the specifics of implementing research, training, a customer care programme and/or an internal marketing plan. However, it needs to be understood that changing culture will take a considerable amount of time.