Optimizing your investment in innovation
Author: Phil Benedict, Customer Strategy Development, Closed Loop ConsultingSubscribe
Optimizing your investment in innovation
New ideas and ways of working are welcome, explains Phil Benedict, Customer Strategy Development at Closed Loop Consulting, but they’ll need to work within the context of the business if they are to make a difference
EVERY ORGANIZATION MUST HAVE A PURPOSE
At Closed Loop Consulting, we have always believed that an organization must discover, discuss and communicate their ‘Purpose’ to the entire company, perhaps even to their customers. Understanding the purpose of the company, as well as how each functional discipline or individual department contributes to that purpose is also critical to an organization’s success. Most organizations call this their Mission Statement. To grow the business, organizations will develop a Vision Statement that helps to define what it wants to become; it’s ‘New Purpose’. This new purpose is often driven by the competitive environment in which it finds itself and the imperatives of the changing markets it serves or wants to serve. The outcome of all this, if properly facilitated, is a robust Strategic Plan for the organization. An organization must keep its purpose and its strategic plan in focus always, as this should guide the decisions made regarding the funding of innovation.
INNOVATION GUIDED BY THE PURPOSE
At a recent aviation industry conference, there was a discussion about innovation for the airline industry, and that innovation should not be restricted to a set of requirements or business needs. I’m glad there are organizations like this with unlimited budgets and the resources to explore new technology. However, I don’t believe this is the purpose of an airline. ‘Innovation with a Purpose’, is why many organizations, including airlines, fund an R&D department. Most airlines depend on the supplier base to provide that innovation, and buy whatever it is that they are offering because it is the next ‘cool’ thing, or technology mandated by regulation. While this has been the way the industry has operated in the past, Innovation with a Purpose is becoming necessary to meet increasing airline customer demands, the growing competitive environment the airlines are facing, and the demand growth that airlines and IATA are forecasting in the next several years.
Finding innovative ways to solve business needs, as defined in the Strategic Plan, is how R&D borsa pays off for an airline, whether it’s done internally or externally. Everyone is interested in innovation – in innovative strategy, technology, products and services. Identifying an idea that can lead to Innovation with a Purpose, most often comes from within the organization. For example, two million suggestions were made in a year at Toyota through the employee suggestion scheme, and 85 per cent of them were adopted into the business. That could not happen without a strong, consistent Purpose. Utilizing the corporate knowledge found within the organization can produce amazing results. However, it takes strong leadership to recognize that corporate knowledge, to listen and to plan accordingly.
With all of the Strategic Planning sessions I have facilitated, it is apparent that most companies are great at identifying and defending their existing strengths, some of which do not include innovation. However, patents expire, consumer tastes change and competitors come up with new ideas. Not investing in innovation, regardless of how it is achieved, is in many cases the beginning of a death spiral from which it is very difficult to recover. The same can be said for Innovation without a Purpose. Reliance on innovation for the sake of it, has often led companies away from their Purpose, and into a series of expensive blind alleys. This occurs when there is no sense of purpose that guides the innovation process.
INNOVATION ON ITS OWN IS NOT ENOUGH
Innovation in the airline industry in the past several years has been focused on efficiencies of flight, and on the customers the airlines serve: all great things. However, many of those projects failed to provide the promise they had intended due to poor or unclear requirements. In 2005, Booz Allen Hamilton conducted a study of the one thousand biggest spenders on innovation – the companies with the largest research and development budgets around the world. They found no significant correlation with any measures of corporate success. None. Not profits, not revenues, not growth or shareholder returns. In other words, the simple decision to invest in innovation is not enough. How you invest, and especially how innovation serves a larger purpose, determines the value of your investment and the promise of a return on that investment.
When working with clients, we facilitate a process that keeps a focus on the Purpose of the organization and the departments that support that purpose; helping to identify internal suggestions and requirements, then linking them to others within the organization, who have the same or similar business needs, to develop a set of requirements from which the innovation will support the purpose of the business. The Big Data phenomenon in the airline industry makes this process an imperative for all airlines; otherwise the data will cost more than the value it was to provide.
RECOGNIZING THE NATURE OF THE BUSINESS
Purpose makes an innovator more aware or sensitive because it is itself a response to the environment and one that engages the innovator. We might even say that a purposeful response, if genuinely felt, is an innately innovative response because it provides a context for paying attention to the needs of the world outside, rather than technology for technology sake. How many times has a supplier invested time and energy in an airline to clearly understand that specific airline’s purpose, its business environment, the markets it serves, and how they operate? The airline industry is not a cookie cutter industry when it comes to operational efficiencies and customer service. Rather, each airline has its own unique challenges and needs.
BORROW FROM SUCCESS
The innovator has every reason to identify the essence of practices in other industries and repackage them for their own use; like Aristotle Onassis, who pioneered cruise ships by borrowing from the hotel industry. The innovator may reconfigure established components into new products, like the engineers at Sony who developed the Walkman. The innovator may glimpse potential benefits in new technologies, like Apple who worked on the graphic user interface and helped to create a disruptive new technology call the Electronic Flight Bag (EFB). He or she may simply see economic logic in a situation masked by current convention. This is why we continue to preach that airlines must not simply automate the status quo, but should first determine, ‘what problem are you trying to solve’.
SUPPORTING THE WHOLE BUSINESS
This focused effort to bring about change within an airline can only be accomplished by a facilitative approach that ensures all disciplines of the airline are included. The way the supplier base can best serve the industry is to provide solutions that meet a set of robust requirements and support integration of the airline as against the way it has often been done in the past, i.e. selling products to each department individually.
With the pace of technology advancements today, Innovation with a Purpose will have a dramatic effect on the competitive landscape in which an airline finds itself today and in the future, but only if it is designed and implemented at an organizational level. What a powerful position it is to clearly represent your requirements to suppliers based on a purpose and a vision as an organization rather than as just one department. If they have the insight to ‘Innovate with a Purpose’, airlines can change the way solutions are innovated instead of purchasing technology looking for a problem to solve.
Philip J. Benedict: Customer Strategy Development, Closed Loop
Mr. Benedict has over thirty years’ aviation and airline experience, including 15 years at Jeppesen. In 1995, he joined the Aviation Information Systems Business Unit of Computing Devices International becoming Director and General Manager from 1997. Phil became President of Spirent Systems Inc. and then VP of Business and Strategic Development at Teledyne and has worked at Cobham Commercial Systems. Phil has been recognized for his contributions to several industry activities, and is now responsible for Customer Strategic Development for Closed Loop Consulting.
Closed Loop Consulting
Closed Loop Consulting is a niche global aviation consultancy focused on the successful delivery of financially sound, strategically conceived, business driven and sustainable project and program outcomes for the operational divisions of the aviation industry. They challenge the status-quo and believe in doing things differently. Because doing the same thing over and over – and expecting a different outcome, simply doesn’t work. Closed Loop Consulting exists to make sure customers get their projects and programs done right – the first time.