Lack Of Standards - The First Barrier To Tackle

If you are responsible for the sector of innovation at your company, you probably understand that the results coming from your department's actions are mainly driven by very dynamic market variables. Yet, the title of the Chief Innovation Officer (CIO) means something quite different in most companies, which adds another step of freedom into our shape-shifting puzzle.

The truth is, the position of CIO is still an emerging trend, with market penetration between 1% - 5% according to Gartner's report. Lack of standardisation is mainly caused by a simple, yet very natural thing in business: the fear of unknown.

According to Gartner:

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Having a chief innovation officer creates executive accountability and enables effectiveness for executive leaders to implement the protocols, strategies, and support for an impactful innovation practice. Focused on business goals such as revenue, opportunities and reputation, a chief innovation officer or executive leader of innovation is best implemented on the board or reporting to the board, for seeking funding approvals directly in line with board priorities.

Beautiful description, yet far from reality. Most companies today hire or assign a CIO outside the board of directors, very often reporting from the middle-management position and so the innovation is managed midlevel, not at the executive level. Siloed teams, and project and event management minimize innovations’ impact to the business by rarely aligning to its goals. That is why, even if the CIO doesn't have any direct reporting (effective) influence on the board or higher management - the second thing he should do is to set up the right objectives for his role and activities.

I said the second, because the very first thing the CIO should do within the first 90 days in his role is to analyse all the barriers and resource capabilities residing in his company (or division).

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OKR - Your Most Powerful Weapon In Innovation Management

Adopting the objectives and key results (OKRs) framework for innovation priorities brings flexible goal-setting to convert innovation objectives and priorities of the organizations into concrete and measurable operational results. By aligning innovation with an organization’s OKRs, executive leaders can distribute the engagement and responsibility necessary for growth across the business. Of course in theory, because in order to make sure OKRs work in such way, organisations must adopt the Shared Responsibility Model to ensure equal responsibility and resource distribution for all innovation initiatives.

Objectives and key results (OKRs) are defined as a metric that outlines company and team “objectives” along with the measurable “key results” that define the achievement of each objective. OKRs represent aggressive goals and define the measurable steps you’ll take toward achieving those goals. They’re typically used to set quarterly goals but can also be used for annual planning. The rising popularity of OKRs is mainly attributed to Intel and Google, which have adopted this technique for their planning.

OKRs are set at the company, team, and individual levels. Here is an example:

Company OKR 1:

• Objective: Become the #1 most-downloaded iOS productivity app
• Key Result 1: Conduct a survey to identify the ten most-requested features and launch five of the top most-requested features by Dec 15
• Key Result 2: Conduct 10 user tests to identify UX issues
• Key Result 3: Show at least 50% improvement in satisfaction with UX (via customer survey)

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What are the differences between OKRs and KPIs?

They’re both three-letter acronyms focused on goal setting, so it’s understandably easy to confuse OKR vs. KPI. However, there are some notable differences between the two.

Here’s a quick breakdown on what separates an OKR from a KPI:

Objectives and Key Results (OKRs)

• Goals with metrics attached
• Set an entirely new goal and then identify the signals of success
• Used to lead and measure
• Often set and measured quarterly

Key Performance Indicators (KPIs)

• Standalone metrics
• Set only signals to apply toward an existing goal, project, or process
• Used to measure
• Measured on a continuous basis

If properly defined, the Key Results can be used as KPIs for different processes. We'll cover the topic of process and KR creation in the next article.

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Barrier-Driven OKRs

Imagine you are trying to build a Center of Excellence - the Community of Practice (CoP). COEs have emerged as a significant trend in modern innovation management, presenting a structured approach that centralizes knowledge and dedicates resources towards nurturing innovation. Your goal is to:

• Establish best practices for innovation.
• Cultivate leadership around crucial processes or technologies essential for driving innovation.
• Automate and improve Continuous Foresight activities

So how would you formulate the objective of such CoP? Because these things mentioned above are clearly not a description of any objective, they resemble a wishful thinking of an innovation director.

Here is a tip:

Every initiative in innovation management should correspond to a company's challenge (do not confuse with a problem). These challenges are distant growth goals, that your company can achieve only through innovation. Every challenge has a certain amount of barriers, preventing your actions from achieving the goal. Your objective, should define a way of tackling down these barriers.

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Defining Objectives

Identified organisation challenges, corresponding to innovation barriers, need to be sorted by category and paired with corresponding Community of Practice objectives in order to create a pair: Problem - Objective. Each objective can be defined in terms of feasibility risk. All potential risks associated with feasibility then must be described, listed and scored, giving your company a powerful tool to efficiently manage the way to the distant goal.

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At this stage, feasibility declares capability of mitigating certain Objective Barriers using available company resources. That is why the CIO should focus on comprehensive investigation of company's innovation barriers and resources in the first place.

Each Objective (change factor) requires the Change Impact Assessment on a scale in terms of the impact, from Low to Extreme. The assessment consists of the following criteria:

• Size of the change
• Complexity of the change
• People increase / reduction change
• System change
• Process change
• Organisation structure change
• Culture change

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Reasons to incorporate OKRs

Innovation OKRs drive stakeholder engagement in innovation practices and are key to aligning innovation with the overall business goals of the organization. By definition, OKRs set an unapologetic standard for measuring key results for organizations. setting and managing strategic goals, accountability via clear measurements and failures demonstrates how a clear purpose-built practice of innovation benefits the business. In practice, OKRs in innovation work only if an organisation can ensure an overarching investment policy (Focus Areas) for the company, aligning it with further innovation OKRs.

Innovation OKRs prioritize innovation across executive leadership and the organization through:

• Accountability: Having clear and explicit responsibilities in the process and outcome of innovation work allows for ownership, leadership, creativity, and a streamlined path forward toward the business objectives and priorities.
• Measurement: Setting goals that are clearly defined for leadership and teams allows for a transparent understanding of innovation’s intention. New routes to success can be decided with a clear objective in sight. OKRs are meant to be flexible and adaptable during the innovation process.
• Executive Buy-In: In the 2022 Gartner Justifying and Funding Innovation Survey, organizations report being most effective in the design and management innovation stages by obtaining executive buy-in.
• Key Stakeholder Engagement: Innovation OKRs set prioritized objectives across the organization, allowing for innovation to thread throughout and serve multiple teams in the process.

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Business Impact

Establishing innovation OKRs sets an executive-level mandate for innovation in the organization, pushing performance and promoting innovation while delivering focus, building cross-functional alignment, and tracking progress/success. In other words - this is the only way to properly set up processes for all innovation activities.

If you build processes for the company's sales strategy, why do you leave innovation in the realm of uncertainty and market dynamics influence, letting your company to burn unjustified amount of money on activities and things that don't even come in pair with the company's growth strategy? Did you (or your CIO) ever ask yourself - what am I really responsible for in this company? If your answer is "innovation" it means you are not effectively responsible for anything.

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Building OKRs is a must for every mature organisation, that wants to drive innovation purposefully.