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Long-term competitiveness derives from your ability to build core competence at lower cost & more speedily than your competition. This relies on your management’s ability to consolidate corporate wide technologies & skills to enable the business to adapt quickly to changing opportunities. It relates to the collective learning of your organisation and its ability to coordinate diverse operational & production skills and integrate multiple streams of technology. Core competencies translate into value for your customers. They do not diminish with use and are enhanced as they are shared & used.

How to be More Innovative

Becoming innovative is hard. Employees learn through experience, trial and error. It is important to ingrain a philosophy of innovation into your business strategy and operations. This requires -

  • A “tolerant of failure” leadership style (of not
    punishing failure unless repeating the same mistakes)
  • A business culture of:
    • market orientation
    • team work and collaboration (internal and external)
    • skills training and development
    • networking
    • alignment of performance measures, recognition and incentives to encourage innovation

Building Core Competency in Innovation

CORE COMPETENCY IN INNOVATION:
  • provides potential access to a wide variety of markets.
  • makes significant contribution to perceived customer benefits of product.
  • is difficult for competitors to imitate (harmonise complex technologies and production skills). 

Building core competencies in innovation requires commitment of time, energy and attention. It is critical to identify and manage innovation through continuous improvement. It can span decades.

Core rigidities which inhibit innovation
  • Certain areas are emphasised over others.
  • Institutionalised core competencies.
  • Habitual actions.
  • Rigid rules of thumb.
  • Firm develops narrow range of competencies.
Core rigidities inhibiting innovation are overcome by:
  • Interacting with customers.
  • Developing and pursuing broader strategies.
  • Reinforcing variability, slow socialisation and introducing new people to keep rules of thumb from becoming dominant.
  • Scoping out emerging markets and feeding back insights.
  • Reviewing project successes and failures.
  • Maintaining attention to problem solving – not witch-hunting
  • History matters. Dismissing past practice may increase alienation. Do not throw the baby out with the bath water. Build on strengths.

Forming the Right Team

It is important for the team of technical, marketing, factory and administration staff to sit down at the start and during innovation projects to determine what needs to be done. This can be hard, partly because different functions have different motivations:

  • Manufacturing – standard product, volume, get cost out, improve quality.
  • Marketing – want to give every customer a bespoke product.
  • Technical – always see a need for further work and never want to finish.
  • Administration – want to control or reduce expenses.

Teamwork can be improved by development of effective  team working skills. But it should not feel comfortable or something is wrong.

Innovation Teams

Often skill sets are connected to business functions. Teamwork is required to integrate and connect technologies to create value. There is a paradox that teams need to be focused and specific but must still be able to shift and have a degree of flexibility.

THIS INVOLVES CREATING TEAMS WITH, OR SUPPORTED BY:
  • Market orientation, for product match to market. (Involve customers, team visits to customer and end users.)
  • Commitment of top management. (Project champion. Time, money and resources.)
  • Leadership. (Heavy-weight project manager, coach and facilitator.)
  • Sense of participation (Cross-functional group, consensus, deal with conflict positively, problem solving skills.)
  • Multi-level representation (Include people from the “coal face” who do the work, creative skills, etc.)
  • Relative autonomy. (Encourage entrepreneurship, challenging assignments.)
  • Team motivation. (Alignment of KPIs and incentives, recognition, career opportunities and rewards.)
  • Networking and seeking external expertise and knowledge (Use of outside resources, suppliers, industry & information.)

Consequences of organisational structural linking mechanisms

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 big@aigroup.com.au