Innovation as a Virtuous Cycle

by Kevin Riley

Editor’s note: In this series, we share personal stories from business leaders in a new book by Luis Solis; Innovation Alchemists: what every CEO needs to know to hire the right Chief Innovation Officer

Producing value in one step of the innovation cycle creates value and opportunity in other steps

I have been a Chief Innovation Officer (CINO) for an $8 billion company. The insight I give here is related to that role as the highest corporate officer whose focus is enterprise innovation. The role as I see it is part advocate, part supervisor, and part inspector. The primary job of a CINO is enterprise innovation. This means that as the CINO, you are not the sole source or arbiter of great ideas. Rather, your role is to ensure the “system” in which you work becomes a self-sustaining value creation engine.

So how do you create a self-sustaining value creation engine with raw materials that are not necessarily suited for innovation? This is where the idea of innovation as a virtuous cycle comes into play. A virtuous cycle is a complex chain of events that reinforces itself through a feedback loop and produces favorable outcomes. Its opposite is a vicious cycle. Each of the parts of the virtuous cycle creates individual value, as well as shared value to the whole ecosystem. Thus, the sum of the parts becomes somewhat greater than the whole. The virtuous part is that by producing value in one step of the cycle, you give rise to value and opportunity in the others. Done right, innovation as a virtuous cycle catalyzes the next “right” ideas.

Idea Source

Idea Sources are the people – such as your customers, suppliers, competitors, and employees – who create ideas. For some of them, idea generation is inherent to the way they work and think. For others, not so much. What’s more, your organizational culture may be one that has a negative reinforcing loop (or vicious cycle) that penalizes any thinking outside of the norm. The adage says to make a good steak, start with a good piece of meat and then get out of its way. Likewise in innovation, a great new product line or business model is invariably the fruit of a great idea. So how do you farm only great ideas? You plan only good seeds.

As the CINO, your role in this is to awaken your Idea Sources to realize that they are vital to the innovation process, and that you will defend their right to get it wrong, vigorously. This is where your role as an advocate is especially important.  Others will only respect what you yourself inspect. Be the chief evangelist for the idea of creating new ideas – not the chief idea creator. As a CINO, you must spend your energy and time removing the inertia from your Idea Sources by emboldening them to take action and to participate willingly and often, completely as well as incrementally. You cannot do this if you are busy getting your own ideas launched.

Idea Focus

The next step is to focus your efforts. Focus, in this and in all things, is key. Focus will reduce waste and allow for any quality of Idea Source to contribute to the cause. Focus lets your awakening Idea Sources be put to better use. I argue that even the most meager Idea Source has incremental ideas on how to change their immediate circumstances for the better. The virtue in this step comes when you create boundaries for your innovation effort by tying it clearly to the strategy of your company. Set these bounds and ask your Idea Sources to contribute only in that context. Provide a definitive direction, which will save time, energy and hurt feelings. Setting a definitive direction also allows anyone and everyone in the organization to align with, and contribute to, the execution of the company strategy.

I suggest that each year you set up three (and only three) major Idea Focuses that need innovation to solve them, and then formally invite your Idea Sources to find the answers. Remember this is enterprise innovation we are talking about, not a startup accelerator. The goal is transformation of the company you work for in a manner that is coherent to its strategic direction. As I said — the CINO is not allowed to be the cool kid with the great idea, playing in a laboratory off to the side somewhere – that is for the startup guys. Your role is to steer the “system” to use innovation as a springboard and propellant to the company’s success.

One quick note: the first time you take your company through the ideation process, it is more about acclimating your Idea Sources to the notion of idea generation than it is about immediate value creation. In other words, it is most important to have them all engaged in the process first. Working out the rhythm of Idea Focus comes with the second and subsequent passes.

Idea Process

It is always beyond the capabilities of any organization to act on all, or even most, of the ideas it receives from its innovation engine. After all, innovation teams are usually small and can handle only so many ideas at once. So this must be a process of refinement, of separating the wheat from the idea chaff. In enterprise innovation, not all ideas are good, and not all good ideas will be advanced.

There are numerous technology systems that help to automate parts of this process. But technology can only make good into better. It cannot make good into great. To create a great innovation engine, the input (the ideas from your Idea Sources) must evolve into a wellspring that is both coherent to your organization’s strategy (focused) as well as self-policing (efficient). I advocate that there must be a defined process for determining the linkage between any ideas and the company’s strategy, the problem to be solved, or the job-to-be done. This is where the role of the CINO, as a supervisor, comes into play.

The virtue in this step comes when you create a clear, simple, and transparent process that anyone can use, and all are held accountable to keep. Overly complex processes result in non-use or workarounds. Non-adherence results are the same. Either way, your role as supervisor to the process is critical and necessary. One quick note: be flexible enough to know when the process itself needs innovation.

Idea Outcome

As Thomas Edison said, the value of an idea lies in the use of it. To use an idea, we must first have a clear means of measuring it – its adoption, its implementation, its usefulness, and so forth. A good idea – taken through a robust process – is for naught if it does not produce a valued outcome. Value is only understood when it is measurable and attributable. By measurable, I mean that virtuous ideas create a calculable value for a specified target. By attributable, I mean that virtuous ideas also assign credit to their creators, refiners, focusers and measurers.

Next comes measuring how to advance and build upon the idea – preferably by creating Idea Sources from those who receive the value of the outcome.

The virtue in this step comes when you extend your innovation virtuous cycle with an opportunity for the end-user to become an Idea Source. Early adopters are a form of this: those people who adopt new capabilities or business processes, or whose feedback or suggestions on a business idea result in pivot from the original process, capability, or idea.

One quick note: if your innovation value creation engine is not eventually taking more ideas from the value receivers than from the value deliverers, you have a problem. Use the virtuous cycle to move the Idea Sources, Focus and Process to one that aligns with those for whom you create value, and transform your company from idea creators into idea implementers. It stands to reason that if your customers are plugged in and telling you what they want, then all you need to sustain your success is a team of experts at bringing ideas to market.

Superior outcomes over a sustained period of time are the ultimate mark of a high-functioning innovation system. It may be possible to drive short-term outcomes without having an innovation virtuous cycle in place, but an innovation virtuous cycle is the only way I know to create sustainable long-term differentiating outcomes.

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Kevin Riley is an Entrepreneurial Healthcare Leader and Principal of Kevin Riley & Associates | Business Model Innovation for Healthcare. Kevin’s LinkedIn profile here.