Innovation management – Part 4

Fundisile Serame

Just because your idea may distrupt markets does not mean it will spread. This week I conclude the Innovation Management series with the last stage of the Innovation Chain: Idea Diffusion. When an organisation reaches this stage, it implies that its innovation has gone through a transformation process of turning an idea into a valuable product or service, and is ready to launch it as a business. The outcome of this process should be delivery of the customer value proposition (CVP) declared upfront during the idea screening process. Such would typically be monetary value.

It may have been a challenge allocating funding to the new concept and developing it into a product, but the innovation challenge does not end there. Once a company has overcome the idea-conversion challenge, it has to deal with the diffusion of that concept within and outside the organisation – across targeted geographies, distribution channels, and customer groups. This stage is the real test for any organisation to determine whether it is a diffusion-rich or diffusion-poor company. In other words, is it good at turning ideas into valuable products and businesses?

Once a company has overcome the challenge of developing the new product or business, it is just a matter of taking it to market, right? Yeah right! It always sounds easier when said than done. In large companies that constitute many subsidiaries and organizations, you may have learnt through experience that such diffusion is far from swift. The proponents of the Innovation Value Chain, Hansen & Birkinshaw, suggest that company-wide innovation diffusion does not happen by fiat. Rather than ordering a company-wide roll-out of developed ideas through marketing and sales (be they products, businesses or best practices), executives need to start thinking of diffusion as a social process, much like creating a buzz among consumers for a new fashion item.

Evidence shows that companies tend to have their bubble burst at this last phase of the Innovation Value Chain. A company’s innovation success is only as good as its weakest links in the Value Chain.The much reported low success rate of innovation projects can be attributed to companies being generally either conversion-poor, diffusion-poor or both. In other words, their weakest links may be concentrated in the two final stages of the Value Chain – signaling insufficient or lack of capacity to either convert an idea to something of business value or to extract measurable economic value from these new products or businesses.

So what do we mean by diffusion of innovation? We can choose to lazily view diffusion as merely a spread of something more widely or we can overcome our sloth by accepting a more comprehensive suggestion by innovation scholar, Everett Rogers, to view diffusion as a four element process whereby (1) an innovation (2) is communicated through certain channels (3) over time (4) within social systems. Innovations literature further posits that there is a need to include other terms when refering to innovation diffusion: diffusion (passive spread), dissemination (active and planned efforts to persuade target groups to adopt an innovation), implementation (active and planned efforts to mainstream an innovation within an organization), and sustainability (making an innovation routine until it reaches obsolescence).

Spreading your innovation isn’t about getting customers to buy once the product is in market, the traditional challenge of sales and marketing, but achieving adoption by employees, launching and pushing products and businesses wherever possible. We have seen too many products and businesses limping out of markets, not because they were not good enough, but simply because their diffusion strategies, if they had any, failed to transcend beyond conventional sales and marketing. In some cases, such failures can be attributed to over-reliance on perceived brand equity. In countries like Nigeria, and South Africa more recently, we have witnessed mobile money diffusion failures, although there may be varying reasons for failure to gain traction and having to exit the market.

How can a diffusion-poor company fix itself? By leveraging the power of networks, for starters. With social networking tools and other available platforms which accelerate the pace at which innovations can spread, the resulting information overload from such platfoms makes it difficult for target groups to receive important messages. Thus, there is a need to target strategies which will effectively reach different groups. To develop such targeted diffusion strategies, there are internal and external contexts that need to be observed. An organization’s decision to adopt an innovation and its efforts to implement and sustain it depends on a number of internal and external influences. One I will focus on is the network factor.

“Things don’t just diffuse in human populations at random. They actually diffuse through networks,” says Professor Nicholas Christakis, one of the most prominent figures in the emergent discipline of network science, who has made foundational investigations into how products are spread through networks.

Diffusion through networks can take many forms. The aim is not to follow a standard approach, but to leverage the value of the network to fix your weakest links. Some companies follow the approach of appointing  what  Hansen & Birkinshaw call a ‘Paul Reveres’ of the company  — a person with high-reach personal network, one that consists of strong personal relations with many people in different parts of the company. This person would be an evangelist for each new product, business idea, or best practice.

Their mission is to “sell” internally – call people, travel with sales people to customers and relentlessly use their own personal connections to increase awareness among employees and convince them to adopt a new product or business concept. Of importance is that the evangelist’s relationships must span many parts of the company, across business units and country operations, depending on the size and configuration of the company, so that across-company diffusion ensues.

To mark the end of our Innovation Management Series, I’ll conclude with the note that innovation performance improvement requires a holistic view of the Innovation Value Chain (Idea Generation, Conversion and Diffusion). By working on the weakest links throughout each part of the chain, managers and innovators stand a chance to improve their companies’ innovation performance. However, taking an Innovation Value Chain view does not mean business as usual. Operationally, managers need to implement a new set of key performance indicators to track performance across the chain, and cultivate new roles for employees in the organization. Whether you call them innovation evangelists, idea brokers, external scouters, corporate entrepreneurs, innovation coaches, or internal venture capitalists – has little significance. What is of more significance is a paradim shift where, strategically, a company deliberately takes a Value Chain view of innovation. Instead of looking for best innovation practices to ‘import’ – from business and management books, there is value in first spotting and fixing the weakest links and thereafter assess whether a best innovation practice is right for your company’s unique environment.