Innovation and the CLO

Patti P. Phillips, Ph.D., Chief Executive Officer ROI Institute, Inc.
Jack J. Phillips, Ph.D., Chairman, ROI Institute, Inc. 

Innovation is everywhere, in every type of organization, and in every part of the world. Leaders want innovation, politicians cheer innovation, consumers demand innovation, investors reward innovation, and media outlets promote innovation. The visibility and popularity of innovation translate into billions of dollars being pumped into all types of innovation efforts. This visibility brings out critics who expose glitches and concerns. Lack of success and high failure rates bring out even more critics. All of this creates the need to show more results in a timely manner.

 Research Conclusions

The research of innovation has produced some interesting conclusions:

1. Investing in research and development is not a good predictor of innovation outcomes.
2. The best source of innovation is employees.
3. When employees are engaged, there is more innovation.
4. Far too many innovation programs fail to deliver the desired results.¹

Most of us have heard about the Post-it® note, invented by an employee at 3M Corporation, which became a significant product line for 3M.  Stories like this are everywhere for all kinds of ideas. The challenge is to capture those ideas and have processes in place to convert them into impacts for the organization.

CLO Role

Given these conclusions, the CLO is in a great position to make a difference in innovation. Because innovation comes from employees, and not necessarily the investment in R & D, the key is to make sure the culture is created to spark innovation, support innovation, and facilitate innovation. Even if your CEO is labeled the most innovative CEO on the planet, it still comes from the employees.  According to Forbes Magazine, Jim Bezos is the most innovative CEO by far.  However, Bezos and the Amazon team rely on innovation that comes from the employees. New ideas are encouraged and sought. When an employee has an idea, he or she needs a “yes.” Accordingly, Bezos has structured Amazon around what he calls “multiple paths to yes.”²

At Quicken Loans Inc., employees are given four hours each week of focused “bullet time.” During those hours, they are able to step away from day-to-day responsibilities and explore new skills and parts of the company’s business not directly related to their own work, according to Quicken Loans CEO, Jay Farner.³

So, what can the CLO do? There are many opportunities to foster creativity and the CLO should drive programs, ranging from suggestion systems, idea contests, and improvement projects to teaching creativity, brainstorming, and design thinking. The CLO should also sponsor programs such as innovation champions, innovation labs, and innovation task forces.

The Chain of Value

Extra steps must be taken to ensure that innovation programs are adding value at multiple levels. A five-level chain of value exists for every innovation program.

At Level 1, Reaction is taken from employees to ensure they see innovation as important to the success of the organization, important to them, and as something that they want to be involved in and make successful.

At Level 2, Learning is measured. Employees must learn about innovation.  While some employees naturally have great ideas, others can offer great ideas with a little help. Employees must learn what to do to be creative and innovative. They must know how innovation works, what they must do, and the expectations set for them.

At Level 3, Application is measured. Employees must apply what they’ve learned to create ideas, process ideas, test ideas, try new approaches, and experiment, all within the innovation guidelines.

At Level 4, Impact is measured. The goal is impact from the innovation; a new product adds revenue, a new process takes less time, a new procedure improves quality, or a new service improves customer satisfaction. The effects of an innovation program must be sorted out to see how much of the impact has been generated by the innovation efforts. This connects innovation to business results.

At Level 5, ROI can be calculated. As an option, the impact can be converted to money, revealing the monetary value of the innovation program. Those monetary benefits can be compared to the cost of the innovation program to calculate the actual ROI for an innovation project. The ultimate accountability, ROI, proves to the management team that innovation is an investment. This level of accountability can set the talent development team apart from other functions, showing that real innovation comes from the employees through programs offered in the organization.

References

1. Phillips, Jack J., and Patti P. Phillips. The Value of Innovation: Knowing, Proving, and Showing the Value of Innovation and Creativity. Hoboken, NJ: John Wiley & Sons and Beverly, MA: Scrivener Publishing, 2018.
2. Lane, Randall. “Bezos Unbound” Forbes. September 30, 2018 p. 77.
3. Chadha, Janaki. “Innovation as a Team Wins, Study Finds” The Wall Street Journal. August 9, 2018.