Your Innovation Debt
Companies have invisible “debts” that never see the balance sheet. If your company is not embracing technology you are building a “technology debt.” When organizations don’t refresh and replace equipment at a cadence that keeps up with ever-changing standards, it too is “debt.” These debts eventually get paid — sometimes by finally getting caught up, sometimes by losing customers — but they get paid.
The scariest “debt” is the “innovation debt” that builds when a company is not proactively driving changes. In order to tackle the “innovation debt,” it serves well to redefine innovation as any idea you adopt that adds value.
All industries have ebbs and flows to business. One business model surges ahead, another falls behind. But trajectories never maintain themselves indefinitely. Smart companies learn quickly, innovate and change constantly. When innovations work, they begin to surge ahead again. Innovations are quite literally the inputs to growth and differentiation.
Will Phillips (REX Roundtable Founder) wrote a great business briefing about “the three agendas” of business. The first agenda focuses on the usual suspects: sales, marketing, finance, production, revenue, profits, etc. These are the areas where most organizations push for change when things aren’t trending as planned. The first agenda is the ante to be in the game. Innovation in the first agenda might be new ways to market, sell, onboard new members or new programming. Most companies seem to be reactive and only search for change in the face of new competitors or business models (e.g., boutiques). Being reactive has you always chasing the market. Being proactive is what drives differentiation.
The second agenda focuses on the processes and policies that will define the organization’s culture. This includes plans, strategies, structure, position descriptions, performance planning, delegation, rewards and recognition. The intentional design of the second agenda is where alignment to a common vision either gets embedded or goes off the rails. Innovating in the second agenda is proactive by its nature. When you “innovate” new position descriptions that align with your vision of customer experience and employee empowerment you leverage your most powerful assets. Innovation in this agenda is what leverages the entire first agenda.
The third agenda focuses on transforming people. It is about learning more about ourselves and the impact we have on others. The third agenda develops better leaders and more bench strength, further leveraging the second agenda. Innovation here might be leadership training, 360-degree reviews, executive coaching and operationalizing employee feedback.
The center piece of innovation is customer feedback, no matter which agenda you are focused on. When you operationalize customer feedback and wire your entire organization to use it, you will breathe life into innovation and drive differentiation.
Blair McHaney is the president of MXM, Medallia’s partner to the fitness industry and the most member-obsessed company in the industry.