Innovation process

Methods and the importance of core values

Participants in the Innovation survey Netherlands 2018 offered an insight into their innovation processes and how investment is spread across the various phases. Attention was also given to the methods they use as well as external reporting about innovation. We also enquired about the core values of organisations and what impact they have on innovation. Here is an explanation by Ilja Linnemeijer, chief digital officer at PwC Netherlands, and Wendy van Tol, PwC expert in change and leadership

Methods

Survey respondents use a variety of structured methods in order to be innovative, such as design thinking, customer validation, business model canvas and storytelling. Of the mentioned methods, agile was the most popular, while big idea canvas and lean user experience were the least popular. A third of all respondents said they used their own methods, which they may have developed together with an external consultant. Respondents generally use three different methods but do not have a preference for fixed combinations. To our surprise, respondents said the commonly used agile barely helps to improve the flow of the innovation process. We believe this can be attributed to several reasons. There has recently been debate about the overheads that accompany the agile method, and people having difficulties with agile forcing them to stop projects if they are not successful. It remains to be seen how agile will develop in the future and if a new method for innovative development will materialise.

Innovation in annual reports

Half of the respondents mentioned innovation as a topic in their annual reports or other external reports. Of the respondents that did not do this, half said they did not want to bring it to the attention of their competitors. We believe this is a missed opportunity. By reporting about innovation, organisations are able to offer an insight into their potential value. And this is important for investors and other stakeholders.

So it will be in the best interest of organisations to find a way to communicate their capacity to innovate, without having to release commercially sensitive information. Ilja Linnemeijer has noticed that companies in the market often have difficulties when identifying their innovation skills: “The number of innovation initiatives or hours spent on innovation do not actually make us much wiser.” As Wendy van Tol has also indicated in the chapter on Challenges, it is important to have good indicators for value creation. We feel companies do not pay enough attention when it comes to effectively and punctually defining the value of their innovation. When are we satisfied? Which results should be realised? And which values are we and our stakeholders looking for?

At the start of the process, we recommend defining what will constitute a successful innovation, and consulting with (potential) shareholders and stakeholders about the innovation information they want to see in the annual report. This is another case of user-centric thinking, where the organisation can decide whether it wants to report this information and whether it wants to make the required investment.

Explicit communication

Of all respondents, 75% said their organisation possesses core values, with three quarters of them saying they explicitly communicate these values. These respondents thus score better than the family businesses in our Global Family Business Survey, where 80% possessed core values but only half explicitly communicated them. The adjacent image provides an insight into the most commonly mentioned values.

Our onderzoek into the Sustainable Development Goals (SDGs) of the United Nations showed that many companies are trying to focus on these goals because that is what their customers want. In our innovation survey, we asked organisations about their most important values. The most commonly mentioned core values are clearly linked to innovation in a SDG context. It is good to see that SDGs have established a foothold within organisations.

The mentioned core values establish a clear link between innovation and sustainability. Other core values, like collaboration and integrity, are also in keeping with the spirit of the SDGs. For instance, SDG 17: partnerships, aimed specifically at collaboration between various stakeholders within society, when addressing shared challenges. The SDGs are often referred to as facilitators of collaboration because they offer a common language for a variety of sectors.

Encourage appropriate behaviour

Respondents said their core values encourage innovation and help guide the innovation process. Wendy van Tol is delighted with this finding: “This illustrates the importance of such values, which normally encapsulate their current status as well as their aspirations. You can be more specific in your innovation if you are clear about what you stand for (purpose) and what is of importance to you (core values). If you also translate these core values into behaviour, employees will know how to innovate (by working together, not being afraid to fail, giving feedback, better understanding customer needs etc.). If you specifically focus on this, employees will see that you are serious and realise that such behaviour is truly appreciated. This will result in purposeful innovation. We advise companies to explicitly communicate their core values and encourage behaviour that reflects these values. That is the starting point for a comprehensive transformation.”

Our Global Culture Survey serves as a guide for such changes in culture. For example, first address the most important behaviour, like e.g. customer focus or sustainability. Make it tangible for everyone in the organisation and expose people to it on a regular basis. Acknowledge and reward people that lead by example.