How to stimulate innovation through Intrapreneurship 15/09/2015 Let’s push an open door: not innovating is as good as standing still. Former CIO of the Year Cécile Gonfroid (RTBf) said it at our year-end event in 2013: “Listen to the business, innovate or disappear.” Earlier this year, Group Aveve’s CIO Erwin Verstraelen talked to us about collaborative economies and how they are disrupting current business models: Airbnb in the hotel sector, Uber in the taxi and carrier sector, and others. How should a company innovate its model? You cannot stimulate the desire for change. But you can facilitate intrapreneurship. Innovation is often associated with new tools or products. Better is to start with new approaches for serving customers, working differently or more productively, and so on. Tools and gadgets are one of the last steps of the process. That’s why the best ideas emerge bottom-up. If you haven’t done so, create a communication platform to allow such upward communication. It will integrate innovation as a continuous process within your company. Ad-hoc innovation meetings, where people ‘need’ to come up with an idea are all too often pointless. Having spotted potential in a metal coating of the group for one of his company’s cement products, HeidelbergCement CIO Kees Van Rein wanted to create such an innovation platform with specialists of both group companies. “We failed because of political reasons, but we went on to create the innovation platform on a local level within our own organization, facilitating cross-division communication and intrapreneurship.” Employee time for innovation at Wijs Intrapreneurship is also a somewhat mandatory skill at web agency Wijs. Now that he has a staff of 60, owner Bart De Waele needs to manage the internal entrepreneurial spirit! He wants to keep the youngsters interested, but if possible, aboard as well. Employees stay about three years on average. Self-taught entrepreneurs might just as well create a parallel, possibly competitive agency. It was a challenge De Waele picked up. But first, back to the entrepreneurial spirit that made Wijs a renowned agency. “The first thing you want in your company or division is an enthusiastic culture” “The first thing you want in your company or division is an enthusiastic culture”, De Waele says. “We have a flat organization and steering. We decided to create teams of about a dozen, that have their own profit and loss. Smaller teams are more manageable and we give them responsibilities to stimulate entrepreneurship. To boost the spirit of co-creation we also give them roles instead of functions, all whilst putting decision power at the right level. This company structure allows us to move fast or accelerate if needed.” Now, how does he innovate as such ? His employees have to be billable 75% of the time, 10% goes to meetings and another 10 to internal projects. It means they can use 5% of their time for innovation. If they have an idea, they present it to the MT and develop it with the team within the 10% for internal projects. “Additionally, we have a hackathon once a year. The MT leaves the company for two days. Last year the central theme was the Internet of Things, and it resulted in 20 projects, amongst which Otto: a device to analyze your driving style” De Waele adds. Stimulating innovation makes people independent. As a consequence, they might want to create their own brand, product or company. De Waele came up with an A-B-C scenario, where innovators could become entrepreneurs but allowed him to participate. The scenario consists of three stages. Candidates first need to write their business strategy, then get 1 to 6 months for commercial development and finally they spin out. De Waele has had three parallel companies via this model. IT needs to have an eye for opportunities Melexis has asked its IT department to innovate within the boundaries of their day job: scan the market, stay up to date. At HeidelbergCement, CIO Kees Van Rein asks his staff to keep an eye on opportunities in the market and also within the organization. IT is the only division in the company that is approximately the same in every country. Therefore IT has a big opportunity for innovation to reinvent itself, business processes or the company. “Innovation starts with an idea of someone and will only have a future if it is backed by top management. If it is only driven by middle management, you run the risk of eroding and evolving to mere research and development”, says Kees Van Rein. “Therefore, you will need enthusiasm but also a business case. Top management will never turn you down if you can prove your project’s potential to contribute to the top line, even if it is based upon assumptions. My personal advice: sell it as a long-term opportunity. And on another note: try to avoid ‘headquarter’s syndrome’. It’s not because certain ideas aren’t invented by corp that they’re not valuable.” Top management will never turn you down if you can prove your project’s potential to contribute to the top line, even if it is based upon assumptions. My personal advice: sell it as a long-term opportunity.Veerle LozieCIO Melexis Governance to keep track of cost, but also to smother innovation Yet again, if you need full consensus and thus governance for innovation projects by top management, you often run the risk of budget cuts and the end of your idea. Governance is there to avoid that too much money is spent on innovation. You need governance, yes. But a light version, to guarantee required agility. De Persgroep for instance has two operational committees: one for innovation and one for ongoing operations, with respectively light and strong governance. Innovation in media is crucial today and they have to be able to proceed quickly. That’s also why innovation projects start just below top management, or even outside the company. Cisco is well-known for its spin-in strategy, but local companies like BNP Paribas Fortis or KBC have incubation cells as well. It allows them to have agile zodiacs around themselves, that don’t need to follow the rules of the big tanker’s captain. The masterclass found consensus that innovation and consensus are antonyms. Governance and review committees have the potential to completely tear down your project. Same goes for acquisitions. The acquiring company often fails to optimally integrate the technology it bought because of bureaucracy. Innovation implies you have to dare to reinvent yourself. If you won’t do it, your competitor will. “With innovation you have to dare to reinvent yourself. If you won’t do it, your competitor will.” “Not only dare to reinvent yourself”, Veerle Lozie says. “Also dare to fail. Eighty percent of our revenue is generated by twenty percent of our products. I gives an idea of how many simultaneous innovation projects we run. We dare to fail. But, it is mandatory to pull the plug on time if it’s not turning out. Fail fast, fail cheap.” A company that is reinventing itself is the ‘Belgische Distributiedienst’, that distributes 4,5 billion commercial folders per year. A 6% volume decrease recently created a sense of urgency within BD, assigned a new CEO bought the start-up MyShopi. “Digital quickly became one of the strategic pillars of our new CEO. We need to prepare for the future of e-commerce and mobile business. But we didn’t make the mistake of neglecting our core business and thus cannibalize our company. We looked for disruptive ideas, which is good. Disruption is continuous”, warns Sven Van Geit, IT Director. How to align innovation with strategy A lot of companies believe innovation is not something for IT to take care of. It is then up to IT to prove it can innovate the business processes. And create a roadmap to go from ‘awareness of IT’ towards becoming a business partner. At Heidelberg, the CIO has translated the CEO’s ten-point strategy into an IT strategy. “Our experience is that they will see the IT strategy from a different perspective”, Kees Van Rein says. “You cannot define a business strategy that is totally independent from the IT infrastructure, can you? Most strategies also focus on providing efficient services. Great strategies focus on how we will help the business win.” You cannot define a business strategy that is totally independent from the IT infrastructure, can you?Kees Van ReinCIO HeidelbergCement At Studio100 though, the executive team doesn’t share its strategy easily and innovation planning is therefore almost impossible. Are they sticking to merchandising, or moving to licensing? “That has quite an impact on the ERP we need to upgrade. If you don’t get precise business strategy, you can build them bottom-up. So we’re making parallel business cases”, says Rachel Alexander, IT Director at Studio 100. Scenario planning If you want to think ahead – and innovate – CIO of the Year Veerle Lozie shares an interesting read for the summer holidays. ‘Thinking futures’ by Derrick Gosselin and Bruno Tindemans helped her to define parallel scenarios for innovation and future decisions that you foresee to take. “The biggest revenue stream comes from the automotive industry. We still see opportunities for the next thirty years, but then what? The scenario planning explained in ‘Thinking futures’ helps us to define feasible scenarios and as soon as we recognize one, we’ll already have done our brainstorm. Even if it defines what and not how, scenario thinking might be a good leverage.” And make innovation sustainable within the organization? Download a pdf version of this article