In the age of disruption, corporate innovation is rapidly climbing to the top of companies’ agendas. Our business landscape is now one where companies can go from being worth billions of dollars to nothing at all, or vice versa, within a few years. The ability to innovate effectively — to adapt to new trends and rapid change — can help to determine a company’s fate. Never have ideas been worth more.
As corporates, we all know that innovation is important. But do we really know how to innovate effectively, even in chaotic times such as these?
It’s all about finding the right balance. Not investing enough in innovation may result in a successful business, but not a sustainable one; focusing too many resources on R&D at the expense of performance risks disappointing investors.
As we all continue to battle the devastating impact of the COVID-19 pandemic, it would be only natural for organizations to pull back investment on long-term initiatives and focus on the immediate bottom line. This might be a necessity, it’s equally possible that it is an unintentional consequence of the pandemic consuming so much management mindshare.
Keeping an organization sustainable and servicing customers through the difficult times ahead is the right thing to do, and obviously comes first. However, this pandemic has also brought about an unprecedented level of change in how we all live and work. This will have ramifications on products, services, customers, and employees for years to come.
The organizations that can find a way to efficiently focus on today, while also still thinking ahead and investing in a future beyond COVID-19, will inevitably come through this pandemic in a stronger position.
Having Your Hands Full: The Innovation Paradox
Effective innovation places equal emphasis on two aspects: delicately balancing the pressure to deliver on financial targets on one hand, while investing in R&D to future-proof your business on the other.
This concept, known as the “ambidextrous organization,” refers to managing today’s business demands while being adaptive to the changes in the environment. It was coined in the late 1970s, but has become popularized in recent years by the essays of Michael Tushman, who describes ambidextrous innovation as a “mental balancing act that can be one of the toughest of all managerial challenges.”
At Elsevier, we’ve structured an ambidextrous approach to drive innovation at every level of our business, with separate funding models to fuel growth in the short and long term.
The organizations that can find a way to efficiently focus on today, while also still thinking ahead and investing in a future beyond COVID-19, will inevitably come through this pandemic in a stronger position.
This ambidextrous approach has been integrated into the innovation strategy, delicately balancing both the “right” and “left” hand aspects.
At a departmental level, leaders are empowered to enhance existing digital products through continual innovation and optimization. This is done with the “right hand” to ensure we meet the current year’s financial targets as efficiently as possible.
Meanwhile, on the “left hand,” a separate funding stream is dedicated to allowing teams to rapidly experiment with new ideas, quickly shelving those that don’t work and then investing to scale in those that show promise. To do this, we create what we call discovery squads — small dedicated teams of employees from different disciplines, who have been taken out of their day jobs to focus on exploring new ideas and assessing whether they have commercial viability. Not only does this ensure that there is a dedicated resource that focuses solely on what’s next for our business, it’s also a great motivator for our employees. By seconding people from their normal roles to work on new and exciting projects, they gain varied experience and develop beneficial skills for when they return to their regular routine.
Once an idea is deemed commercially viable, further funding is dedicated to scale the idea and the team to deliver the new proposition. These ideas are then integrated effectively into the wider organization. It is this re-integration of new ideas back into our core business that allows the organization to continuously move forward.
A Hands-On Approach: Ambidexterity In Action
An ambidextrous approach has also helped deliver effective solutions to real-world problems. In the US, there continues to be a dire shortage of nurses, mainly stemming from the high dropout rates of students taking nursing courses at universities. So, a discovery squad was set up to experiment with solutions that would ultimately help students pass their final exams.
This led us to develop Sherpath, an interactive teaching and learning technology built specifically for nursing and health education. The technology provides highly focused interactive lessons, personalized formative assessments, and dynamic resources that leverage Elsevier’s world-class content to help medical students learn effectively. Since its launch a few years ago, the platform’s success has skyrocketed with over 60,000 student enrollments, up by nearly 75% year-over-year.
Lessons and Challenges: Operationalizing An Ambidextrous Model
Our organization has had to overcome a number of challenges when it comes to innovation. As we learn and adapt, we continue to prepare for the ones that lie ahead. Here are some of the key lessons learned along the way.
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Put ambidexterity at the right levels. Not everyone in an organization needs to be thinking about both the right hand and left hand separately. In fact, good execution often requires a single focus. Having to worry about today and tomorrow can slow execution down. Consider where in the organization you want people thinking about both hands doing separate things, and where you want both hands on a single steering wheel.
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Function follows funding. Separating both the funding and how you measure returns — between the day-to-day continuous innovation of existing products and services, and the experimental investment funding — ensures that new ideas get enough fuel to flourish.
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Culture and cross-team expertise are essential. When developing an innovation team, it’s critical that you have people from across departments as part of your team. Including members of other teams, like sales and marketing, early-on is essential to ensuring you are really testing all aspects of a hypothesis and that the product will be commercially viable.
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Knowing when to kill an experiment is key. Have you ever fallen in love with an idea only to realize it’s not that great? Not every idea will make it to market. Making sure you have a clear hypothesis at the outset of a project and setting parameters as a team is essential to conserving valuable resources. Constantly test your idea against the initial hypothesis. What are we trying to solve? How do we know we can solve it? Who will use it? Who will pay for it?
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Have a plan for folding your idea back into the business. When it comes to integrating your new product back into the main business, timing is everything. Careful consideration should be given to how, when, and where the final product or service should be brought back into the wider organization. Folding in too early risks the immune system of your organization killing the idea. But fold too late, and the product team becomes its own independent republic and can’t integrate effectively. Have a plan for how and when to integrate the team back into the organization so that you do so with impact, allowing the team to circle in and out as needed.
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Listen to all of your customers and adapt. Make sure you understand all of your customer types and are involving them in the experimentation and investment cycles. When Sherpath was developed, student feedback was positive as the team had obsessed about making this product great for students. However, instructors complained that they would potentially have to change their curriculum to align with the product’s new approach and content. This led to an alternative content pack, aligned with the current curriculum, being built to give instructors a choice. Consider how your customers might use your product and the individual needs of your different audiences.
Ultimately, adopting an ambidextrous mindset has been transformational for us as a business. The “left” and “right” hand R&D strategy has allowed us to develop industry-changing products and respond to a fast-changing market dynamic.
It can often feel like we have our hands full, but building communities across the organizations, creating a culture where employees feel empowered to share new ideas, and sharing knowledge and expertise at every level helps businesses begin future-proofing. And at this time when “business as normal” is deeply impacted for most organizations, those who can continue to innovate, and do so effectively, will come out stronger.
Dan Olley is the Global EVP and CTO of Elsevier, the science, technology and healthcare division of RELX. RELX is a global provider of information-based analytics and decision tools for professionals and business customers.
