How to Develop Critical Innovation Competency for The Digital Age

To every age its key competency.

Back in the twentieth century, the ability to scale profitable systems won the day. Ford, McDonalds, GE, and GM all beat their competition because they were the best at replicating a winning business concept on a global scale.

Successful workers in this age climbed corporate ladders by cutting fat from business units and copy-pasting profitable models into new markets. Key management competencies were all about precise measurement and driving efficiency. The heroes of the age were the Six Sigma blackbelts of system optimization.

How much the world has changed since then! Silicon giants now roam in place of manufacturing dinosaurs, and smartphoning millennials showroom the remaining bricks and mortar retailers to order drone-delivered Amazon purchases — digital disruption has become omnipresent in our lives.

The nature of work has changed along with the digitization of our world. For example, McKinsey’s December 2017 report projects that 800 million jobs will be replaced by automation and AI by 2030. Even high-level analytical tasks, formerly the pride of management, will soon be taken over by machines. Change is now happening too fast for system optimization to feed success. Before a system can be optimized, its whole industry has been disrupted.

The icons of our age are now the creators of open platforms — Google, Amazon, Facebook — whose teeming, non-centralized ecosystems ride the waves of organic change. To stay responsive to this screaming evolutionary pace, even traditional consumer product businesses have shed fixed business units in favor of project-based sprint teams that use agile methodologies adapted from software developers. Six Sigma blackbelts of the optimization age have passed the baton to the disrupting scrum masters of our time.

This new age demands new key competencies.

Across industries and across continents, the key human value-add in this new world has become the ability to continuously develop new solutions to changing needs. We call this innovation competency.

Innovation competency is really a family of five key competencies for the 21st century. These include:

1. The ability to thrive in ambiguous circumstances
2. The ability to demonstrate sensitivity to latent user needs and subtle shifts in atmosphere, culture, and macrocosm
3. The ability to prototype, seek feedback, and refine products and processes
4. The humble ability to lead and be led as situations demand
5. The ability to effectively advocate and manage change
6. The ability to communicate with clarity, impact, and audience empathy

Change is exhausting and anxiety provoking to human beings, and developing innovation competency is therefore never an easy task. Developing this competency is especially challenging in Latin American organizations, however, which have traditionally shown higher power distance between leadership layers and greater risk aversion than their US counterparts.

A few tips from developing organizational cultures of innovation in Mexico can be helpful:

• Be sure that top leadership actively demonstrates innovation competencies in a visible way. Perfection is not required here, but tactical levels will usually avoid taking on the risks inherent in innovation unless leaders repeatedly demonstrate and encourage innovative behavior. Celebrating failures that result from good faith innovation efforts is especially critical, as LatAm educational systems tend to disparage failure of any kind, and reward risk aversion instead.
• Embrace all practical opportunities to strengthen cross-silo collaboration. “The only people who see the whole picture,” writes Salman Rushdie, “are those who step out of the frame.” Rigid silos unwittingly limit our perspectives of the whole breed tactical over big picture strategic thinking. They stifle innovation because they preclude sharing of information with other functional areas. Integration of silos should focus both on forming bonds between workers in different areas, and also on shifting work flows away from excessive specialization. Formal integration activities and cross-functional project teams are great for this. Strategically using training courses of any kind as forums to integrate areas is also helpful. Ergonomics (idea boards, shared break areas) should facilitate mingling, and directors should be encouraged to build relationships across areas to avoid the establishment of rival fiefdoms.
• Ensure that metrics are aligned with desired innovation behaviors. Often, KPIs are legacy systems aligned to an optimization era. Human resources in LatAm is frequently relegated to a tactical/function role whose strategic value is underappreciated, and whose structures are slow to change. It is unfair and ineffective to ask workers to adopt new behaviors while evaluation systems continue to reward the old ones.
• Make space and time for innovation. If innovation is presented as something to be done in addition to a collaborator’s full time job, then the best people burn out. Everyone else labels innovation as the enemy that competes with their leisure time. Google’s famous 20% time is one possible model to free up time. Yet many LatAm workers struggle to function on a fully self-directed basis on special projects. Team-based inter-area initiatives with an active leader tend to be more effective in LatAm because they involve the social engagement and structure that support self-directed innovation in its budding stages. Dedicated spaces for innovation — especially rooms or walls that can hold ideas in incubation — are useful both as labs for innovation, and as monuments to its importance in the organization.
• Patiently and persistently nurture a culture of internal motivation and purpose drive. Paternalistic cultural elements and obedience-driven education systems are often replicated in workplace cultures that rely on 19th century command and control management to ensure performance. Workers conditioned to external reward and punishment motivations require gradual and structured transition to self-directed work. Organizations frequently err by rushing to copy horizontal org structures and home office systems from the US without planning small steps and and adapting these systems to local contexts. Failure in rash and rushed transitions often results in a demoralizing and cynical return to the old way, and even greater reticence to embrace change again.

Above all, the greatest error made in the development of innovation competence in LatAm and beyond is the failure to try.

Every failure born of a good faith effort spawns feedback for a system to grow. Not stepping into the arena, however, guarantees the most common of all results in the age of innovation: the slide into obsolescence.