Where are your innovation efforts leading you in the new year?
When innovation is the topic of discussion in most organizations, the goal is often to invent something and grow the business or become more efficient and spend less on things. If this sounds like an ambiguous approach, it is. It lacks focus and points you in a direction with no destination in sight.
We like to segment innovation goals into three distinct categories – Revenue, Costs, and Culture. While we don’t claim this is a game-changing system for segmentation, it provides a good first step to take to identifying your goals. Innovation is a broad term and science, and you need to start somewhere. For each segment, you can begin to break them down further, breaking revenue into products, services, leads, etc. Again this all probably seems very obvious, but is still often overlooked when organizations are setting their innovation goals.
Once you’ve broken down your segments, you need to discover what your potential KPIs (key performance indicators) are for those segments. The KPI itself can be tied to real dollars, actions, outcomes, or time, or things like human capital metrics such as turnover, payroll, and bonuses. The over-arching theme is to identify and set a KPI, set a baseline and a goal to hit, and to track the changes you’re making to ensure you’re heading in the right direction.
Once you know your KPIs and where you want to target each area, outline a time component. This will provide further context and necessary constraints that will greatly affect your strategy. Time horizons can vary from the end of the week or month to the end of the year or five years from now. Try to align your goal horizons by balancing “reality” and some urgency to perform, while also giving yourself enough time to develop, launch, and test your changes.
Here are some examples of potential innovation goals and thought-starters your team could use –
Increase revenue – Target specific business units, products, operations, or upsells to diversify how you’re bringing in more money.
- We want to increase service revenue by 10% by the end of Q1.
- We want to increase sales of Product A by 20,000 units by the end of the year.
- We want to increase customer retention by 5% by the end of the year.
- We want to increase referrals by 5 every month starting Q3 through Q4.
- We want to increase our monthly leads by 20% by July 1st.
Reduce costs – Identify operations requiring your capital, resources, or time that could be improved or more efficient.
- We want to reduce processing costs by $50,000 this quarter.
- We want to reduce errors in packaging by 5% by Q3.
- We want to reduce monthly returns by 10% by the end of the year.
- We want to reduce safety incidents by 5 next quarter.
- We want to reduce website load time by 3 seconds this week.
Improve culture – This can be tough to quantify, so track what you can and be specific with goals that directly affect your workforce and their environment at work.
- We want to reduce annual turnover by 5% by the end of the year.
- We want to improve employee survey scores by 10 points by Q3.
- We want to make staff meetings more actionable and useful.
- We want to increase attendance at the Holiday Party this Winter.
- We want to improve communication between departments this month.
As you can see, each goal identifies a target, assigns a metric, and has a date for when you should hit your goal. Again, this provides you will not just a result, but what real success looks like for that result, and when you need to accomplish it by. By taking some time to formalize your goals for innovation, your team and organization can move together towards a common goal, and realize success in a sustainable and analytical manner.
Actionable Tips –
- Don’t just set your innovation goals based on things you want to see happen, but rather take time to identify challenges or problems first. If a particular product is growing fast, look at an under-performing product instead for improvement. Your goals should seek to solve a problem or grasp an opportunity, not ride the momentum of something that’s already working well.
- To identify the aforementioned problems and opportunities, ask around. Involving other departments not just as a target for improvement, but as someone who sets goals and provides solutions as well can work wonders for innovation. Where do they see inefficiencies in their daily activities? What are some quick wins, or things they think you could roll out quickly that could help you operate smarter? What do they need to reach more customers, drive more leads, and sell more products? Let them share their ideas, and bring forth other initiatives, problems, and challenges you can explore.
- Diversify the scope of your innovation goals. Smaller, incremental improvements are easier and quicker to identify and implement, but shouldn’t be the exclusive driver of your efforts. Identify a couple large, difficult, but still possible challenges too that might take longer to solve, but could provide a large dividend. Take some chances, and set your target a little further into the distance.
- Avoid focusing strictly on one of the three areas of costs, revenues, and culture. Take time to work on all three. An organization that is successfully cutting costs but offers a faltering product or service won’t be around for long. Similarly, a rock-star product will only last so long if the organization behind it has a culture in the dumps. This speaks to engaging all departments with your innovation program to ensure no unit is being left behind.
- Communicate and celebrate your goals. Publicly setting, pursuing, and achieving your organizational goals won’t just improve your bottom line, but will also help improve organizational culture, morale, and engagement in your future initiatives.