Successful and profitable innovation without a big budget

Profitable Innovation

“In many organizations, innovation is hardly or badly organized. With the motto ‘innovation is creativity’, their departments are all just trying random things, and getting random and useless results,” says Danny Mekić. He is one of the speakers during the Strategic Innovation lecture series at Nyenrode Business University. Mekić is a consultant on innovation to 40 of the 100 largest organizations in the world, and has developed an innovation process called Innovation Accelerator, which can create successful innovations in any organization.

“There are many misconceptions about what innovation is. Innovation is not just any radical change; innovation means finding new ways to actually solve a problem. Innovation also isn’t about technology, like blockchain or artificial intelligence. Technology is just a tool for innovation, not a goal in itself.”

Building blocks

“During my lecture, we go through Innovation Accelerator, the innovation process I’ve developed over the years.” Participants learn how to adapt the process to their own organization, what is valuable and how to implement it successfully with minimal risk. “Many corporate innovators take one or two ‘building blocks’ from successful startups, like design thinking, scrum and being agile, and then try to implement those detached building blocks in an organization, hoping that that’s going to lead to successful, profitable innovations.” Practical experience tells Mekić that this doesn’t work. “What you need is a proven and – most importantly – integrated approach that also works for larger, more complex existing organizations. A few startup building blocks won’t cut it.”

Mekić also discusses the ‘benefits first’ principle. “In existing organizations, innovation often starts with a budget and then innovators start looking for a problem that they could solve with the solution they want to implement, like blockchain or AI. My method turns that around. You start without a budget and first look at a major problem, then find out how much solving that problem would be worth, and then look for or invent a solution that could be profitable. For example, imagine an organization where absenteeism is a big problem. You would calculate how much money you would save in the long run for every percent that you can take off the absenteeism rate. This tells you how much value you’re going to create, and then you also know how much money you can afford to spend per percent of reduced absenteeism. And if you can’t create more value than the cost of creating it, that means the problem you’re trying to solve isn’t serious enough, or that you need to look for a better, more innovative solution.”

Working together with other parties

“Innovation really comes to life when you can get multiple parties in your chain involved with your innovation challenge, and work on the solution together with them.” Mekić gives a practical example. “In a certain city, the many students were making public transport so crowded that it had become a big problem. I brought together all parties – like the municipal government, transport companies, the vocational university and the academic university – to work on a solution together. As it turned out, that solution was to spread out class hours. Classes at both universities used to start on the hour. The vocational university decided to have its classes start at a quarter to the hour, and the academic university had its classes and study groups start at a quarter past the hour. This led to nearly 50% less students at a time on each bus, tram or train. The stakeholders hadn’t found this solution when working individually, but they found it when they were brought together and went through a proven innovation process. And since there was no more need for the extra buses that had been deployed, this solution also saved a lot of money.”

During his lecture, Mekić discusses a number of organizations that handle innovation well, like the Dutch airport Schiphol. “What they do there is really extraordinary, inventing one data-driven solution after another, with a positive impact mainly for passengers, staff and other stakeholders. I also discuss the Dutch Central Judicial Collection Agency (CJIB), which has become a shining example of innovation within a government. In a short time, they’ve managed to implement several new portals, chain partnerships, an app and a robot that sorts all incoming paper mail by language and subject. Their website is also a good example of a successful innovation project, because it was developed specifically to reduce the pressure on the call center. The most important questions are now answered on the website, and the website also lets people take care of things themselves, like requesting a photo. There’s no need to call the call center for that any more. And when there are new topics that many people call the call center about, the communications department adjusts the contents of the website and they can quickly build new functionalities.”

Making organizations more durable

Current events are also discussed. “Personally, I’m a big fan of scenario thinking. There are indications that a recession is going to hit us. Is your organization ‘future proof’? If you don’t start preparing now for the next crisis, you’re at risk of letting the same things happen that happened ten years ago. For example, the higher-ups might abort all innovation projects when the times get more difficult financially.” Mekić also wants participants to understand that innovations can be used to make an organization more crisis-resistant. “Innovate now, while there’s still a budget for it. And remember: an innovation done well is not an expense but a source of income. If it isn’t, you’re not doing it right.”

This interview was conducted by Nyenrode University in the context of the ‘Strategic Innovation’ lecture series, for which Danny is a guest lecturer.

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