by Alastair Ross, Director, Codexx Associates Ltd
Part 3. Establishing an effective system of innovation
Introduction
This is the third of a series of seven articles on professional service innovation. The objective of the series is to provide a basic introduction to innovation management for managers, partners and change agents working in professional service firms. This article outlines a systematic approach to enable, direct and manage innovation within a professional services firm. To read the first article in the series go here.
Innovation is not easy to do – especially in professional services
The focus of business organizations is to deliver the current value proposition using today’s resources & thinking. Innovation is about developing tomorrow’s business, be it new value propositions, different ways of working, new market positioning or a new business model. This requires new thinking and for people to step out of their current paradigms of working and to be capable of challenging what and how things are done. Doing this needs people and time and thus is a particular challenge in professional service firms where the people who best understand the business are fee earners – and thus not so readily available for (what is non-chargeable) work on innovation. Typical challenges in attempting innovation in professional service firms are illustrated by the quotes below (from past Codexx studies):
“We have ideas but we’re not good at making them happen.” Managing Partner, Law Firm
“Our culture and measures don’t really support innovation.” Manager, Business Services
“People don’t want to take risky ideas to the boss.” Partner, Management Consulting
“Not a coordinated approach to innovation.” Head of Knowledge Management, Law Firm
A system for innovation
Experience and academic research has shown that a systematic approach to innovation improves an organization’s likelihood of delivering successful and sustained innovation. Such an innovation system is built on key practices across 7 areas (see Figure 1) which need to be put in place across the firm:
- Leadership – Active support and encouragement from the top is key to establishing a supportive environment for innovation and also to focus the firm’s innovation efforts.
- Strategy – A clear strategy is needed to provide context and priorities for innovation. The strategy will define where the firm will focus its innovation efforts with targets and supporting metrics.
- Process – A structured and objective ideas management process is required to explore, select and implement the best ideas. This helps ensure that the firm focuses its limited resources on the best ideas, rather than ‘pet projects’.
- Climate – A supportive culture and values are needed to establish an environment that promotes innovative behaviours. Key metrics in professional service firms, such as chargeable-time utilization, need to be complemented with other metrics that support innovation. Such metrics encourage employees and partners to make time for innovation and take the risk of proposing and championing new ideas.
- Resources – People time, methods and money are needed to fuel innovation. In a professional services firm, making time available for fee earners to develop promising ideas is critical – as is recognizing and rewarding those who deliver innovation.
- External Linkages – Effective links to the outside world, especially clients, for ideas and resources, is important for ensuring that the firm is focusing on market-relevant ideas. Engaging clients in innovation co-development also increases the likelihood of success and strengthens client relationships.
- Learning – Capturing and sharing learning from innovation across the firm is key to increasing return from innovation activities – looking to where else a similar innovation can be applied and encouraging the ‘re-use’ of ideas. Process-based learning and improvement is also a competency that is fundamental to enabling continuous improvement, but is typically lacking in professional service firms (for more information on applying Knowledge Management to process improvement, see here).
Figure 1: The Innovation System Model (Source: Codexx)
Assessing your firm against the innovation system model
To help firms in establishing and developing their innovation system, Codexx uses an assessment approach called ‘Foundations for Innovation’ (F4i for short) that reviews 60 key practices that make up the 7 areas of the innovation system. Codexx has used F4i with law firms, insurance companies, business consultancies as well as industrial organisations. But as an initial start you can simply consider how effectively your firm supports innovation across the 7 areas defined above and what improvements are needed.
The overall innovation system will only be as strong as its weakest link. I have worked with professional service firms who established innovation processes, defined an innovation strategy and dedicated some personnel time for innovation, but the lack of a supportive innovation climate (non-chargeable time was not valued or rewarded) and indifferent leadership (other than a couple of partner champions, the board was lukewarm in support) meant that few ideas were generated to go into the innovation process and even fewer were progressed along it. A firm’s management needs to be committed to innovation if it is to establish a supportive system that enables effective and sustained innovation – rather than an occasional ‘get lucky’ approach.
In the next article I will show how firms can utilize innovation to reduce the costs of their business processes.
References and further reading
This article and the others in the series are based on the approaches, references and case studies detailed in my new book ‘Innovating professional services – transforming value and efficiency’ published by Gower in May 2015. This provides in-depth coverage and case studies of the topics featured in this series. For more information go to: https://www.codexx.com/2015/innovating-professional-services-new-book/
