How to create a culture of innovation and foresight: tips from Ravi Arora, VP Innovation, Tata Sons

Much has been written about ideation and perseverance in innovation, but there are also other important aspects, such as foresight and culture. This book uncovers typical roadblocks to innovation and proposes new tools to improve impact.

It is important for scale-stage startups and large enterprises to understand what can come in the way of future innovation, and how to stay ahead in the game. The book Making Innovations Happen by Ravi Arora covers the tensions, challenges and potential solutions for innovation roadblocks.

Ravi is VP for Innovation at Tata Sons, and has created programmes like Tata InnoMeter, Tata InnoVista, Tata Innoverse, and Challenges Worth Solving to build a better innovation ecosystem. He is a graduate of XLRI Jamshedpur, and IIT Roorkee.

“Behavioural and social sciences play a vital role in making innovations happen,” Ravi begins. The eight chapters are spread across 314 pages, and there is an online companion with fresh blogposts.

The material is presented in the form of a narrative between two young managers, but some readers might prefer a more direct style. Here are my four clusters of takeaways in terms of the unique contributions of the book. See also my book reviews of the related titles Unrelenting Innovation, Eight Steps to Innovation, The Innovator’s DNA, and The Innovation Code.

Understanding innovation

Ravi likens the innovation journey to a mountaineering expedition, with phases such as rambling (generating ideas), trudging (selecting ideas), hiking (investing), rope climbing (executing) and ladder crossing (monetising). Phases of early ideation are generally risk-free; future phases require courage and commitment.

Companies need to clearly define what innovation means to them and how it applies to their strategy. Innovation lies not just in the final product, but also in sales, branding, packaging, supply-chain management, logistics, financing, and after-sales service. There are a number of innovation types: incremental, architectural, derivative, adjacent, radical, and disruptive.

The reviewed literature shows how innovations differ in the amount of risk involved, impacts, duration, frequency of occurrence, role of partners, customer segment focus, and involvement of customers. Some innovation projects can be merged, others can be split into more projects (“fusion and fission”).

A number of ideation and creativity tools can be used: lateral thinking, ethnographic discovery, customer brainstorming, connecting with startups, and trend analysis. Innovator and manager mindsets are of different types: discover, deliver, fix and grow.

Innovation obstacles

Ravi enumerates a long list of innovation blocks in large companies: fear of cannibalisation of existing products, inertia of past success, risk aversion, fear of failure, lack of understanding of what is happening at the grassroots level, intolerance of mavericks, ignorance of the activities of emerging startups, blind spots about customer attitudes, overconfidence of customer loyalty, and internal reward structures that favour only standardisation, compliance and consistency.

Large companies may sweep mistakes under the carpet, but startup founders learn from such mistakes. “Attackers – the startups – are more inspired and desperate to win,” Ravi observes. Companies should pay attention to the opportunity cost of missed innovations as well.

Such “drags” inhibit organisational innovation, but some actionable fixes like culture change can take years to implement. The charisma and passion of the CEO are critical for innovation to succeed, and appropriate rewards and “soft” reinforcement also help.

Many companies have a separate innovation structure with autonomous teams. They are shielded from the rest of the company and have a separate budget. “Consistency, improvement, and innovation need to co-exist,” Ravi urges.

There should be “psychological safety” so that employees feel encouraged to speak up and suggest ideas which may seem radical, without fear of being called stupid. Anonymous feedback and suggestion channels may help here, particularly throgh online tools.

Employees should be given adequate time and resources to experiment with new ideas. The company should clearly communicate what has happened to past ideas in terms of commitment, implementation, and impact.

Innovation Foresight (IF)

Managers should make educated guesses about the state of the market and the company’s innovations over a period of one, two, five and even ten years – and then assess how well these guesses have fared as time progresses. Sealing these forecasts in envelopes and opening them years later is a creative method suggested by Ravi.

Even in an era of many unpredictable changes, it is important for companies to be able to plan and forecast. This includes avoiding prescience errors (missing out on a great idea), obstinacy errors (sticking to an infeasible product) and drift (products with no clear strategy).

It is not always necessary to be first in a category with a new product; fast followers can also succeed if they adopt methods for catch-up. Ravi proposes a range of useful progress dashboards and charts in this regard, such as Foresight Document, Reality Document, Foresight Accomplishment Chart (FAC), and Failure Assessment Matrix (FAM).

Managers should be able to estimate future cost models, impact on revenues, market share, competitive offerings, customer satisfaction, media impact and even disruptive moves by startups – and then objectively assess their performance.

Such activities help mental states of preparedness and alertness, and reduce error. Other impacts are a better understanding of assumptions, mapping of scenarios, and collective learning. In the long run, this helps to quickly identify and kill projects that are infeasible, and better predict promising areas of investment and catch-up.

Rewards

While the company’s board rewards business leaders for delivery and meeting stock market expectations, there should also be rewards for discovery skills, strength of innovation portfolio, effective foresight, fast catch-up to competitors, and external collaboration.

Internally, the Tata Group has instituted a reward called ‘Dare to Try’ for intelligent or creative failures where the cause, learnings and remedial or precautionary actions are well captured. Amy Edmonson’s HBR article on Strategies for Learning from Failure describes such mistakes as “praiseworthy failures.”

Rewards should be given for innovation impact as well as efforts made, such as consistency in efforts to accomplish innovation, and best use of external and internal resources to accomplish innovation. Rewards can also be in the form of a bonus.

Replicating and adapting ideas from outside should be encouraged. After all, catch-up and fast catch-up are required to outflank competitors. This requires a strong sense of humility.

In sum, the book shines the spotlight on aspects of innovation that are not as well covered in other publications, and provides a lot of actionable advice for innovators in organisations of all types. We look forward to more case studies of how such tools are implemented and assessed.