Partly solved Rubik's cube where the top part is yellow

Good innovation practices are vital

Unleash creative potential with data-backed decisions, cultivate a growth mindset, and conquer biases for a thriving innovation culture.

Effective innovation practices empower managers to make well-informed decisions using reliable data. These practices can continuously be improved. Recognizing that numerous decisions are grounded in assumptions and that we are susceptible to our own biases is a crucial initial step.

Co-author Øyvind Lillerødvann, Business Developer for Data-driven Innovation at Kantega.

This article is part of a series where we share experiences from a learning project on innovation accounting and innovation systems. To learn more about the background for the learning project and the problem statement we recommend reading these articles first: 

The cornerstone of good innovation practice begins with good leadership. Establishing a culture that integrates innovative thinking and work processes is essential. To accomplish this, leaders must guide their teams, develop a supportive framework for innovation, and facilitate that those who will do the job are given the opportunity to develop the necessary skills and expertise.

It helps to have a growth mindset

To enhance our abilities, adopting a growth mindset is advantageous. We may have limited experience or training in innovation, or we may be fairly skilled yet recognize room for improvement (demonstrating a growth mindset). To innovate and generate value by enhancing or developing products and services, we must allocate space for refining practices and evolving our thought processes.

Transformation is a gradual process, and we cannot expect to become exceptional performers instantly. While that may not be the ultimate goal, a team can more readily achieve success with the guidance of a skilled coach or "team mentor."


What aspects should be focused on during training?

The essence of innovation practice dictates that a product cannot be scaled until the business model has been validated. Initially, it is crucial to assess whether an idea addresses real needs. Once this has been validated, it is then appropriate to contemplate potential solutions, bearing in mind the importance of validating our assumptions.

KSSO's innovation framework outlines a product life cycle that demonstrates how to incrementally reduce uncertainty by verifying assumptions at each stage. This approach minimizes the risk of expending excessive resources on an unviable idea. Identifying early on that there is no demand enables us to avoid unnecessary development costs.


Understanding facts, beliefs, and risks

Before embarking on an innovation journey, it is essential to recognize the need for change. Unfortunately, many innovation projects invest significant resources in a single idea without realizing tangible results. Various factors could be pointed at when a new product fail, such as high stakes, bad luck, or even a well-designed product with insufficient marketing. With a growth mindset, the focus should be on improving future endeavors.

The first step involves acknowledging that relying on intuition or outdated information may lead to mistakes or missed opportunities. This realization highlights the importance of managers establishing supportive frameworks and encouraging innovative thinking and practices.


Beware of cognitive biases

Numerous cognitive pitfalls can negatively impact product development, making it crucial to remain mindful of our inherent biases and how they shape our understanding and decision-making.

Here are some examples of common cognitive biases:

  • Confirmation bias: The tendency to interpret information in a way that confirms one's preexisting beliefs, while disregarding information that contradicts them.
  • Dunning-Kruger effect: The phenomenon where individuals with limited knowledge or expertise in a subject overestimate their abilities.
  • In-group bias: The inclination to favor or trust members of one's own social group over those outside of it.
  • Availability bias: The tendency to rely on easily retrievable information when making decisions.
  • Optimism bias: The propensity for people in a positive emotional state to overestimate the likelihood of favorable outcomes.
  • Pessimism bias: The tendency for individuals in a negative emotional state to overestimate the likelihood of unfavorable outcomes.
The list of cognitive biases influencing our choices is extensive, and nobody is immune to them, as they are deeply ingrained in human nature.


Combatting cognitive biases

To counteract bias, avoid relying solely on faith and hope regarding your product's reception by customers. Instead, adopt a healthy skepticism as a foundation for more informed decision-making. Utilize reliable data and relevant information to assess ideas and guide your choices.

It's crucial to acknowledge that we often operate on beliefs rather than concrete knowledge. In these cases, we should explicitly state our assumptions and then test their validity. In other words, form hypotheses—preferably rooted in intuition—and validate them through gathering insights or conducting experiments.

The quality of hypothesis testing, or the methods used to mitigate risk, significantly impacts the outcome. Acquiring insights is an essential skill that involves determining what information is needed and the most effective way to obtain it. The goal is to gather sufficient data to make well-informed decisions.

Embrace the possibility of being wrong. It's better to discover a flawed assumption early on, rather than investing valuable time, effort, and money into an unviable idea.


Are you addressing a genuine problem?

To make sound decisions, reliable data is essential. Various types and quality of data are required at different stages of a product's life cycle. For instance, KSSO emphasizes comprehending customer needs and problems early in the development process.

When verifying if our assumptions about customer needs align with their actual demands, we must conduct interviews that do not bias the interviewee into providing the answers we desire. If we fall victim to confirmation bias, it can affect not only the phrasing of our questions but also our interpretation of the responses. Consequently, we may miss the opportunity to abandon a nonviable idea early on, risking the investment of resources in a concept that cannot materialize into a sustainable business model.


Cultivating a culture of continuous improvement

Effective innovation practices are crucial for business success as they enable managers to make well-informed decisions. Managers can foster a culture of innovation by providing opportunities for skill development and nurturing a healthy skepticism to ensure those skills are put to good use. Additionally, seeking guidance from experienced individuals in innovation practices can help the team enhance their performance. Allocating time and resources for improvement is a vital managerial responsibility. The benefits include mitigated risks and a team capable of learning and generating value more rapidly.


In summary, these key elements are vital for achieving effective innovation practices:

  • Recognize that assumptions are being made.
  • Engage someone who can train the team in innovation practices.
  • Learn how to quickly test various assumptions.
  • Be aware of and counteract your own biases.
  • Test, learn, and apply the acquired knowledge.

KSSO has demonstrated considerable success in innovation, but with a growth mindset, we acknowledge that there is always room for improvement. Enhancing our innovation practices will enable KSSO's management to make better and faster decisions while managing the innovation portfolio more effectively through the established venture board. We will discuss the lessons learned from this initiative in our next blog post as part of the learning project.

This article is inspired by the books "Innovation Accounting" (Toma, D. and Gons, E.), and "The Corporate Startup" (Viki, T., Toma, D. and Gons, E.). 

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