Hi Georg, thank you for taking the time to talk to us today about innovation culture.
Hi Sofie, I am also very pleased.
What measures can companies implement to strengthen their innovation culture?
First, it's important to understand that a lot is changing in innovation. The way companies, including Heraeus, look at innovation has changed. That often has to do with corporate culture. So, it's not about what we do but how we do it.
I'll take three examples. The first point is that we look first and foremost from the outside in. In other words, we are starting with our customers. We look at what customers do, what business models they have, what their value creation process looks like, what problems they experience, and what wishes they have. Only then do we go back to the company and develop ideas, which we then develop further in close cooperation with the customers.
The second thing is: that we don't just look at products but business models. What has to be successful is not the product and the technology but the business model. The needs that are fulfilled by the customer, the technology, the economic efficiency, and the profitability must be in harmony. We are also talking about monetizing innovation here.
The third aspect is that today we understand that we need to get out of functional silos more and work together cross-functionally. Working in these cross-functional teams is also more fun.
Medium-sized companies are among the leaders when it comes to patent applications. Is the topic of innovation culture still important?
I think so. Medium-sized companies are the drivers of innovation. That has been proven. However, patents are a poor indicator. Of course, we need patents and intelligent patent management. But it comes down to turning those patents into successful products. One example is Kodak, which had many patents but ultimately overlooked digital photography.
Medium-sized companies know their customers very well and grow together with them. However, there is also a second side to this coin. While focusing too much on existing customers, companies fail to see the opportunities in the larger market or overlook completely new market players. We want to overcome these challenges and have already made progress.
At Heraeus, you support some business units in aligning their innovation process more closely with the market. What does that look like exactly?
We have developed a consulting and learning project in HR Inhouse Consulting. We call it Market Driven Innovation. Cross-functional teams participate in this program, working together on an innovation challenge. These teams come from our different Global Business Units - always one team from one business unit. The teams learn new approaches and tools of innovation management and apply them directly to their projects. We also work with the sponsors, i.e., with the executives. Here we ask ourselves: What does it mean to practice innovation leadership today? How do I create framework conditions, including cultural framework conditions, so that innovation can develop and grow successfully in my area?
What learning outcomes of the participants surprised you the most?
What surprised me most was what the participants learned. For example, it pays off to talk to customers very early on. The teams interviewed customers when they did not have anything to put on the table but ideas – let alone sell anything. Of course, they went into interviews very well prepared – but were surprised at how much they learned about the customer's perspective. In the past, many thought: We don’t want to present without being able to sell something. However, the realization is: Yes, we can! And we have a very positive experience. That was the first point.
The second point was how important it is to be clear about your hypotheses – on your product ideas, the market, the customer, and what they like and what they don't like. We worked with the method of hypothesis-driven work and systematically tested these hypotheses. The program taught the teams how to do this with relevant market data. I found that fascinating – it took the teams a long way.
The third was how important it is to have teams with straightforward tasks, sufficient resources, and good coaching by their managers.
Thank you very much for the exciting insight and the interview, Georg.
Thank you, Sofie.