Organizations today are spending money on the latest technologies and working hard to solve problems as they arise. Yet, sad to say, this is simply not enough.

Today, to get on top of today’s fiercely competitive business environment, organizations need to take a strategic move: Develop an Innovation Mindset. What is an Innovation Mindset? What does it take to develop an Innovation Mindset? Often, this can be mindboggling as we get confused as to understanding what is an Innovation Mindset. Developing an Innovation Mindset is never the mere act or intent of investing in technology. It goes beyond spending money on the latest technology.

Developing an Innovation Mindset is to undergo the transformation from an innovation-averse to a forward-thinking organization.

Understanding an Innovation Mindset: What It Takes to Develop One

Developing an Innovation Mindset requires scaling innovations repeatedly and making it grow as fast as others. Companies need to depart from adopting technologies as point solutions to evolving future systems. This can be achieved by cultivating the mindset and methods of the top 10%.

The top 10% are the Leaders in Innovation Management that are already enjoying a considerable head start and are not standing still. The systems they have put in place are specifically designed to not only accommodate innovations but also scale them across the enterprise.

Developing an Innovation Mindset Starts with the Right Tools

To foster than Innovation Mindset, we need to put in place 5 key principles.

These 5 principles can provide organizations the foundation on developing Innovation Mindsets.  There first 2 are defined as:

1. Adopt technologies that make the organization fast and flexible. Consumers now demand that companies are fast and flexible. The market is getting impatient when there are delays and so structured that it ceases to be an organization with a Customer-centric Design. Principle 1 focuses on making organizations fast and flexible. Achieving this call for efficient use of decoupling data, infrastructure, and applications to achieve greater flexibility and a faster-moving IT culture.
2. Get grounded in cloud computing. This principle is focused on catalyzing innovation. Adopting this principle will enable organizations to maximize the use of the cloud to successfully utilize other technologies, including Artificial Intelligence and analytics.

There are 3 other principles that organizations must take notice of and focus on. The other 3 principles are recognizing data as being both an asset and a liability, managing technology investments well across the enterprise, and finding creative ways to nurture talent.
Integrating these principles in the organization’s journey towards Digital Transformation will promote the development of an Innovation Mindset. When this happens, we can expect our organization to keep up with the pace and catch up.

What Does It Take to Have an Innovation Mindset

Developing an Innovation Mindset has led leaders to take command and be in-charge of market demands. Leaders are adopting DevOps, automation, and continuous integration/continuous deployment at a faster rate than Laggards. Let us take a look at a Travel Industry disruptor. The company migrated its platform to microservice as part of decoupling initiatives.

As a result of taking this initiative, rapid response to change was achieved. This also enhanced its capability to add new features as the company experiences explosive growth.

Let us take a look at a more internationally recognized company: Ant Financial (formerly known as Alipay), the Alibaba Group’s financial arm. The organization embedded cloud services and AI across multiple processes and product lines. Furthermore, AI capabilities were offered to external ecosystem partners.

Today, Ant Financial can instantly assess the credit risks of underserved people who may not have bank accounts and even target them with loan offers. The overall cost was reduced by 50% and the company experienced a 10-fold increase in daily visitors.

Developing an Innovation Mindset is key.

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More sophisticated managers explicitly use Key Performance Indicators (KPIs) to promote cross-functional–not just vertical–alignment. For them, KPIs are the means and methods for rigorously defining and measuring the fundamentals that matter.

Why are KPIs important? If used effectively, KPIs can clearly track value creation and deliver value for its stakeholders – customers, employees, and investors.

KPIs are being used by organizations in different ways. Yet, there are clear and measurable differences that exist in terms of how it is being used. There are organizations that use KPIs to monitor and assess performance while there are those that use KPIs to guide and drive performance improvements. Data-driven and customer-oriented leaders use KPIs in practicing Customer-centric Design, while those more concerned with hitting their numbers remain focused on efficiencies.

There are 4 primary best practices for Key Performance Indicators that organizations should follow. These best practices are every organization’s guide to using KPIs to drive performance improvements.

The 4 KPIs Best Practices

The 4 KPI Best Practices can demonstrate the effective use of KPIs to reflect and illuminate the strategic priority of organizations.

1. Focus on Customer Experience (CX). The first KPI Best Practice, Focus on Customer Experience is focused on an increased understanding of customers’ wants and needs. There is a renewed emphasis on learning more about users of products. The main objective of focusing on customer experience is turning customers into brand advocates and evangelists. When KPIs are focused on customers beyond the sales funnel, this encourages an organization to realign itself around sharing, coordination, and collaboration.
2. Identify Top KPIs. When top KPIs are identified, it is basically identifying the priority KPIs. Doing this requires identifying the appropriate number of KPIs to prioritize. There are guide questions than can help organizations in the prioritization of the KPIs. One of the questions can be “Is there a consensus on how KPIs affirm and support strategy? Another significant question can be one that points to how directly the functional KPIs contribute to enterprise success. When going through this process, it is important that leaders understand how KPIs interrelate and align.
3. Foster Enterprise-wide Discussion of KPIs. A very critical Best Practice, the third KPI Best Practice is focused on reinforcing the company’s culture. In fostering enterprise-wide discussion of KPIs, KPIs must be central to leadership conversations around driving organizational behavior and change. It is not merely an assessment tool. If KPIs are not front and center at a management meeting, there is something wrong with the meeting, the management, or the KPIs.
4. Treat KPIs as Special Class Data. Treat KPIs as Special Class Data is the fourth KPI Best practice that is essential in process transformation and automation. Organizations must understand that data and analytics are the raw ingredients of KPIs. KPIs special class as a data asset will become even more important as they become an input to ML algorithm and process automation. In the years to come, organizations can expect that data capability that supports more complex KPIs will become a source of competitive advantage.

What Matters Most

It is very clear that KPIs play a vital role in directing the priorities of organizations. With the changing global economy, organizations have been recognizing the importance of Customer Focus. In fact, it has taken a priority seat and identified as the top KPI by executives.

But does this hold true to all organizations? Identifying top KPIs is important but organizations must know the right way to identify the appropriate number of KPIs and prioritize them. It is important to note that KPIs must align well with the organization’s internal processes with its external customer behaviors.

Customer Focus is a priority, but is it also your priority KPI?

Interested in gaining more understanding of the KPI best practices? You can learn more and download an editable PowerPoint about Key Performance Indicators (KPIs) Best Practices here on the Flevy documents marketplace.

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