How should firms develop the organizational structure, culture, and incentives (e.g., for teams) to encourage successful innovation?
When it comes to creating an innovation culture, often people make it far too complicated. If you’re part of the senior leadership team and you’re serious about innovation then your job is simple – reduce friction.
If you’re serious about innovation and you’re not a senior leader, then your job is to do what you can to convince senior leadership that innovation is important. Then, gently help your execs see the areas of greatest friction in your organization so they can do something about it.
When it comes to creating a culture of innovation, the most frequently cited area of friction in organizations is the acquisition of resources for innovation projects (the infamous time and money). Senior leaders serious about innovation must eliminate the friction that makes it difficult for financial and personnel resources to move across the organization to the innovation projects that need them (amongst other things).
But this particular impediment is just a part of a much larger barrier to innovation – the lack of an innovation strategy. When senior leadership commits to innovation and sets a strong and clear innovation strategy then policies and processes get changed and resources move.
A couple of years ago I ran a poll on LinkedIn asking people to identify their organization’s biggest barrier to entry. 566 people responded and 58% of respondents identified either the absence of an innovation strategy or the psychology of the organization as the biggest barrier. ‘Organizational psychology’ came out on top with 32% of the vote, with ‘Absence of an innovation strategy’ a close second (26%). Other choices in the poll included – ‘Organizational structure’, ‘Information sharing’, and ‘Level of trust and respect’.
(poll results timed out on LinkedIn)
A second major area of innovation friction is the movement of information. Too often there is information in disparate parts of our organizations that remains separated and unknown to the people who need it. Organizations that reduce the friction holding back the free flow of relevant information to where it is needed will experience a quantum leap in not only their product or service development opportunities, but in many other parts of their organization including sales, marketing, and operations.
So, what are the areas of friction that are holding your organization back from reaching its full innovation potential?
What are the barriers to innovation that have risen in your organization as you struggle to maintain a healthy balance between your exploration and exploitation opportunities?
I’ve explored the idea of barriers to innovation further in my book Stoking Your Innovation Bonfire from John Wiley & Sons. It’s been called “accessible and comprehensive” and companies have been acquiring it in bulk to both identify and knock down barriers to innovation, but also to build a common language of innovation.
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Innovation is about change. Companies that successfully innovate in a repeatable fashion have one thing in common – they are good at managing change. Now, change comes from many sources, but when it comes to innovation, the main sources are incremental innovation and disruptive innovation.
Note that the chart has arrows going in both directions, but not simultaneously. There is a push-pull relationship. At the beginning of the innovation process the satellites influence what the innovation will look like (new production capabilities, new suppliers, ideas from partners/suppliers, component innovations, new marketing methods, etc.). But as the innovation goes into final commercialization, the direction of the change becomes outwardly focused.
The reason that almost every scenario ends up with a centralized innovation group managing innovation is because of the complexity involved in properly managing innovation. A centralized innovation group has the opportunity to continually evolve the innovation understanding of the organization and cascade that knowledge through a set of innovation champions, distributed throughout the organization. A centralized innovation group can also remove most of the innovation management burdens from other groups by taking responsibility for managing the policies, processes, systems and training needs for idea generation, selection, funding, and development. This allows other groups to focus on achieving excellence in their day jobs and coming up with great ideas.
I had the opportunity to meet and chat with local ethnographic researcher Cynthia DuVal about the role of ethnographic research in the innovation process, and she shared an insight that I thought I would share with the rest of you.
Because the team will likely only get the insights mostly right, it is important that your go-to-market processes include a great deal of modularity and flexibility. In the same way that product development processes have to design for certain components that are ‘likely’ to be available, but also have a backup design available that substitutes already released components–should the cutting edge components not be ready in time.
In this economic downturn there is more pressure than ever on executives to find new sources of growth, and as a result leaders are increasingly talking about innovation. In some organizations the leader may say “we need to be more innovative” or “we need to think out of the box” and stop there. While for other organizations it may become part of the year’s goals or even the organization’s mission statement. Only in a small number of cases will there be any kind of sustained effort to enhance, or create, a culture of continuous innovation.