Innovation and the Corporation

In my current life, I’ve found myself struggling to innovate in an environment that is typical of the modern corporation. Even given that there is a positive value placed on ideas and open thought, and that the industry is conservative and ripe for exploitation; selling, sustaining and executing innovative strategies is all but impossible.

Why is this? I’ve spent a good deal of time mulling this over this past year and have now come to the conclusion that there are certain aspects of the innovative process that can be considered critical points of failure. Any organization that has difficultly getting past even one of these areas will ultimately fail in being innovative.

What’s more, I’ve noticed that the larger a company is, the more likely it is that one of these hurdles will be impossible to surmount. It seems that the more people involved, the less likely consensus can be reached.

The Process of Innovation

First, it’s a good idea to clarify what I mean by innovation. Wikipedia’s entry does a good job of laying out a framework for this discussion.

I view successful innovation as a series of five distinct steps. Each step has different needs and requirements and because of this, the process itself can cause challenges.

The Challenge of Innovation

Innovation becomes difficult because most organizations are unwilling or unable to recognize and support the cycle as it’s described above. Often, where there is a stated “culture of innovation”, there is support for only one or two components. But each step in the cycle creates different strains and pressures on the organization, and it is easy to interpret the normal process of innovation itself as failure.

Points of Failure

As I mentioned earlier, points of failure tend to come in certain varieties. The unfortunate part of this is that seeing risk to innovation requires some rather unorthodox thinking of its own. It’s been my experience that people either get it right away, or they don’t.

Failure to Recognize the Benefit of Innovation - Perhaps the biggest reason for failure is the inability of managers and the corporation in general to see any value in innovation, either given a specific circumstance or at all.

It’s curious that some managers will have a positive opinion on growing new markets and engaging new types of customer yet will be unable to allow new processes, platforms and ideas to provide solutions.

The misunderstanding of benefits translates directly into misconceptions of risk and reward; the expectation that innovation can be measured and analyzed to a sufficient degree prior to the innovation taking place! Along with this, there is often an overconfidence in current processes and technologies. Not understanding innovation results in seeing current best practices as being the result of complex algorithms that must remain unchanged as opposed to being a collection of individual haphazard temporary measures that they often are. Not understanding innovation results in thinking that the organization is an untouchable technological leader - nobody can match our spending and current platform - as opposed to not understanding that certain customers are willing to pay a lot less for good enough.

Insistence That Innovation Must be Restrained - What often happens when a champion is allowed to innovate is that they are forced to do it with rigid limitations in place. Innovation of a new product or process has never come from capitalizing on the current way of doing business, but from inventing and experimenting with new ways of doing things.

It’s for this reason that innovation must always be conducted in isolation from regular activities if it is to be successful. If you take a look back at the cycle diagram, there is an expectation that innovative ideas will be allowed to undergo a revision process. In other words, odds are that the innovators may not get it right the first time, and may need to tweak their ideas for them to be successful. For example, perhaps the product was launched to the wrong target market, or perhaps the original process wasn’t efficient enough for the customer. Innovations need to be able to find the right balance, and this can only be done through isolation.

Often, innovations present risks that are deemed unacceptable. To mitigate this, the innovators are forced to reduce scope, thus reducing the reward. In the end, the innovation is seen at best, as a marginal improvement for great cost.

Finally, attempts at innovation that aren’t isolated are eventually brought into direct conflict with higher priorities. When an idea of how to make something better and the reality of addressing a pressing client issue conflict, it’s obvious which option resources will be applied to - rightly so. The effect however is that the innovation dies from being consistently under resourced.

Impossible Expectations of Success - Companies without a history or culture of innovation have a difficult time accepting the risk/reward equation that innovation requires. As a result, there is often an expectation that the innovation itself will do its best to reduce its exposure.

When this happens, potential high reward targets are discarded for lower paying, yet safer options. While this is good business sense in general, it defeats the whole idea of innovation. Instead, innovative efforts should be measured holistically. The sum of many investments should allow for a few hits, but also for some misses. By encouraging misses, one encourages innovation and, by extension, hits.

Expecting That Innovation Just Happens - Finally, perhaps the worst thing that corporations do is to expect that innovations just happen. Often, executives look for people within their organizations to innovate, and expect the rest to be magically created from this champion’s aura.

What these executives miss is that they must be the force driving the innovation. They must be the ones to isolate the process. They must be the ones to champion the act alone, and not focus on the result. They must recognize that it’s not enough to be a leader today, but essential to be a leader tomorrow.

Innovative leaders do this in three ways: Budgeting for innovation, isolating and developing innovators and taking calculated risks on the resulting new products and ideas themselves. In the technology field, two of the better examples of this leadership are Apple and Google. The former runs as sort of a serial innovator, putting the weight of the entire company into a particular new idea. The latter encourages distributed innovation, allowing each new product to show its merit in a limited space and grow into something larger when it is proven.

Both companies receive tremendous benefit from the innovative spirit that is explicit in the culture.

Corporate Innovation

Innovation requires a unique way of thinking that isn’t within every organization’s comfort zone. It requires an assumption of risk with the expectation of high reward. Often, a culture simply isn’t able to innovate successfully.

Until the present environment is one that avoids the common traps mentioned here, innovators are safer to restrain their actions. Create the culture that allows for innovation first, and you’ll be better able to build the next big thing.