Innovation used to be the preserve of a select band of employees — be they designers, engineers or scientists — whose responsibility it was to generate and pursue new ideas, often in a separate location. But increasingly, innovation has come to be seen as the responsibility of the entire organization.
Making innovation everyone’s job is intuitively appealing but very hard to achieve. Employees face capacity, time and motivation issues around their participation. There is often a lack of follow-through in well-intentioned schemes. And there is typically some level of disconnect between the priorities of those at the top and the efforts of those lower down in the organization. Moreover, Web-based tools for capturing and developing ideas have not yet delivered on their promise.
To understand these challenges, and to identify the innovation practices that work, we spent three years studying the process of innovation in 13 global companies. In this article we focus on the key insights that emerged from our research, organized around five persistent “myths” that continue to haunt the innovation efforts of many companies.
For many people, it is still the sudden flash of insight — think Archimedes in his bath or Newton beneath the apple tree — that defines the process of innovation. According to this view, companies need to hire a bunch of insightful and contrarian thinkers and provide them with a fertile environment, and lots of time and space, to come up with bright ideas.
Alas, the truth is far more prosaic. It is often said that innovation is 5% inspiration and 95% perspiration, and our research bears this out. If you think of innovation as a chain of linked activities — from generating new ideas through commercializing them successfully — it is the latter stages of the process, where ideas are being worked up and developed in detail, that are the most time consuming. Moreover, it is also the latter stages where problems occur. We recently conducted a survey in 123 companies, asking managers to evaluate how effective they were at each stage in the innovation value chain. On average, they indicated that they were relatively good at generating new ideas, but their performance dropped for every successive stage of the chain.
Takeaway: Most innovation efforts fail not because of a lack of bright ideas, but because of a lack of careful and thoughtful follow-up. Smart companies know where the weakest links in their entire innovation value chain are, and they invest time in correcting those weaknesses rather than further reinforcing their strengths.
The emergence of second-generation Internet technologies (“Web 2.0”) has had a dramatic impact on how we share, aggregate and interpret information. The proliferation and growth of online communities such as Facebook and LinkedIn seduce us into assuming that these new means of social interaction will also transform the way we get things done at work. But for every online community that succeeds, many others fail. Some make a good start but then enthusiasm wanes.
Takeaway: Online forums are not a panacea for distributed innovation. Online forums are good for capturing and filtering large numbers of existing ideas; in-person forums are good for generating and building on new ideas. Smart companies are selective in their use of online forums for innovation.
Any discussion of innovation in large companies sooner or later turns to the issue of “open” innovation — the idea that companies should look for ways of tapping into and harnessing the ideas that lie beyond their formal boundaries. The benefits of open innovation, in terms of providing a company with access to a vastly greater pool of ideas, are obvious. But the costs are also considerable, including practical challenges in resolving intellectual property ownership issues, lack of trust on both sides of the fence and the operational costs involved in building an open innovation capability.
Takeaway: External innovation forums have access to a broad range of expertise that makes them effective for solving narrow technological problems; internal innovation forums have less breadth but more understanding of context. Smart companies use their external and internal experts for very different types of problems.
A dominant concern when organizations set out to grow their innovation capabilities is how to structure rewards for ideas. A common refrain is that innovation involves discretionary effort on top of existing responsibilities, so we have to offer incentives in order for people to put in that extra effort. But both academic theory and our discussions with chief innovation officers indicate that this is a red herring.
Takeaway: Rewarding people for their innovation efforts misses the point. The process of innovating — of taking the initiative to come up with new solutions — is its own reward. Smart companies emphasize the social and personal drivers of discretionary effort, rather than the material drivers.
There is a lot of enthusiasm among those writing about innovation, and among those working in R&D settings, for bottom-up activism or “intrapreneurship.” The reasoning here is straightforward: Top executives are not close enough to the action to be able to come up with or implement new ideas, so they need to push responsibility for innovation down into the organization. We wanted to find cases where dramatic changes had emerged through bottom-up initiatives. But we came back empty-handed.
Takeaway: Bottom-up innovation efforts benefit from high levels of employee engagement; top-down innovation efforts benefit from direct alignment with the company’s goals. Smart companies use both approaches and are adept at helping bottom-up innovation projects get the sponsorship they need to survive.
Online tools, open innovation communities and big collaborative forums all have their limitations. None is always right or always wrong. The best approach involves careful judgment and a deep understanding of the particular challenges a company is facing. By thinking through the pros and cons of each element, companies can manage their processes better.