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July 9, 2012

Making innovation work at enterprises

Posted by Simon Towers (View Profile | View All Posts) at 6:16 AM

Every time I visit a firm, one of the first things I notice is that everybody thinks they are innovating.  But, once you start talking about ideas they say, oh, we have lots of ideas, but none of them actually see the light of day. Why? I think, it's because the conventional organization is not wired to really innovate.

Because, one of the characteristics of innovation is that there is no explicitly measurable ROI at the beginning of the process.  Nobody can clearly say, let's invent something because it is going to bring in X amount of revenue.  It is hard to say, let's sit in a room, brainstorm and just come up with a blockbuster.  So then, what must funding be based on? Organizations tend to fund projects that have a clear goal in sight.  If you cannot necessarily put your finger on it - more importantly the person who is championing it cannot be measured on it - then it gets shelved.  So, if you only measure for success - a measurably successful end product or service - then innovation will take a back seat. If, however, you allow for failure, if you can see how many ideas will come out of the woodwork, you may be on to something.  Many are blue sky, but that's the point.  To truly innovate you have to do whatever it takes until you can inspire the system to invest in that pure idea. Excite it enough to put money on the table.  

So, the culture of innovation has to have people inspired to contribute. There may be five guys who will deliver 80 percent of the volume of innovation, but there is that one guy who, in two years, comes up with the one idea that becomes the blockbuster.  That idea is vitally important, so allowing for that idea to take birth is really about nurturing a culture of innovation. So, in the beginning, we are not gunning for anything cast in stone.  We are just inspiring people and we we directing them to innovate.  In fact, the best way to kill creative input and innovation is to ask if it is worth a billion dollars.

Look at startups.  They are typically unafraid to innovate, but they also ask the important fundamental questions - What is the opportunity behind this idea? How big is that opportunity? What is the addressable market? I am certainly not advocating "don't ask"; Because, it's important to go on and invest knowing that there's something substantial to be  gained from it.  One thing the organization should certainly verify  is that the innovation agenda helps accelerate the execution of its stated strategy.  Because strategy is something that you come up with after you have the basic homework done.   

Real innovators try, today, to come up with something that might otherwise happen ten years from now.  And it might be the next big thing.  But then, there's a chance it may not.  But they go on anyway. Because innovation is also about noodling - not just next quarter's profits.


Noodling - easier said than done, but nonetheless unfortunately innovation is a wild animal, tough to tame. Some organisations have specific innovation departments, others have more generic innovation approach where they want anyone and everyone to innovate. E.g. At one time, I believe HP compensated its employees for each patent they generated in their free time. Nonetheless, individual innovation (where one person can deliver on an innovative idea) is far easier to generate than collective innovation (where a group is required to deliver on an innovation). And innovation must always hold potential for money made or money saved and really needs an entrepreneur's mindset to deliver on it. Ideas are dime-a-dozen, execution is always the key. And only a true entrepreneur has the leadership ability to cohesively hold a loosely created group of people into a productive organisation.

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