Five Ways to Ruin Your Innovation Process


Rita McGrath

RITA MCGRATH
Columbia Business School professor Rita McGrath studies innovation, corporate venturing, and entrepreneurship. Her latest book is Discovery-Driven Growth (2009).

http://blogs.hbr.org

Most companies sabotage their own innovation processes without meaning to. I’ve noticed five tell-tale signs of this syndrome, which I recently described during a talk to the Columbia Media Forum.

1. Innovation is episodic. We’ve all seen this movie: A few people in the organization have a burning desire to foster more innovation, or a different kind of innovation, so they invent a new process. If they are more junior, they might create a small team that, working around the typical organizational barriers, explores new opportunities. If they are more senior, the impulse may become formalized in a skunkworks, or even a New Ventures Division. For a while, things move along: people make interesting discoveries, and find new places where the company’s capabilities might be relevant.

All too often, however, the initiative ends badly. Sometimes it’s because the senior sponsor moves on. Sometimes it’s because the ideas didn’t work out: innovation, after all, is an uncertain process. Sometimes the company faces a cash or a profit squeeze, and the folks with budget scalpels go looking for something to cut. (It’s easy to ax innovation. Potential future customers can’t scream about not getting a product they don’t know they would love.) So, the innovation efforts get shut down.

More tragically, the group has actually come up with something powerful and novel, but — whoa — someone senior realizes that this could have a disruptive or cannibalizing effect on existing cash cows. The innovators get squashed and the idea is shelved.

What to do? First, remember that innovation, like any other important organizational process, can be managed. Don’t reinvent the wheel — there are good resources that can help you build a repeatable process. Second, recognize that on-again, off-again innovation is worse than nothing. It sends the signal that these are not the projects that people should bet their careers on. So, make it continuous and systematic. Set aside a regular budget. Build it into good people’s career paths.

2. Resources are held hostage by incumbent businesses. If you want to understand the most significant lever for generating change in a large, complex organization, you need to understand the resource allocation process. Resources flow where there is power; they signal what is important. Unfortunately, the resource allocation process in most complex organizations is not innovation-friendly. Rather, it’s a throwback to an era when the importance of a business was directly correlated to the people and assets it had under management. Makes perfect sense in a world of steady-state production. It can be lethal to organizations trying to be more innovative.

Most people who manage powerful businesses believe that it’s not in their personal best interest to contemplate shrinking that business or redeploying its assets and capabilities. So resources shore up the position of businesses that are starting to fade, eking out a little more time for the managers in charge. This creates two problems: first, valuable assets are being tied up in a business that doesn’t represent the future. Second, the resources that might be used to fund growth are held hostage.

The only time I’ve seen a company neutralize this problem is when very senior managers are charged with extracting resources from established businesses and re-purposing them to fund growth. This is not easy stuff. IBM had to re-invent its entire innovation process, creating an “Emerging Business Opportunity” model where a senior-level executive watched liked a hawk to be sure that the people and assets allocated to innovation didn’t get sucked back into the existing business. Ivan Seidenberg of Verizon was criticized by many — even his own people — for re-purposing the cash coming out of land-lines and phone books to support moves into wireless and entertainment businesses. The core lesson is that, if you allow the existing businesses to determine where people and funds are allocated, you won’t get innovation. Leer más “Five Ways to Ruin Your Innovation Process”