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HBR/McKinsey M-Prize: Innovating Innovation Challenge

How do we make innovation an everyday, everywhere capability in our organizations?
Start
Finish
10/16/2012
Challenge Begins
1/7/2013
First Round Deadline
2/10/2013
Final Round Deadline
julian-birkinshaw's picture

Three principles for making innovation a reality in your company

Management thinking is inherently faddish, but there are some perennial favourites that never fall out of favour.  Innovation is one those evergreen themes: it is a rare CEO who doesn’t list innovation as one her top four or five priorities.

But innovation is an elusive beast.  Setting aside a few well-known exceptions, the vast majority of established firms feel there is a big gap between their efforts and their achievements.  R&D investments have been made, stage/gate processes have been built, creativity training courses have been run, and yet the outputs –exciting new products and services—don’t seem to be falling into place.

So what to do? We can look to those old favourites –Apple and Google—and try to learn from them. But it is a flawed approach. Apple and Google have innovation in their DNA; they have many years of success to build on; and they have earned the license to take some risks. So we have to be very careful in applying our learning from these two to our own companies.

I think a more useful approach is start from the principles of innovation – the underlying ideas and themes that have been identified over the years – and to see if we can find ordinary companies that are putting those principles into practice. And when I say ordinary companies, I mean established players that are trying to reinvent themselves, and also mid-sized firms that are away from the spotlight, looking for new and better ways of working. If these companies are successful, then they are likely to be much more effective role models than Apple or Google are.

So what are these principles, and who is experimenting with them?  Here are three that I think are really important, with a couple of company examples for each one.

Time Out.  It’s a well-established principle that people need slack time to work through their ideas. 3M and Google, among others, have given “innovation time off” to their scientists and engineers. But most companies struggle to justify that level of slack, and aren’t confident it would be well used anyway.   So a more focused approach may be more worthwhile.  Consider, for example, the UK software company, Red Gate. They first experimented with a “coding by the sea” initiative, where they got a bunch of volunteers to take over a beach house for a few days to see if they could make progress on a software product. This then expanded to “down tools week” which is a company-wide initiative, once a year, where everyone puts their normal routine work on hold and commits to doing something new, something a bit risky, or something that has been bugging them. There is also a “sweat the small stuff” day, once a quarter, for getting on top of the creeping bureaucracy and niggling problems that accumulate over time. These activities provide the necessary time out for employees, but with a reasonable degree of focus at the same time.

Loosely defined roles.  One of the biggest obstacles to innovation is the notion of a job description – it is a sure-fire way of narrowing an employee’s focus around someone else’s view of what is important, and of not making full use of his latent skill-set.  Truly innovative companies avoid giving people job descriptions, or they find creative ways of encouraging them to join multiple projects. For example, the UK consumer products company Innocent (famous for its healthy smoothies) asks all its employees to help deliver its vision, “to make natural, delicious food and drink that helps people live well and die old.”  Over the last few years, its big new product lines – including a healthy Veg Pot and its This Water line – have both come from ideas conceived and developed by mid-level employees.

Tolerance of Failure.  It is axiomatic that successful innovation requires tolerance of failure. Some pharmaceutical scientists will spend an entire career working on drug development without a single one of their products reaching the market. Strange, then, that so many of our management processes, the ones that support innovation, are designed to avoid failure and to ignore it when it does happen. We can try to breed tolerance for failure through our skills as leaders of others, but we also need to find ways of institutionalising this approach.  Here are a few examples. Tata Group’s annual innovation awards include a category, Dare to Try, for the best failed attempt at innovation. Advertising agency Grey has a Heroic Failure award in similar vein. HCL Technologies has a prestigious leadership development programme which executives have to apply for by putting together, among other things, a failure CV listing their biggest mistakes and what they learnt from them. 

Have you noticed a key theme that links these three principles?  None of them involve idea-generation schemes. Rather, they are all about translating ideas into action.  In my view, many companies get distracted by the allure of new ideas, and they forget that the hard part is taking those ideas and putting them work.  That is where the real progress is to be made.

Do you have ideas or case studies to share on how to make innovation an every-where, all-the-time capability?  Please enter the Innovating Innovation Challenge, the first leg of the Harvard Business Review/McKinsey M-Prize for Management Innovation.

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mathew-harold's picture

Innovation is useful for every sector and every manager or CEO wants it from their employees. But as the author has mentioned that when you try innovative ideas in your work then there is chance of failure and it is a risk factor for the employees. They will hesitate to try new ideas in fear that it might spoil their career. We have to implement the ideas and take a risk if we want to grow and win.
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peter-dry's picture

Great ideas. A massive blocker to innovation is when management don't walk the talk and actually implement innovative ideas. People will always come up with creative suggestions but demotivation can occur when ideas are not actioned.
What about the mindset that people enter the building with? This is a key area that has not been fully developed by companies. Mindset matters and the more creative the individual mindset, the more innovative the company will potentially be.

chakradhar-mahapatra's picture

If we incise deeply, it will not be incorrect to say that world over, government controlled bodies/companies (so called public sector) enjoy the above three attributes and at the same time probably least innovative (with some exceptions like NASA). I think these three facilitators are necessary, but quite insufficient to generate and execute Innovation. So what is that matrix?

Yesterday, I happened to listen to the TED Talk@
http://www.ted.com/talks/anil_gupta_india_s_hidden_hotbeds_of_invention....

roy-barden's picture

I like the concept of indirectness. To make profit you don't set out to make profit. You do great things for your customers and profit comes as a bi-product. Funny how when we try to innovate we do this by trying to innovate - and then wonder why taking this head on often doesn't work. Look how big pharma assumed that spending more on R & D would create more drugs when in fact the reverse has been the case.

mike-green's picture

One other thing ...

Startup founders are often replaced as CEOs when they received venture capital because they are typically lousy executioners of scaling proven business models. They are more typically explorers, creative geniuses who discover the business model that works. Seldom can they switch into narrow-minded executioners who assemble the management team necessary to scale the business based upon a single-minded focus on the business model. VCs recognize that and often replace the founding CEO with an experienced one.

Now, reverse that process in mature small companies and large corporations. The business model is at the core surrounded by lots of management people who know how to execute assignments, manage departments to produce an outcome that dovetails into the outcomes produced by other departments, which all fit to produce growth in profit margins.

But the search is substantially reduced or gone altogether for new, creative, market-driven opportunities, innovative competitive advantages and additional streams of revenue. The C-suite is no longer a bunch of innovative geeks trying to solve a problem, introduce a new addictive toy, offer fantasy, leisure, security or a simply yuck-yuck to identify a new target market or a subset of the target market the company currently addresses. Can a bunch of C-suite executioners make room for a small flexible group of innovators within their midst and take them seriously? Could the company develop such a team from within by offering incentives? Could the company rotate some of the spots on the team members each month, offering employees the opportunity to win spots on the team by coming up with great ideas and spending 30 fully paid days solely working on their ideas with the team?

mike-green's picture

Everybody hates the person who stands around and observes an operation solely for the purpose of pointing out what's wrong and what needs to change to improve the outcomes. That person is often viewed as a nit-picky annoyance. But when companies need to come up with enterprising ideas, innovations to old constructs and even new business models to compete better in an evolving marketplace, it seems apropos to have idea people whose job is offer ideas that help the company become more efficient, gain a competitive advantage, improve the bottom line, extend the life of the company, etc., all without the pressures of day-to-day grinds and the fear of failure and-or consequence. People offer their best ideas when they perceive a problem they believe their idea has the capacity to solve. In fact, that single notion is the essence of the soul of every entrepreneur. And serial entrepreneurs can't STOP thinking about how to solve problems ... and they see them everywhere in every business.

So, what if a company put together a team of folks from inside the company and outside the company (and rotated the members) and provided incentives for every idea that was adopted and successfully instituted? Could the company benefit from funding the team and offering small equity stakes in every idea implemented?

What if the company developed such a team and offered spots onto the team through online challenges aimed at recruiting local students from higher ed and high schools? Could the company become a model for other companies by engaging the community itself and crowdsourcing by posing provocative challenges that served as incentives to get the community to see itself as an extension of the company? Would the community compete for cash and prizes provided by the company and ultimately win a spot on the company's Idea Squad?

Could the company win by invest in developing a pipeline of great ideas that get wrung through a vetting process inside the company and eventually selected by the Idea Adoption Team and turned over to the Idea Implementation Team? Could there be benefit in having some overlap between the IS, IAT and IIT?

tera-allas's picture

I couldn't agree more with "translating ideasinto action" -- as I argue in my "hack" (http://www.mixprize.org/hack/invest-incentivise-incorporate-%E2%80%93-ie...), the bottleneck really is not knowledge or ideas, it is implementation.

That's why the three principles here are not sufficient: they don't address the conflict between "rational management" and human nature. Unless you only employ really unusual people, your staff are going to find "time out", "loosely defined roles" and "tolerance of failure" really uncomfortable -- which in turn will almost certainly kill creativity and innovation. A more fundamental change is required.

_148's picture

It seems to me that the three principles overlook the most important ingredient which is people capable of coming up with an insight and taking it to market despite resistance from colleagues and a lack of resources and .... So I don't think that these principles will do much if you do not have the capable people... and, if you do have the capable people, then they will make time, and redefine their roles loosely and shrug off failure. In other words, they will be perceived by their superiors and colleagues to be capable in interesting ways that means they get more space to operate. So the principles are correlated with innovation, but the force behind them is people

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nick-shaw's picture

It is important to understand the difference between Leadership and Management. Effective Leaders create space in their business for Innovation; for themselves and their employees. Too many heads of business actually just operate as managers. Often, that it is because it easy to do so, they operate in their comfort zone and hide behind "business compliance". Effective Leaders rise to the Innovation challenge.

yin-cheng's picture

I like the point that "it is all about translating ideas into action."

In my role, I facilitate discussions regularly between the line and HR for ideas on improving onboarding, engagement, performance management and other HR&OD issues. In the past, I used to ask my staff to jot down the numerous ideas surfaced and we will go back to discuss and analyze before deciding what to do. It take a few meetings before we decide and some time before action is taken.

Now, I include an additional step where I ask each of my staff present to take on 1 idea shared and commit them to implementing them within 1 month to all participants!

The first time I did it, the participants were pleasantly surprised and were most creative in coming out with ideas. And my HR staff not wanting to look bad, listened attentively than before and chose ideas that are most practical and they feel passionate about implementing within 1 month.

With the change, we were able to translate ideas into action, and fast! Try it out : )

stefan-blobelt's picture

It all starts with the people or stated another way, the nature of human behavior. People work inside companies and find the conditions to behave innovative or not. If those corporate environments don't provide the conditions (incentives & promotions) to behave innovative, innovators will remain a rare bred - you get what you pay for!
On the other hand, organizations have to survive within our economic system. But, which kind of companies survive best? Those who are investing in innovation or those who run for short-term profits to satisfy short-term focused investors and shareholders?
Unless we don’t innovate our economic shareholder value driven system, we will have a hard time to provide the grounds for companies to reward innovative people rather than their sales personnel.
Finally, what are the criteria by which our society evaluates people regarding being winners or losers - I've never read an article about the most innovative guys in town - the only thing we hear about is the most successful managers measured by how much they have improved stock value of their companies and how much they have made last year.
The formerly basic and collective values of progress and development have been replaced by the individually focused values of status and money - it's simple as that! We live in a world of winners and losers – not people who are valuable members of organizations and societies doing a great job as innovators and producers.
Slack, loosely defined roles, and tolerance of failure are fundamental principles for complex adaptive systems to work. As long as we continue to treat and manage our organizations and societies like machines, we won’t be able to provide the variances necessary to survive. Variation, selection, and replication will remain the three fundamental principles of evolution, if we like it or not – and innovation is required for variation, if it’s paid for or not.