As many organizations become successful they tend to innovate less. Unfortunately, they begin to fear that the money, time and resources they spend on innovation will erode their success, rather than enhance it. They lack that sense of urgency to continue moving forward and so they mistakenly maintain the status quo. However, this is a short-sighted approach.

The headlines of major papers and magazines tell us that if we don’t innovate we’ll lose position because our competitors will take over our market share. In corporations we’ll lose customers and profits. In government we’ll spend more money yet meet the needs of fewer customers. In health care we’ll lose the ability to stay ahead of the latest approaches to patient care.

Many organizations today know that they must become more innovative in order to survive and grow. No longer can we look to the past to predict the future. No longer can we improve our products and services and expect this to be true innovation. We must re-think and re-invent what it is that we are doing and want to do. We need to identify what our products and services will be in order to manage today and in the future.

The Truth about Innovation

Most innovations don’t even make it to market. But that doesn’t mean organizations shouldn’t continue to strive for more. Innovation is the essence – the heart of organizations. Without it they’ll struggle and die. The great organizations today are known for the innovations that are successful.

If invention is inspiration, then innovation is discipline. The world is filled with inspiration, as evidenced by the more than 30,000 new consumer products introduced into the marketplace every year. But the failure of 90 percent of them is a powerful reminder of just how much discipline is required to achieve true innovation. If we focus on this statistic, we’ll resist spending the time required to create new products, services and processes. Most of these organizations that released new products that failed lacked a clearly defined innovation process. If it is haphazard people will resist spending time on innovation because they don’t understand the process.

Google executives are undeterred by employee resistance to innovation, and in particular, by failure. In fact, failure is encouraged. Eric Schmidt, executive chairman says, “Please fail very quickly – so that you can try again.” CEO, Larry Page tells how he praised an executive who made a several million dollar blunder: “I’m so glad you made this mistake because I want to run a company where we are moving too quickly and doing too much, not being too cautious and doing too little. If we don’t have any of these mistakes, we’re just not taking enough risk.”

Risk Aversive Corporate Cultures

Today, organizations need strong, committed leaders to create an environment that supports innovation and drives it forward. Such leaders will accept risk and spend time to overcome resistance.

Daniel Muzyka, RBC Financial Group Professor of Entrepreneurship, Sauder School of Business has said, “It is this constant examination of quarter-by-quarter results versus longer-term planning that creates a culture that is not supportive of innovation.” Organizations that focus on short-term, bottom-line oriented thinking create pressures on management and staff that diminish the focus on the long-term innovation process.

In fact, research studies point to a risk-aversive corporate culture as the number one killer of innovation. They show that short-term goals, particularly quarterly numbers, create an environment where the longer-term actions necessary to drive innovation are squashed. As a result, employees tend to avoid innovations that require longer-term thinking. Rather, they focus their attention to develop innovations around ideas that help to meet the shorter term results management is seeking. This leads to an increased focus on sustaining existing products and services rather than creating new ones.

There are many examples of employees who have come up with great ideas for their organizations but done nothing with them so they die prematurely; never having been given the chance to be explored for implementation. Sadly, their organizations probably never even knew of these concepts. Why is this? There could be various reasons: perhaps the innovator recognizes that the idea may negatively impact his or her job or the job of co-workers. Or, perhaps the innovator did not know how to explore the idea to take it from a vision to a reality and been too quick to discard the idea and assume that no one would ever agree on how to structure the concept or pay for it.

A survey of Corporate Canada’s innovation practices was released on February 3, 2013 by the Conference Board of Canada. According to Vice-President Michael Bloom, “The results suggest pretty strongly that it’s worth managing innovation; you get more ‘bang’ for your buck.” In the study, nearly half of the 450 participating organizations acknowledged that they had no “formal innovation management process” in place.

The study found that those organizations that spend lots of time on innovation, but don’t manage it properly, actually do worse, on average, than those who spend less. On the other hand, organizations with well-defined innovation policies and practices showed higher long-term growth in revenue, profits and company worth.

The Three Questions that will Kill Innovation

To protect prospective innovative concepts, innovation teams need to be aware of these typical questions posed by management and be prepared to respond.

  1. What is the expected return on investment?
    It should be no surprise that management will want to know this information; but it’s probably too early for the innovation team to provide an answer. Therefore, get agreement from management to specific dates to get back to them with this information; once you’ve reviewed the prospective idea has been reviewed more thoroughly.
  2. Are you meeting your milestones?
    The innovation team must be willing propose and get management agreement to milestones for idea exploration and development. When setting milestones, the team will need to consider what they require for research and development of the concept and prototyping. Once these milestones are set, they should also be willing to be accountable for meeting them. This will avoid management from setting imposed milestones that may compromise the innovation project.
  3. Do you have a definitive business case with quantitative data?
    While it’s probably too early for quantitative data, it is possible to provide management with a qualitative assessment of the innovation concept. Innovation teams should include this information in the Innovation Scope Document.

The Urgency of Innovation

As many organizations become successful they tend to innovate less. Unfortunately, they begin to fear that the money, time and resources they spend on innovation will erode their success, rather than enhance it. They lack that sense of urgency to continue moving forward and so they mistakenly maintain the status quo. However, this is a short-sighted approach.

Jake Burton, founder and owner of Burton snowboards believes that innovation does not need to be complex and is crucial to continued success for his organization. He said, “If an original product is a hassle for people, they’ll fork over money for something that’s better. Innovation doesn’t have to be complex. A lot of people are intimidated by the prospect of trying to make something better, because they feel that innovation has to be a scientific process. Or they feel that they have to come up with something extraordinary for it to be seen as innovative. Yet the solution is invariably very simple; the tools are usually right there. Problems arise when people don’t use their imagination, because they end up making things too complex. But everyone has the ability to make innovation happen.”

There’s something to be said about applying a sense of urgency to innovation and applying it consistently even when successful. According to Google chairman, Eric Schmidt, “If you don’t try, you don’t know. We tried. I and you don’t even remember the names of the products that failed. That’s the secret of innovation.”

Michael Stanleigh

Michael Stanleigh, CMC, CSP, CSM is the CEO of Business Improvement Architects. He works with leaders and their teams around the world to improve organizational performance by helping them to define their strategic direction, increase leadership performance, create cultures that drive innovation and improve project and quality management. Michael’s experience spans public and private sector organizations in over 20 different countries. He also delivers presentations to businesses and conferences throughout the world. In addition to his consulting practice and global speaking he has been featured and published in over 500 different magazines and industry publications. For more information about this article you may contact Michael Stanleigh at mstanleigh@bia.ca