In my post on Google's leadership change, I mentioned a column by SiliconValley.com's Chris O'Brien in which he listed five challenges for incoming CEO Larry Page. One of them was product development, which has taken on a "spastic quality," wrote O'Brien. He said Page will have to "find a way to channel the freewheeling innovative instinct into a more efficient system for creating new products. And he needs to build a culture that can execute these ideas and turn them into successes once they do launch."
https://o1.qnsr.com/log/p.gif?;n=203;c=204663295;s=11915;x=7936;f=201904081034270;u=j;z=TIMESTAMP;a=20410779;e=iThis is not a new concern. I wrote about Google's apparent lack of focus in 2008 and its poor track record of converting employees' ideas into marketable products in 2007.
Google isn't the company that struggles with innovation. An MIT Sloan Management Review article by academics Julian Birkinshaw, Cyril Bouquet and J.-L. Barsoux shares five innovation myths gleaned from their research. They all fall under the umbrella of what I'd call an uber-myth: that innovation spontaneously happens. (They call it "the eureka moment," and list it as the first of their five myths.)
Truth is, it isn't generating innovative ideas that's hard, it's executing on those ideas. The latter stages of the innovation process, where ideas are worked up and developed in detail, is where most companies struggle. When they asked 123 managers to evaluate how effective they were at each stage in the innovation value chain, most said they were relatively good at generating new ideas but their performance dropped for every successive stage of the chain.
The "eureka" myth is why so many companies are drawn to workshops that gather large numbers of people with the aim of generating new ideas, the authors say. Two problems with such events: Companies underestimate the amount of work they require. They can be disempowering if companies lack the ability to act upon the ideas. The keys to making them work are clearly establishing the problems you are trying to solve, putting on a workshop only if you believe that a lack of ideas is the problem, and being prepared to devote plenty of time and effort into follow-up work. An example offered is IBM, which found it needed a team of 60 researchers to sort through 30,000 posts received over a 72-hour period during an online "Innovation Jam" in 2006.
Myth No. 2 is that social interaction will transform the innovation process. (Or just about any process for that matter, with all of the talk about social business process management.) Many companies are creating online forums where employees and others can contribute and discuss ideas. Two problems with the forums: It can be tough to maintain participation. Many of the ideas will be "off-topic, half-baked or irrelevant," say the authors. Such forums work best when looking for a specific answer to a question, or when trying to generate a wide variety of views about existing ideas. A workshop with face-to-face interaction is better for building on ideas. I shared some great tips on jumpstarting an online community in a post from 2009.
Myth No. 3 is open innovation is the future. The obvious benefit of crowdsourcing innovation is it generates a much larger pool of ideas than can be done internally. But the challenges include investing time and money into building this kind of open approach and resolving any intellectual property ownership issues that might result from using ideas contributed by outsiders. Legal issues can be potentially hairy, as seen by Netflix's decision to scratch a second innovation contest where outside researchers were invited to help the company tweak its algorithms after the first contest led to lawsuit over giving outsiders access to Netflix customer data. Companies must learn when to use internal resources and when to use external ones, the authors say.
Myth No. 5 is bottom-up innovation is best. While some innovations begin as below-the-radar initiatives or as proposals that were rejected by top executives several times, say the authors, at some point they were adopted and prioritized by top management. "Successful innovations, in other words, need both bottom-up and top-down effort," they explain. A good tip they offer here: Companies should acknowledge contributions and describe how ideas are selected for implementation to keep the good ideas coming. They note Whirlpool has created an Innovation E-Space that allows all employees to keep informed about innovation activities and to volunteer to work one another's projects.
A strategy+business interview with management professor Vijay Govindarajan, co-author of the book "The Other Side of Innovation: Solving the Execution Challenge," also emphasizes the hard work involved in bringing innovative ideas to profitable fruition. He discusses the fundamental difference between operational efficiency, which emphasizes repeatable and predictable processes, and innovation, which is far less predictable. He says companies can meet the challenge of being good at both by:
- Creating a dedicated innovation team.
- Keeping the innovation team part of the overall organization, because it has to leverage some of the assets and capabilities of what he calls "the performance engine" or driver of operational efficiency.
- Not using the same measures of success as those used for the performance engine, typically short-term financial results.
Because of the effort involved, companies must be selective about their innovation initiatives, Govindarajan says:
... Every time you start a new innovation initiative - which the performance engine cannot do because of its limits of reach - you are essentially creating a startup company. This is a major organizational undertaking. Nobody has the bandwidth to start hundreds of innovation initiatives. Each company will have to assess the dynamics of its industry and decide how many innovation initiatives it really needs. But this is so difficult that you should only do a few, and do them right.
The good news for CIOs and IT organizations is they may be well positioned to help companies achieve their innovation goals. In a recent Harris Interactive survey of CEOs, 95 percent of respondents said they consider enterprise innovation extremely important to the future growth of their companies, 44 percent of them during the past decade, and 63 percent of them expect the IT department to drive the highest level of innovation over the next two years.