How Can Innovation Flourish in an Organization?


by James Allan - Date: 2007-12-02 - Word Count: 1131 Share This!

Why is it a 23-year-old computer science student can create a company worth $1 Billion, while companies with hundreds or even thousands of computer science graduates can't even come close to becoming a billion-dollar company?

In the last two years, the biggest things to come out of the internet are YouTube and Facebook. Each have sold, or have had offers to sell, for $1 billion or more. Each was started out of frustration of not being able to find an application that met the visionary's need.

Are companies becoming too safe for their own good?

To "protect shareholder value", most companies have adopted a slow and steady wins the race game. They reach a certain level where they are then large enough to acquire smaller firms. The acquisition comes after the fact that they realize their current strategies will not be able to compete with the smaller, nimbler, more innovative firm. So they buy it

With double digit growth in the stock market for the last few years, market capitalizations have reached such inflated levels that acquisitions have become the "growth engine of choice". Companies that started with 25 or 30 employees dedicated to a single innovative idea have become companies with 2500 employees dedicated to protecting their original innovative idea.

So many companies have staffed Science and Technology groups whose main purpose is to investigate other company's products to determine which company could be a joint venture partner or acquisition target. They are choosing to search for innovation outside the company, while doing very little to encourage innovation inside the company.

What drove innovation out the door?

Was it the constant broadcasting of stock prices which has driven the head office into fear of changing their secret formula for success?
Or was it the competition created by engineers in India, and to a certain extent in China, which has driven North American technology workers into a state of "get the job done as quickly as you can or your job will be moved offshore" mentality?
With so many acquisitions in the technology sector, most technology workers are wondering if their job is soon to be considered a duplicate. Who has time to think about improving the company's revenues when you're worried about protecting your job?
Furthermore, what support will you get from the head office if you were to propose something as off-base as Facebook or YouTube?

Management strategies have "evolved" as well to kill innovation. Tight measurement systems like Six Sigma and the Balanced Scorecard do very little to reward any workers who are not meeting their monthly productivity and quality goals. What innovation has come out of 3M, for instance, since they adopted their Six Sigma policies?

How can organizations become more innovative again?

Ask any higher up in a medium or large organization what their biggest asset is, and they will most likely answer that it's their people. Yet very few of these organizations will have processes in place which allow their people to become more innovative. Even fewer organizations have systems in place to reward innovation.

23-year-old students can create, and implement, billion dollar ideas, while organizations of hundreds of more mature people can not because 23-year-old students are not afraid to fail.

If organizations want to create true "shareholder value", they must begin to take more chances. With risk comes reward. Large organizations already have the number one source of innovation: people. And they have access to many other success factors to help innovation flourish: sales and distribution channels, senior members to mentor younger staff, marketing staff, customers to whom they can ask questions, operations and product development staff, etc. etc.

Large organizations have everything that is needed to make a great idea become reality. Yet they don't seem to take advantage of it.

The one thing an organization needs more than anything else to become a great innovator is courage. They need courage from senior staff to take chances, and perhaps fail. They need courage to accept the fact that many ideas are needed before one great one will be found. They need courage to put organizational structures in place which will allow innovation to thrive.

Who will be the next great innovator?

While the stock market continues to expand at a rapid pace, most companies don't see the need for innovation. They are meeting their sales and revenue goals through incremental improvements. They add a certain feature set here, or change a distribution policy there, and growth just sort of happens.

Like all good bull markets, this market will cool off. When it does, some companies will find that it is now easier to acquire other companies because of lower valuations. Many companies will spend their efforts on cost-cutting measures to ensure continued profitability. A select few will look for growth from internal innovation.
The companies who will most likely be the biggest innovators will be the companies who take advantage of the current waves of success to implement structures, policies and programs to encourage, nurture and develop innovation within their current organizational structure.

Research has shown that over 65 per cent of acquisitions fail to add shareholder value, and nearly a third actually destroy it during the first year . With those odds and the high costs of acquisition, shouldn't companies be doing more to encourage internal innovation?

How can your company be the next great innovator?

To be an innovator in the marketplace, people in the company have to understand the market. Yet very few companies do much to let information about customers flow back to people who are creating, designing and manufacturing products for the market. In fact, information about the market is often hidden from R&D and Operations divisions so that those divisions can concentrate on their jobs.

The most effective way for an organization to roll out more innovative ideas is to have a structure in place which allows cross-functional teams to work on outside-the-box ideas. The cross-functional team members can create more synergy by inputting their ideas from different angles. To be the most effective, this team should be led, or championed, by a senior staff member - preferably at VP level.

No matter where you sit in your organization, you can start your company on the road to innovation by performing the following:

1. Set aside some time each week to think about how to innovate to better meet your customer's needs. Consider what really must bug the customer. Out of irritation comes inspiration.
2. Look for possible team members who don't work in your area and who may be able to help you both brainstorm and develop your ideas.
3. Have the courage to think outside-the-box, and then to act on your thoughts.
4. Speak with your HR representative to see if there are already structures in place to help you move your ideas along.

James Allan partners with businesses to improve human and organizational performance.(http://www.shmconsulting.net)

To contact James directly, phone 1-866-SCOREGOALS or (613) 733-3729.

Related Tags: marketing, organization, innovation, product development, business development, idea, invention, new ideas, acquisitions, research and development

Your Article Search Directory : Find in Articles

© The article above is copyrighted by it's author. You're allowed to distribute this work according to the Creative Commons Attribution-NoDerivs license.
 

Recent articles in this category:



Most viewed articles in this category: