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How to Spark Innovation

Why is it so hard to stimulate innovation inside big corporations, while at the same time VCs are awash in innovative business plans and people?

Jeffrey Bussgang, a partner at venture firm Flybridge Capital Partners in Boston and one of our guest bloggers, put that question to readers in our Staying Entrepreneurial blog. Here’s how one reader responded:

There are two main obstacles to innovation within the enterprise. The first is fear: If I try something new and fail, will I lose my job? Companies need to send a clear message that it is far better to try and fail than fail to try.

The second obstacle is the company’s own internal structure or processes. The typical middle manager will always give you 10 reasons why they can’t take advantage of a great idea. In 9 cases out of 10, the issues are internal and not at all relevant to the business problem they are trying to solve. All they can see is that implementing the idea will make their job harder

Posted under World News

• Is innovation really one of the critical elements of
my company’s overall business strategy? What role
does it need to play?  If innovation is not a top strategic priority, that’s
okay. But you shouldn’t expect to be very innovative.

• Do I rigorously track the cash payback from my
major innovations? Do I make key assumptions
clear and invite rigorous debate? Is my management
team in agreement on what’s important to
drive cash?
Innovation is all about cash payback. Drawing and
discussing cash curves can help keep the focus there.

• Do I understand the impact that globalization is
having, and will have over the next one to three
years, on my innovation activities?
RDEs offer sizable advantages and are underexploited
by most companies. The most innovative companies
realize the potential and carefully, but aggressively,
leverage it.

• Do the people in my company believe that our
organization is aligned around innovation? If not,
what specific elements are out of alignment?
What are we aligned around?
Lack of organizational alignment is perhaps the
biggest obstacle most companies face. A confused
organization, one that receives mixed messages, is
very unlikely to be innovative.

• What specific actions have I taken today, this week,
and this month to improve my organization’s ability
to innovate and generate the required payback
from those activities and investment? What do my
actions say about my priorities?
Innovation flourishes under and requires strong
leadership. The most innovative companies have a
leader who wants to make a difference and leave a
legacy around innovation.

Posted under On Leadeship

Focus on is the environment. Companies should take pains to ensure that the conditions that help people be more innovative, especially in the idea-generation phase—such as motivation, space to explore, the opportunity to develop deep domain knowledge, and time to think—are present. Time, in fact, may be the greatest luxury. Many of the efficiency- and productivity-enhancing steps that companies have taken over the past decade have sharply trimmed the time available for people to simply think. Jobs that centered on pondering longer-term, big-picture issues have been eliminated, and free time that might have been devoted to thinking has been scaled down generally as employees at all levels have taken on more and more responsibility.

Posted under On Leadeship

Innovation remains a top strategic focus for many companies, with 72 percent of the executives we surveyed ranking it a top-three strategic priority versus 66 percent in 2005.

• Seventy-two percent of respondents said their companies will increase spending on innovation in 2006.

• At the same time, many executives—nearly half of those surveyed—remain unsatisfied with the financial returns on their companies’ investments
in innovation.

• Executives consider Apple Computer, Google, 3M, Toyota Motor, and Microsoft the world’s most innovative companies, with Apple the clear leader.

• Globalization, organizational issues (such as metrics and measurement, structure, and people), and leadership remain three of the biggest challenges facing companies that are seeking to become more innovative.

Posted under On Leadeship