Innovation: The Classic Traps
Innovation: The Classic Traps, by Rosabeth Moss Kanter
Harvard Business Review, November 2006. Link to HBR full text here
----------- Notes -----------
-Why is it important: avoiding traps is always useful
-Reading time: ~5 minutes
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"Each generation embarks on the same enthusiastic quest for the next new thing and faces the same challenge of overcoming innovation stiflers."
"Innovation goes in or out of fashion as a strategic driver of corporate growth, but with every wave of enthusiasm, executives make the same mistakes. Most of the time, they stumble in their R&D efforts because they are engaged in a difficult balancing act: They need to protect existing revenue streams while coaxing along new ones. But 'corporate entrepreneurship' doesn't have to be an oxymoron. Innovation can flourish if executives heed business lessons from the past."
"Not every innovation idea has to be a blockbuster. Sufficient numbers of small or incremental innovations can lead to big profits."
"Successful innovators use an innovation pyramid, with several big bets at the top that get most of the investment; a portfolio of promising midrange ideas in test stage; and a broad base of early stage ideas or incremental innovations. Ideas and influence can flow up or down the pyramid."
"Companies should expect deviations from plan: If employees are rewarded simply for doing what they committed to do, rather than acting as circumstances would suggest, their employers will stifle and drive out innovation."
"If companies create two classes of corporate citizens supplying the innovators with more perks, privileges, and prestige those in the existing business will make every effort to crush the innovation."
"Because innovations need connectors people who know how to find partners in the mainstream business or outside world, they flourish in cultures that encourage collaboration."
"The potential for premium prices and high margins lures executives to seek blockbuster innovations, the next iPod, Viagra, or Toyota Production System. Along the way, they expend enormous resources, though big hits are rare and unpredictable. Meanwhile, in seeking the killer app, managers may reject opportunities that at first glance appear too small, and people who aren't involved in the big projects may feel marginalized."
"To get more successes, you have to be willing to risk more failures."
"A related mistake is to act as if only products count, even though transformative new ideas can come from a range of functions, such as production and marketing."
"Early in its history, the U.S. auto industry gained a breakthrough innovation from its financial function: Consumer financing opened mass markets for products that previously only the affluent could afford."
"A second set of classic mistakes lies in process; specifically, the impulse to strangle innovation with tight controls-the same planning, budgeting, and reviews applied to existing businesses. The inherent uncertainty of the innovation process makes sidetracks or unexpected turns inevitable."
"Performance reviews, and their associated metrics, are another danger zone for innovations. Established companies don't just want plans; they want managers to stick to those plans. They often reward people for doing what they committed to do and discourage them from making changes as circumstances warrant."
"Even when a new venture is launched within an existing business, culture clashes become class warfare if there are two classes of corporate citizens-those who have all the fun and those who make all the money. The designated innovators, whether an R&D group or a new-venture unit, are identified as creators of the future. They are free of rules or revenue demands and are allowed to play with ideas that don't yet work. Their colleagues are expected to follow rules, meet demands, and make money while feeling like grinds and sometimes being told they are dinosaurs whose business models will soon be obsolete."
"Undervaluing and underinvesting in the human side of innovation is another common mistake. Top managers frequently put the best technical people in charge, not the best leaders. These technically oriented managers, in turn, mistakenly assume that ideas will speak for themselves if they are any good, so they neglect external communication. Or they emphasize tasks over relationships, missing opportunities to enhance the team chemistry necessary to turn undeveloped concepts into useful innovations."
"Innovators cannot work in isolation if they want their concepts to catch on. They must build coalitions of supporters who will provide air cover for the project, speak up for them in meetings they don't attend, or sponsor the embryonic innovation as it moves into the next stages of diffusion and use. To establish the foundation for successful reception of an innovation, groups must be able to present the radical so it can be understood in familiar terms and to cushion disruptive innovations with assurances that the disruption will be manageable. When technical experts mystify their audiences rather than enlighten them, they lose support-and "no" is always an easier answer than "yes." Groups that work in secret and then present their ideas full-blown at the end face unexpected objections that sometimes kill the project."
"Companies can develop an innovation strategy that works at the three levels of what I call the 'innovation pyramid': a few big bets at the top that represent clear directions for the future and receive the lion's share of investment; a portfolio of promising midrange ideas pursued by designated teams that develop and test them; and a broad base of early-stage ideas or incremental innovations permitting continuous improvement."
"Thinking of innovation in terms of this pyramid gives senior managers a tool for assessing current efforts, making adjustments as ideas prove their value and require further support, and ensuring that there is activity at all levels. A culture of innovation grows because everyone can play. While dedicated groups pursue the big projects and temporary teams develop midrange ideas, everyone else in the company can be invited to contribute ideas."
"One of the secrets of success for companies that demonstrate high rates of innovation is that they simply try more things."
"An innovation strategy that includes incremental innovations and continuous improvement can help to liberate minds throughout the company, making people more receptive to change when big breakthroughs occur."
"While loosening the formal controls that would otherwise stifle innovations, companies should tighten the human connections between those pursuing innovation efforts and others throughout the rest of the business. Productive conversations should take place regularly between innovators and mainstream business managers. Innovation teams should be charged with external communication as part of their responsibility, but senior leaders should also convene discussions to encourage mutual respect rather than tensions and antagonism. Such conversations should be aimed at mutual learning, to minimize cannibalization and to maximize effective reintegration of innovations that become new businesses."
"Innovation groups can be told at the outset that they have a responsibility to serve the mainstream while also seeking bigger innovations to start new businesses. This can be built into their charters and reinforced by overlapping relationships-whether it involves representatives from mainstream businesses rotating through innovation groups or advisory boards overseeing innovation efforts."