The No. 1 Challenge to Innovation

The biggest challenge to innovation is not how to generate new ideas and opportunities. It’s how to make innovation a deeply embedded capability in the organization. What usually happens is that companies focus most of their efforts on the front end of innovation – so they launch some kind of ideation initiative with a lot of hoopla and they get a whole bunch of ideas. But then they hit a wall because there is no back end – there is no organizational system for effectively screening ideas, aligning them with the business strategy, allocating seed funding and management resources, and guiding a mixed portfolio of opportunities through the pipeline toward commercialization. So, invariably, what we find is that the whole innovation effort eventually withers. And all those enthusiastic innovators inside and outside the company become cynical and discouraged as they watch their ideas go nowhere.

The real challenge, therefore, is to turn innovation from a buzzword into a systemic and widely distributed capability. It has to be woven into the everyday fabric of the company just like any other organizational capability, such as quality, or supply chain management, or customer service. In other words, for innovation to really work, and to be sustainable, it has to become a way of life for the organization. Yet how many companies have actually achieved that? The sad truth is this: most organizations today still have absolutely no model, no practical notion, of what the back end of innovation actually looks like. If you asked them to build a corporate innovation system that seamlessly integrates leadership commitment, infrastructure, processes, tools, talent development, cultural mechanisms and values, they wouldn’t even know where to start. That’s the Number One challenge we have to address.

When you ask most people to describe their company’s “corporate innovation system”, all you usually get is a blank stare. Sure, they may tell you they have recently been involved in some sort of idea submission scheme, but if you ask them what their company actually does with all the ideas – how many of them have so far been turned into experiments, how many are receiving more serious funding and attention, how many ventures are heading for commercialization, and how much money those ventures are expected to generate – people’s answers tend to become a lot more vague. The sad truth is that most organizations have not yet developed a clear model—reflected in management practice—of what the back end of innovation actually looks like.

In my speeches, I often compare the front end of innovation to the sparkplugs in an engine – the exciting ideation part where new ideas are born from inspiration and breakthrough thinking. But I argue that literal sparkplugs would be completely useless if there were no engine around them – no mechanical system for taking those sparks of fuel and using them to propel the vehicle forward. And that’s the rub. What most companies are missing today is an “innovation engine”: a high performance organizational system that can continually pick up promising ideas and transform them into powerful new ways to create value and wealth.

Imagine you typed a few words into Google, pressed the search button, and nothing happened. Have you ever thought about how Google manages to deliver all those results in the blink of an eye? The reason we call it a search “engine” is that behind Google’s simple and playful user interface is an incredibly complex system comprising a million servers, racked up in clusters at data centers all over the world, all working together to scan billions of websites at breakneck speed. Without the back end of Google – without that engine – all we would have is a lovable logo on a clean white web page. Similarly, organizations are finding out that without the back end of innovation, all they get is a lot of ideas at the front end which end up going nowhere.

How many big opportunities have been missed over the decades by companies that were presented with some radical new idea but that lacked the right system for nurturing it and turning it into a market success story? Steve Wozniak, co-founder of Apple, originally pitched his personal computer idea to Hewlett-Packard, his employer at the time. But HP had no organizational mechanism for connecting a freaky engineer and his “crazy invention” with the political and financial infrastructures of the company. There was simply nowhere for his idea to go; no way to get a small amount of experimental capital and some time to test its potential; no coaches or mentors in the organization who could help him push his idea forward; no management processes that had been set up to support his work as an innovator. So instead Wozniak decided to throw in his lot with Steve Jobs, and the two friends went off to commercialize his idea from a Palo Alto garage. The rest is history.

Could you put your hand on your heart and say that a similar scenario has never played out – or would never play out – inside your own company? If you can’t, it’s high time your firm started building a corporate innovation system – an organizational “engine” that will enable your company to manage the back end of innovation as a disciplined and highly integrated business activity rather than something that is left to chance.

So how exactly do you build a corporate innovation system? It starts with building leadership commitment to innovation across the organization – not just in word but in deed. Ask yourself: do the executives who run our company’s core business demonstrate genuine interest in radical, new ideas by redeploying adequate resources behind them? Are they held personally responsible and accountable for the performance of their unit’s innovation pipeline? Do they spend a significant percentage of their time mentoring innovation projects? Failure to drive and manage leadership commitment to innovation is often where the whole initiative falls flat.

Second, it requires a tangible organizational infrastructure that is set up to nurture and support innovation in every nook and cranny of the company, and from the outside, too. People need to know where they can go with their ideas to find help and encouragement in developing a business plan, or in designing an experiment or prototype, or in putting the necessary financial and human resources behind their idea to move it to the next stage.

Third, the back end of innovation requires effective processes, mechanisms and tools for screening ideas, aligning them with strategy, allocating resources, managing a portfolio of experiments, turning the most promising opportunities into projects, guiding these projects through the innovation pipeline, and successfully taking them to market. It’s not enough to merely adapt existing management processes and tools developed for R&D or new product development. For one reason, there are many types of innovation – such as process innovation, cost innovation, service innovation, strategy innovation, business model innovation, or management innovation – that won’t fit very neatly into a typical product development process which tracks an idea from stage gate to stage gate.

If you talk to successful innovators in large companies, you usually hear a familiar story: “I succeeded despite the system.” If would-be innovators can only succeed in an organization despite the system – if they have to fight their way heroically through a minefield to push their ideas forward – then by definition, innovation is not a systemic capability in that organization. Why not? Perhaps because the company has put too much focus on the front end of innovation and too little effort into building the back end – the “innovation engine” that is needed for taking ideas from the mind to the market.

I will be in London, UK, this month (from September 24^th to 26^th) to conduct a three-day innovation leadership seminar on exactly this theme (and back in London for another session from December 1^st to December 3^rd) – both events organized by The Leadership Network. Look forward to seeing you there!

image credit: difficulty concept image from bigstock

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Rowan Gibson is recognized as one of the world’s foremost thought leaders on innovation. He is the bestselling author of Innovation to the Core, co-founder of Innovation Excellence, and a top keynote speaker in 60 countries around the globe. His new book is The Four Lenses of Innovation. On Twitter he is @RowanGibson.