Innovation occurs outside organizations - far more than inside them...why?

The classic tug of war between the 'individual entrepreneurial DNA' and the organizational need for systemic structure.

The outcome? Organizations that wish to become breeding ground for entrepreneurs (or intra-preneurs), instead, end up becoming backyards full of incremental, half-baked ideas.

In the last few years I have heard more and more IT professionals say – I want to be an entrepreneur. Quit my job, set up something of my own. Get some funding. Never have to work for an organization again.

That’s great. So we have several independent entrepreneurs coming out of large organizations and setting up smaller ventures.

But why is it that a large organization, with all its scale, investment capability and desperate need for Innovation, is unable to engage its employees in long-term entrepreneurial initiatives?

Lets look at it this way. At a personal level, have you ever had an idea to create a radical new software solution for your client? Or maybe experiment with a new business model that could earn the company two times more revenue?

Chances are that if you are trying any of these in a large organization, you will be faced with a few questions from people around you.

What if the client hates it?

What if he doesn’t pay?

What if we spend a year building it and competition brings out something sooner?

What makes you think you can do this?

And the classic - if this were so easy, someone would have done it already don’t you think?

How do you respond to these questions? Have you found yourself stalling? And rationalizing that it might be just better to continue regular stuff?

Does the environment become a reason for you to say – when I get that great idea I will leave this organization and set up my own company. Till then, let me just continue business as usual….?

Here lies the myth of Innovation in an established organization. Having people who can generate ideas is only 10% of the exercise. The remaining 90%, is building an Innovation ecosystem that can engage with the idea and facilitate the journey of an idea - from concept to reality.

And thats where lies the gap. We seek to generate innovative ideas. Not build an innovative ecosystem within the organization that can nurture, sustain and grow.

But what are the manifestations of an innovative ecosystem within an organizations?

The first - Inspired and committed innovation champions

In a Technology Services Company where Erehwon is facilitating a mission, Srinivasan, a successful Mission leader recently shared his personal learning. He had always been very organized about his career. Knew what he wanted to do. Planned his career growth, in a few years he would be in a senior position and really well established.

Then he was asked to change his role. And lead a team that would take on an ambiguous but ambitious innovation challenge.

He says, “I had to ask myself why I wanted to do this. I had to be very clear why I would want to take on a journey that could easily jeopardize everything I had done so far? I had to be ok with failing. ”

This is a fundamental question. And one that every Innovation champion, in an established organization, asks himself or her self at some stage in the innovation journey.

In this instance, the supervisor’s message was clear. Take it on like the CEO of a new business. Something that you will pursue, set up and take forward. We need the next million dollar businesses coming out of this.

Srinivasan shares that for him this was an interesting perspective. He could leapfrog his career, build something new and be recognized for that.

He shared that in his mind he shifted the lens. “I would think of myself like an entrepreneur. And everyone in my organization including the stakeholders would become venture capitalists for me. If I heard a ‘no’, I would seek to enroll, excite the venture capitalist…”

In a journey lasting over a year, this individual is now known for his capability to enroll and excite stakeholders onto radical propositions. His biggest challenge he says has been to help people in different divisions see how something could be of real value to them, why their inputs are needed on the proposition, why this must become priority for them as well.

So what keeps him excited on this journey? “We have clear insight on what will work, we haven’t earned revenue yet. I believe we will. We just have to find a way to get there”.

And this differentiates the Innovation Champion. A deep conviction in the purpose, clarity around the Insight and a mindset that is focused on making it work.

But how many individuals can self-sustain the entrepreneurial drive in an established environment?

The second element of an innovative ecosystem - the creation of an extra-constitutional green channel that is designed to facilitate the idea’s journey from concept to reality.

The traditional processes applied in an organization are just not equipped to deal with such innovation initiatives. Multiple divisions, and decision-making structures that keep the organizational engine running in the normal course create a drag for radical innovation.

The direct impact, therefore, of taking an idea through the regular channel is dilution. The idea that finally gets built is one that meets everyone’s minimum requirement. And as a result it is an incremental idea, creating no significant impact for the customer.

If an organization is seriously looking at creating breakthroughs and enabling Innovation teams to deliver radical results, then investing in creating an extra constitutional channel for decision-making, prototyping and rapid experimentation is a must.

Unfortunately, however, a channel is misconstrued. An idea database or processes to review innovative ideas is treated as a channel for Innovation.

In our work with the R&D division of a leading electronics manufacturer, the myth of the database came to the surface.

Wanting to create an innovation environment, the division set up an idea database. And to complement it, IP generation was included into the KRAs of all employees. IP coordinators were set up to review the ideas and the person with the most ideas contributed would also win a special award each year.

Logically, this should have worked. There was enough incentive. The process was set up. The intent was genuine. They tried it for almost 2 years. But it did not seem to be working. There was an initial burst of ideas that became solutions and then… a dry idea pipeline.

An Innovation diagnostic threw up some interesting rhythms. For an employee in this division, every idea put into the database would get him/ her closer to recognition and an award at the end of a year.

So instead of sharing ideas with others and building them further, people would just put a raw idea into the database.

Several such ideas populated the database. But most of them were very raw, undeveloped thoughts. The IP coordinators would review these ideas, check against an IP database and declare that many ideas were already copyrighted or not ‘exciting enough’.

No one was sharing anything with each other; therefore no idea was really getting developed into a possible proposition. And it became the IP coordinators job to grow the ideas.

And since IP-ability was the measure for an idea’s selection, several raw ideas got dropped. The database was full of small, incremental ideas. However, none was really orbit shifting, or quantum or even prototype-able. This had become a graveyard for ideas. Not a breeding ground.

Today this process is being re-architected. An idea needs to be shared as a more developed proposition. With inputs on the Insights that it is based on. The potential impact it could create for customers has to be shared. The person or team who submits the proposition also owns driving it to reality. Leadership is enabling entrepreneurial energy being applied by team members.

Think about it. How long have you had an idea database in your organization? How many really breakthrough ideas are coming through the database? How many are getting translated into breakthrough solutions? Is the database becoming an excuse for an incubation channel?

Why is the strike rate so low?

Innovation in the context of the established organization is not about generating tons of ideas.

It’s about creating sustained entrepreneurial energy needed to take ideas to reality. Giving them the extra constitutional bandwidth that is needed to get them up and running fast.

The biggest challenge today for an established organization is in being able to turn itself upside down, unshackle the processes that make it an ultra efficient engine, challenge every assumption that has enabled them to succeed so far and build a new breed of entrepreneurs who will create the next billion dollar businesses from within.


Includes some content from the original article published in the magazine IT.com, January 2008, by Parvathi Menon.