15 Nov 2006  Research & Ideas

Lessons Not Learned About Innovation

Why have decades of executives fumbled innovation? One reason: Existing corporate structures, controls, and incentives do work against out-of-the-box thinking. Professor Rosabeth Moss Kanter, who has just published a Harvard Business Review article on the topic, discusses her research into the classic traps of innovation and how to avoid them. Key concepts include:

  • The search for new ideas must go broad and deep throughout an organization. Traditional corporate controls and structures don't work well with innovation teams. New methods are needed to gauge effectiveness.
  • Innovators must be kept connected to the mainstream business. Isolating them leads to tensions with other parts of the company and lessens the chances that their work will be adopted.

 

Every managerial generation rediscovers the need for innovation to drive growth but, decade after decade, "grand declarations about innovation are followed by mediocre execution that produces anemic results, and innovation groups are quietly disbanded in quiet cost-cutting drives." So observes Rosabeth Moss Kanter in a new Harvard Business Review article, "Innovation: The Classic Traps."

Kanter, who holds the Ernest L. Arbuckle Professorship at Harvard Business School, specializing in strategy, innovation, and leadership for change, discusses her ideas on managing innovation and what companies can do to avoid the innovation traps that snare so many.

Sean Silverthorne: Companies and executives seem doomed to repeat the past when it comes to innovation. What are some of these mistakes and why are they repeated each generation?

Rosabeth Moss Kanter: Innovation seems to be rediscovered in each managerial generation (about every six years) as a fundamental way to enable new growth. But each generation seems to have forgotten or never learned the mistakes of the past, so we see classic traps repeated over and over again. Some of these repeat offenders include burying innovation teams under too much bureaucracy, treating the innovators as more valued corporate citizens than those who work in the current business, and hiring leaders who don't have the relationship and communications skills necessary to foster innovation.

Why the refusal to learn from the past? Institutional memories are short. But internal business pressures also play a part as executives balance the need to protect current revenue streams with the imperative to get behind new concepts crucial to future success. And too often executives lack courage—they call for innovation but then pull the plug on every idea brought their way.

Q: You categorize these mistakes under the headings of strategy, process, structure, and skills. Could you summarize your remedies?

A: Here are a few of the dozen lessons I offer in the article:

Look for small innovations, not just blockbusters. Big hits are rare, but too many executives swing for the fences with each new innovation. This not only marginalizes people who work on smaller projects, but also tends to result in projects modeled on existing market successes—that is, not that innovative. Truly new concepts often spring from smaller beginnings.

Create processes and controls. The innovation process is inherently uncertain, so companies must develop new ways of tracking progress in these units. Rewarding a manager who "sticks to plan" doesn't encourage something new.

Select the right leadership. Innovation teams can't be isolated—their ideas will never catch on. So pick leaders who not only can communicate inside and outside the organization but who also know how to foster a collaborative culture.

In short, there are a lot of specific things companies can do to encourage rather than stifle innovation. But overall, companies need a culture and way of working that emphasizes flexibility and attention to relationships across areas.

Q: One of your warnings for corporate leaders is to be careful not to create two classes of corporate citizens: "those who have all the fun" and "those who make all the money." What's the central message here?

A: In 2002, Arrow Electronics attempted a new Internet venture, Arrow.com. The group was granted perks not given to others, and this did not go unnoticed by the sales group, which was already feeling threatened by Internet-enabled sales. The result: a literal brick wall was erected to separate the two sides of the building. Time was wasted battling each other and even stealing each others' customers.

So the message is you can't afford to build two cultures. Strong interpersonal connections must be created between the new and the established. In fact, each must contribute to the other.

Q: What is the innovation pyramid and how does it work?

A: The innovation pyramid is an innovation strategy that works at three levels. The lion's share of the investment underwrites a few big bets at the top: clear directions for the future. The second level is a portfolio of promising mid-range ideas driven by designated teams. At the bottom of the pyramid are early-stage ideas or incremental innovations that permit continuous improvement.

Influence flows from top to bottom—the big bets encourage smaller wins heading in the same direction. But success can also flow from the bottom to the top—3M's Post-it Notes is one such example.

Senior managers can use the innovation pyramid to gauge current efforts, recalibrate as ideas prove their value, and ensure there is activity at all levels.

Q: What companies do you think are the best at fostering innovation and avoiding these traps that snare others?

A: In the article I point to success stories from a number of companies including IBM, Seagate, Williams-Sonoma, P&G, and Gillette. Using the Innovation Pyramid model to accelerate innovation, Gillette created a stream of innovations—a battery-powered toothbrush, the marketing campaign for the Mach3Turbo, and the new-concept 2006 five-blade battery-powered Fusion shaving system—that raised revenues and profits.

Managers at these companies have learned the innovation lessons of the past. They strike the right balance between getting the highest returns from current activities and investing in new growth, they create organizational flexibility, and they foster communication and relationships.

Q: What are you working on currently?

A: I'm working with a small number of exemplary global companies that set high standards for themselves to see how they develop those standards, apply them to every business function, use them to raise the standards of the countries in which they operate, and generate productive innovation and new business opportunities in the process.

This continues my interest in innovation on a much bigger scale, and I'm already learning about cutting-edge new business practices. Stay tuned; I will start reporting on this in the spring.

About the author

Sean Silverthorne is the editor of HBS Working Knowledge.