Why Is Innovation So Hard For Large Organizations?

Why is innovation so hard for large organizations? This question came up a few weeks back and I wrote a about that. But you can never write enough about this subject. And can creativity and innovation really be nourished and managed in large corporate settings when senior executives are mainly focused on quarterly earnings? How can we equip different level of managers with tools and framework to develop, conceptualize and manage innovative ideas? What organization structure or design is best for innovation to happen?

Here is a good one from my friend Scott. Moving these ideas within a large organization setting is like driving a big bus through a small busy market place, there’s simply no place to park. And you risks running  over some people and their livelihood is selling fruits in that market.

I remember some dialogue exchange during an event at HBS around "Creativity, Entrepreneurship and Organizations of the Future", the impression I had when I walked out was many felt that traditional management practice has little to contribute to processes of concept creation and innovation. It is in fact the number one barrier to innovation.  Innovation is not really part of modern management and it is not something that is taught in B-schools.  Our management system and training put too much emphasis on “control” and not much on “inspiration” and “empowerment”. Film school and Design school is best in training people to learn how to  “inspire” and it is almost the same process to turn a little idea into a 90 minutes film that people resonate then of thousands of people.

One guy raised the question if whether creativity scales? That’s a good one. Can an innovator be more productive with the substantial resources that a large organization can provide? Or does the process work better for two or three crazy guys in the garage with $50,000. Are resource-constrained entities ending up have to be more creative because they have to find ways of dealing with the constraints?

On the question of "What isn't management's role in innovation?" Michelle Malay Carter stated the case this way: "Nearly all current performance management models are stacked against innovation." This includes, according to B. V. Krishnamurthy, confining such activities to an "R&D function" even though he questioned, "whether organizations are ready for … open collaboration." Ulrich Nettesheim suggested that, if innovation is to be fostered in the conventional organization, "the role and practices of management require innovation as well." But what kind of innovation in management are we thinking about? There were many ideas flying around. Nearly all called for a new kind of leadership…. strategic leadership or inspirational leadership. Umesh Gupta stated, "Innovation … is directly proportional to the attitude of senior management”. Dan Hoch put it nicely, "… the real question revolves not around whether the managers have the courage, but does the CEO have the vision and fortitude to stand before the board and defend the opportunity to explore and fail?" There are a few different model of innovation. With the proliferation of networking technologies, more open-innovation will happen beyond the boundaries of traditional enterprise?  Here are the four most common innovation approaches:

- GE: CECOR - Calibrate, Explore, Create, Organize, and Realize

- Peter Widdis: People Provoking Process to Prototype Passion

- Idris Mootee: Pattern Recognition, Participation, Prototyping, Possibilities

- Suzanne Merritt: Collect.  Connect.  Create.

Innovation is hard work (who says it’s easy). Not only it requires intelligence, it also takes out a lot of emotional energy and personal commitment. It is not for everyone.

Comments

[Rory MacDonald]

Here are two points (probably fairly obvious) which I think are relevant:

1. Do large organisations have or attract innovators? I remember a conversation with a top IBM HR exec explaining that the company had just realised that by only taking 1st graduates from top institutions they are only getting a very narrow spectrum of society and they were losing out as a result.

Do innovators fulfill the criteria needed to get into large companies? If they do are the attracted to a bureaucratic environment?

2. Is innovation the same thing in a large company as it is in a dynamic start-up. In a large company everything is incremental, including innovation. Large scale innovation is simply too risky. It is like sailing: if I am on a sailboard I can tack and gybe and move about to my hearts content I can ride the wind's every whim switching and dodging on the front of every gust. If you use the same tactic on a large yacht you stand still. The weight of what you are sailing, means you have to look further out and ride the bigger changes. Sometime this will mean you are slower catching onto a fresh new gust.

Since I always use elitist sailing metaphors, lets just say you don't drive a mini the same way you drive a articulated lorry. In a heavy central London traffic, the juggernaut driver may look less "innovative", but he looks a lot less innovative jack-knifed with his cargo all over the road.

Tieing this into my first point is a large yacht going to attract the worlds best sailboarders as crew? No, they might be interested in taking the helm, but lets face it they are unlikely to be offered that job when there is a reliable ex-McKinsey bean counter there to watch over them. The sailboarder is unlikely to be happy for long being ordered to pull in that rope, let that one out a bit, fold up that sail and look over there to see what the wind is doing two nautical miles away and write me a detailed report on how you see the race panning out.

One final metaphor, if I am young and have very little money, betting every last penny on the roulette wheel is a massive buzz but not really a big deal. If I am older, have more money and more responsibility, I will never bet everything I have. I can probably double or treble the stakes of my younger compatriot, but I don't get the same buzz.

Innovation comes from the buzz, not the stakes.

[Greg Krauska]

Idris, good exploration of this topic. Most large organizations are organized around consistency and competition. These biases reinforce existing practices and assumtions. This is why I believe that innovation efforts either need highest level sponsorship or need to be protected projects that can operate independently - or both.

Most organizations like the concept of innovation and the results it can bring. They can learn a lot about how to manage risk and how to attract the talent needed to keep them flexible.

If not, their new growth will continue to come from a less risky strategy of acquire and optimize.

[Ellen Johnson]

Many talk about "change" in an abstract manner and have no idea of the real challenge we deal with everyday. You post is very helpful and I like what Greg said about companies are organized around "consistency and competition".

[Kelly Shaw]

I think it is important to distinguish two core types of innovation.

1. The Sexy Innnovation that drives new products, services, markets.

2. The Optimize innovation that improves systems, tools and materials used in product or service delivery.

Organizations striving to increase innovation would do well by starting to recognize and reward personnel who are leading the Optimize charge. This will seed a more formally embraced culture of innovation which could reduce the fear of change and encourage ideation.

[J Baker]

I have been enjoying many great resources from your blog, and your innovation presentation caught my eye. It really presents a very practical view and I had a few chuckles thanks to your knack for humor. Come speak to us at Stanford when you're traveling to the west coast for business.