Creating an Innovation Engine by Gary Hamel

You are never too old to innovate!

What’s standing in the way of companies that fail to innovate? In many cases, it is the tried-and-true recipe that brought them past success.

1. The inevitability of commoditization
2. The impossibility of forecasting future trends
3. The futility of waiting for inspiration

If companies can’t depend on the lightning bolt of sudden inspiration or serendipitous discovery, then what? An innovative environment can be consciously created — if a company is willing to abandon old rules, shed old habits, and upend cherished conventions. The key is recognizing that past achievement militates against future adaptability by creating well-worn ways of doing things that cause a company to undervalue or ignore rule-breaking insights. Yesterday’s laserlike focus becomes today’s set of blinders, narrowing an enterprise’s field of vision from what is truly new to what it already knows. Glimmers of great ideas are evident in most organizations; the problem is that in direct proportion to the degree those great ideas are different, the “immune system” of most organizations attacks those ideas as foreign organisms, threatening the host.

1. Part of the challenge is demystifying innovation by breaking it down to its constituent parts. Here are three ways to begin the process of awakening innovation in your company:

2. Recognize that innovation doesn’t follow a schedule. Most companies are so bounded by existing orthodoxies and obsolete business models that they think they can schedule strategic insight the way you record a reminder in your day-planner. But the truly innovative bursts of insight that trigger new ideas don’t obey the corporate planning calendar.

3. Consider that the idea for Nokia’s wildly successful rainbow-hued cell phones emerged not from a daylong strategy session in the corner office but from an afternoon at California’s Venice Beach, as company execs watched sun-drenched skaters slash down the boardwalk, sporting color-coordinated shades, Rollerblades, and bathing suits. The realization: Mobile phones are as much fashion accessory as communications tool, an inspiration that’s pushed Nokia to the cutting edge of cells.

4. Shatter the “strategy monopoly.” In any company, a hierarchy of organization dominates a hierarchy of ideas. The antidote: To encourage innovation, unlock ideas from across the company. Bring together a cross-section of employees at all levels to share the new perspectives that may just contain the kernel of a bold new idea. Realize that every company promotes success as defined by today’s reigning strategy; the question is how to promote new ideas that may have nothing to do with that strategy — or may even cut against it.

That’s how Virgin Enterprises operates under the lead of Richard Branson. Every employee has Branson’s phone number, and can pitch new project ideas directly to the top. That’s how a Virgin Airlines flight attendant turned her difficulties in planning her own wedding into a new venture: the wedding planning boutique Virgin Bride.

Institutionalize innovation by building a safe place for people to think new thoughts. In some companies, new ideas are in short supply — stifled by a corporate climate that cuts off intellectual oxygen, discourages change, and demands conformity. At other companies, ideas abound — and the challenge takes a different shape: Creating the conceptual conveyor belt that moves from ideas to action.

From Ideas to Action

What can innovation-minded executives do to create such a culture in their company? Here are three ways to kick-start the innovation process:

1. Start new conversations. New ideas don’t obey an organizational chart. Companies that want to get serious about innovation need to break the “strategy monopoly” that closes off the executive suite from new ideas percolating in other corners of the company. Innovation-minded companies spark new conversations by bringing together executives with employees of all ranks to question corporate orthodoxies and search for new ways to do business.

2. Seek new perspectives. If you want your company to do a better job of envisioning the future, ask the people who will get to the future first: Your youngest employees. If you want to know how consumers act, don’t observe them in focus-group captivity — join the Nokia execs for a day at the beach. Want a new vision? Try a new vantage point — and watch a world of opportunity open up.

3. Innovation comes from the heart as well as the head.
Spark new passions. Innovation comes from the heart as well as the head. Companies that aren’t afraid to innovate engage employee energies in a new and profoundly different way. When people are part of a cause and not just a cog in the wheel, their IQ — innovation quotient — skyrockets.

4. And above all, recognize that in today’s economy, capital is plentiful; good ideas are scarce. Companies that look to incremental change to generate additional revenue will tend toward subsistence at best — eclipsed by companies that create an environment of innovation, spawning the new ideas that generate new wealth. That’s why an ambitious enterprise must replicate within itself the basic DNA of innovation: A culture of continuous experimentation embedded broadly and deeply throughout a company.

All of which brings us to the final characteristic of the true innovator: courage — the guts to realize it’s time to take a hammer to your own business model, before someone else does it for you.


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