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Innovation Locked Up or Blocked?

Innovation is inherently expensive and challenging for large firms

14Dec

Much has been written and presented in the technology and business press lately about the notion of 'unlocking' innovation in organizations.

From research organizations to financial news commentators, to Harvard bloggers, the emphasis has always been on finding a means of opening up traditional industries to the benefits of innovation, and to let the natural innovative tendencies of staff be tapped - a kind of innovation bloodletting.

The problem with these perspectives is that there is an assumption that organizations are failing to recognize the need for innovation, or somehow
assuming that their staff are not empowered to effect change. It's a patronizing critique at the very least, and it misrepresents the barriers to adoption of innovation within both agencies and organizations.

Innovation is not locked up. It's blocked.
And for the most part, it's blocked for good reasons, or at least for reasons that are designed to protect the firm.

Innovation is inherently expensive and challenging for large firms. Innovation in business processes, for instance, mean that firms will often need to invest in new technologies or add subscriptions to cloud-based services, and they will need to train staff in use of these tools in order to maximize the value of the investment.

Policies for data handling need to be updated, integration of data with recording systems (timesheets, HR management, business analytics) will have to be assessed and intermediary systems implemented where required. And where staff are either made redundant as a result of business process improvement, or if staff require retraining to take on different duties, executives need to plan for handover and/or redistribution of staff resources with sufficient time and delicacy to implement.

Then there's the risk to the firm for productivity losses during transfer to an innovative process - teething problems - and there are the reputational costs associated with those productivity losses. There may even be legal repercussions for changes in how business data is processed, both between a firm and its customers, and between a firm and its supply chain. Then, process innovation inevitably involves redesign of all dependent systems, and so the speed of transactions and process completion is slowed down as new behaviours are learned. Only through repeated behaviours can staff truly maximise the benefits of a process improvement.

And that's just process innovation!

Production, distribution, transaction and communication innovations have another whole series of costs and challenges that render innovation even more expensive and difficult to support. It's not that executives can't see the value of a business innovation. It's not that innovation needs to be unlocked. It's just that the time, productivity, reputation, legal, financial and human resource costs of implementing innovation may exceed the benefits of adoption. And so innovation is blocked to ensure ongoing production and core business activities (and cash-flow), rather than putting the company at risk.

Its important to understand why these blockages to innovation have been put in place.

The challenge is not to unlock innovation but rather to remove the inhibitors to adoption. That involves a three-pronged change management approach (not without their own challenges):

  1. Mapping of business activities within a firm to identify weaknesses in systems and determine dependencies
  2. Cultural shift to green light, rather than red light regulation of staff and business activities
  3. Project the opportunity costs for failing to support innovation over extended periods of 3-5 years

These three activities have their own costs for firms, but they change both the attitude to innovation in firms, and they improve the understanding of the cost implications of innovation. Only after these have been properly undertaken can an innovation culture be fostered.

Unfortunately, many commentators on innovation in enterprises only get to speak with forward-thinking C-suite executives, and thus their perspective on openness to innovation is skewed. These executives generally understand the value of innovation, and they are open to the idea of distributed R&D, agile methodologies and a customer-experience driven business. They want to facilitate innovation. They don't have to unlock innovation; they already know how they want it to happen. It's the middle management and traditional stops and checks on trade that are the blockages to innovation. And they are there to maximize profitability and performance of a firm, while reducing the risk. So until a firm changes the way risk is viewed, how business activity is policed and how the firm will be affected by failing to change, freeing up innovation within the firm won't be a bloodletting, it will be a haemorrhage.

We need to stop considering innovation as a policy, or a hidden attribute of staff and networks that needs to be 'unlocked', and acknowledge that innovation is a product of open business people and processes.

Change the business first. Then innovation can be allowed to flourish.

What does it look like inside your organization?

Sources

Anthony J James (AJ) is a C-Level, international marketing transformation executive specialising in creative, digital, brand positioning, and innovative global B2B and B2C solutions focussed on growth. With deep experience working with major brands across Asia Pacific, Middle East & Europe plus high-growth emerging markets on their digital marketing ecosystems for over 20 years.

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