Friday, September 16, 2011

For Growth, New Ideas Aren't Enough

There it was again in the Wall Street Journal on August 29: a beloved and uplifting, but unfortunately not effective, approach to driving growth through innovation. The idea is that companies need to encourage innovation from everyone and at every level in the organization. Ironically, the article cites Apple and Procter & Gamble, two companies that have most emphatically learned that generating lots of ideas is the least of their problems when it comes to growth. The "let a thousand flowers bloom" approach to innovation often leads to frustration at best, cynicism at worst, and is the underpinning of the on-again, off-again approach that most firms take to growth through corporate venturing and innovation.

Consider what happens in a typical, well-intentioned corporate effort of this kind. It begins with lots of enthusiastic cheerleading at the executive ranks. People are told to dedicate a portion of their time to pursuits that interest them but are not part of their day jobs. Trainers are brought in to teach everyone to be an innovator. There are "innovation boot camps." Ideas come pouring forth from every nook and cranny. Many of them are half-baked and impractical. Others are a poor strategic fit. Others will only tick off supply chain partners or important vendors. Many simply don't have enough upside. And so it goes.

In my experience, most companies have far more innovation ideas than they can ever implement. Most of these won't work out — one study found that a company needed to generate, on average, 3,000 raw ideas to find one that could be a commercial success. The real trouble is that, after all those ideas are generated, the innovation process runs smack into the organization. When I ask participants in my executive programs what gets in the way of growth in their companies, the list goes on and on: lack of incentives, power of the existing business, management desire for near-term success, too many silos, fear of failure, "it's no one's job," and so on. That's the stuff that kills innovation-fueled growth, not a lack of interesting ideas.

So what do companies like Apple and P&G really do? Rather than rely on more-or-less random idea generation, they have made innovation into a systematic process, with dedicated, trained professionals to do it. No company would put a mission-critical function in the hands of people with no experience at making it work, yet it happens all the time with respect to innovation. So encourage your people to bubble away. Just don't be surprised when the bubbles burst upon first contact with your own organizational reality.


Rita McGrath:Columbia Business School professor Rita McGrath studies innovation, corporate venturing, and entrepreneurship. Her latest book is Discovery-Driven Growth (2009).

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