Today, most managers assume that innovation is supposed to be done constantly, by everyone in the company, on every area of the company, while using new Web-based tools to help it happen. Does this conventional wisdom really make sense? Or do the experiences of companies reveal something different?
To find the answers, a team of researchers spent three years studying the process of innovation in 13 global companies: Mars, BP, Sara Lee, IBM, Best Buy, BBC, Whirlpool, BT, Roche Diagnostics, GSK, ThomsonReuters, UBS, and Royal Bank of Scotland.
In “The 5 Myths of Innovation,” in the Winter 2011 MIT Sloan Management Review, the team — Julian Birkinshaw, Cyril Bouquet and J-L. Barsoux — reveal their surprising findings. Birkinshaw is a professor of strategic and international management at London Business School. Bouquet is a professor of strategy at IMD. Barsoux is a senior research fellow at IMD.
They discovered five persistent “myths” that haunt the innovation efforts of many companies.
Myth #1 is “the 'eureka' moment.”
According to this view, companies need to hire a bunch of insightful and contrarian thinkers, and provide them with a fertile environment, and lots of time and space, to come up with bright ideas.
The reality is different. If you think of innovation as a chain of linked activities — from generating new ideas through to commercializing them successfully — it is the latter stages of the process where problems occur.
When managers in 123 companies were asked to evaluate how effective they were at each stage in the innovation value chain, they indicated that, on average, they were good at generating new ideas, but their performance dropped for every successive stage of the chain.
The “eureka” myth explains why so many companies are drawn to big brainstorming events, with names such as ideation workshops and innovation jams. Such events can generate excitement and some useful ideas. But it's not clear that they are the right way to build company-wide innovation capability.
The first problem is that companies underestimate the amount of work that is needed after the workshop is completed. IBM's 2006 on-line Innovation Jam required a team of 60 researchers to sort through the 30,000 posts received over a 72-hour period.
The second problem is that workshops can be disempowering if the organization fails to act on the ideas generated. When people suggest ideas but receive no response, they become resentful and less likely to contribute in the future.
So what should you do?
First, be very clear what problem you are trying to solve, and put on an ideation workshop only if you believe that it is a lack of ideas that is holding you back.
Second, if you believe that an ideation workshop is the right approach, be prepared to invest a lot of time and effort into the follow-up work.
Myth #2 is “build it and they will come.”
The growth of on-line communities such as Facebook and LinkedIn can seduce us into assuming that these new means of social interaction will also transform the way we get things done at work.
But for every on-line community that succeeds, many others fail. Some make a good start but then enthusiasm wanes. Others fail to live up to their founders' hopes.
All the companies studied had figured out that the tools of Web 2.0 could be valuable in helping large numbers of people get involved in an innovation process. Most had built on-line forum in which employees could post their ideas, comment, and build on the ideas of others.
IBM used space on its corporate Intranet to launch the Innovation Jam mentioned earlier. The purpose was to get employees, clients, and partners involved in an on-line debate about new business opportunities. The Innovation Jam attracted 57,000 visitors and 30,000 posts.
While IBM had success in attracting interest, the overall story was much more mixed. Some on-line forums helped to galvanize their company's innovation efforts. Others ended up underused.
What are the problems with developing on-line innovation forums? The first risk is that the forum doesn't take off. It's usually quite straightforward to get people to check out a new site once or twice, but they need a reason to keep coming back.
The second risk is that the ideas that get posted are off-topic, half-baked, or irrelevant. The notion that the good ideas will be picked up by others and rise to the top rarely works out.
To avoid these problems, understand the types of interaction that occur in on-line forums, so that you use them in the right way. If you are looking for creative, never-heard-before ideas, and if you want people to take responsibility for building on one another's ideas, then a face-to-face workshop is your best bet.
If you are looking for a specific answer to a question, or if you want to generate a wide variety of views about some existing ideas, then an on-line forum can be highly efficient.
Myth #3 is that “open innovation is the future.”
“Open” innovation is the idea that companies should look for ways of tapping into and harnessing the ideas that lie beyond their formal boundaries. Many companies are now embracing open innovation.
For example, the Danish toymaker LEGO has been leveraging customer ideas as a source of innovation for years, and some new products are even labeled “created by LEGO fans.”
The benefits of open innovation, in terms of providing a company with access to a vastly greater pool of ideas, are obvious.
But the costs are also considerable, including practical challenges in resolving intellectual property ownership issues, lack of trust on both sides of the fence, and the costs involved in building an open innovation capability.
Another concern is the time it takes to do open innovation properly. Companies such as Procter & Gamble, Intel, and LEGO have put an enormous amount of investment into building their own external networks, and they are beginning to see a return, but you shouldn't underestimate the time and effort involved.
Myth #4 is that “pay is paramount.”
A dominant concern when organizations set out to grow their innovation capabilities is how to structure rewards for ideas. A common refrain is that innovation involves discretionary effort on top of existing responsibilities, so companies have to offer incentives so people will put in that extra effort.
While people are motivated by many factors, extrinsic rewards such as money are usually secondary factors. The more powerful motivators are typically “social” factors, such as the recognition and status that is conferred on those who do well, and “personal” factors, such as the intrinsic pleasure that some work affords.
More specifically, there is evidence from psychology research that individuals view the offer of reward for an enjoyable task as an attempt to control their behavior, which undermines their creative performance. Parallel research in behavioral economics suggests that intrinsic motivation is especially likely to suffer when the incentives are large.
All of which suggests that you don't need monetary rewards for innovation. Innovation is intrinsically enjoyable, and it's easy to recognize and confer status on those who put their discretionary effort into it.
Myth #5 is that “bottom-up innovation is best.”
There is a lot of enthusiasm for bottom-up activism or “intrapreneurship.” The reasoning is straightforward: Top executives are not close enough to the action to be able to come up with or implement new ideas, so they need to push responsibility for innovation down into the organization.
There are plenty of examples of successful innovations that started out as below-the-radar initiatives, or as proposals that got rejected by top executives. Examples include Ericsson's mobile handset business, Sony's PlayStation, and HP's printer business.
But, at some point, all these innovations were picked up and then prioritized by top management. Successful innovations, in other words, need both bottom-up and top-down effort.
This interplay between direction and empowerment is evident even in a declared bottom-up innovator like Best Buy. The success of the retailer is strongly tied to the cumulative effect of continuous experimentation and small bets at the level of individual stores.
Yet top management plays a significant role in channeling the collective creative energy toward desired areas by framing the innovation challenge in terms of finding new and better ways to service customers — hence removing the risks of random or ill-focused innovation.
Innovation is the lifeblood of any large organization, but there are no quick fixes or one-size-fits-all solutions. On-line tools, open innovation communities, and big collaborative forums all have their limitations. None is always right or always wrong.
The best approach involves a deep understanding of the particular challenges a company is facing. By thinking through the pros and cons of each element, companies can avoid making the wrong decision based on the myths of innovation, and instead make successful innovation a reality.
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