Executives can fuel the emergence of new ideas by understanding and tapping the power of employee networks.

Economists have estimated that approximately 50% of U.S. annual GDP growth can be attributed to product and service innovation,1 and more than 90% of executives claim that long-term organizational success depends on developing and implementing new ideas.2 Research shows that growth fueled through organic innovation is more profitable than growth driven by acquisition,3 in part because the organizational capability required is vastly different.4 Yet organic, or emergent, innovation typically does not occur without heroic effort in many large organizations. While technology giants such as Alphabet, Apple, and Facebook are lionized for their innovative cultures, other industries struggle with hierarchal organizations that make consistent organic innovation very difficult.

Companies try to address this by formalizing innovation processes. However, such programs, when they succeed, often produce only a portion of the growth that most large organizations require.5 Many innovation programs fail to meet expectations, in part because they separate the innovation process from the informal networks needed to adapt and support an innovation.6 For example, “skunk works” programs have some lauded successes but also many failures because their innovations have been developed outside the social ecosystem of the organization. Similarly, acquisition strategies that attempt to bring in new expertise and creative ideas make logical sense but far too often underperform due to integration challenges.7 Of course, these stories of failure often don’t make it to press, so those less effective approaches persist.

Leaders need to better support emergent innovation to supplement planned new product or service development activities. Our research suggests that, rather than leaving emergent innovation to serendipity, executives should create collaborative contexts where innovation is likely to emerge from unpredictable pockets of creativity.

References

1. U.S. Chamber of Commerce Foundation, “Enterprising States 2015: States Innovate” (Washington, DC: 2015).

2. D. Smith and C. Mindrum, “How to Capture the Essence of Innovation,” Accenture Outlook Journal 1 (January 2008): 1-10.

3. T. Davila, M. Epstein, and R. Shelton, “Making Innovation Work: How to Manage It, Measure It, and Profit From It” (Upper Saddle River, New Jersey: FT Press, 2012).

4. A.G. Lafley and R. Charan, “The Game-Changer: How You Can Drive Revenue and Profit Growth With Innovation” (New York: Crown Business, 2008).

5. J. Hagedoorn and N. Wang, “Is There Complementarity or Substitutability Between Internal and External R&D Strategies?” Research Policy 41, no. 6 (July 2012): 1072-1083; and A. Kandybin, “Which Innovation Efforts Will Pay?” MIT Sloan Management Review 51, no. 1 (fall 2009): 53.

6. R. Cross, P. Gray, S. Cunningham, M. Showers, and R.J. Thomas, “The Collaborative Organization: How to Make Employee Networks Really Work,” MIT Sloan Management Review 52, no. 1 (fall 2010): 83-90; M.E. Johnson-Cramer, S. Parise, and R. Cross, “Managing Change Through Networks and Values,” California Management Review 49, no. 3 (spring 2007): 85-109; and R. Cross, C. Ernst, D. Assimakopoulos, and D. Ranta, “Investing in Boundary-Spanning Collaboration to Drive Efficiency and Innovation,” Organizational Dynamics 44, no. 3 (July-September 2015): 204-216.

7. M.M. Bekier, A.J. Bogardus, and T. Oldham, “Why Mergers Fail,” McKinsey Quarterly (autumn 2001): 6-9; M.E. Graebner, K.M. Eisenhardt, and P.T. Roundy, “Success and Failure in Technology Acquisitions: Lessons for Buyers and Sellers,” Academy of Management Perspectives 24, no. 3 (August 2010): 73-92; and D.R. King, D.R. Dalton, C.M. Daily, and J.G. Covin, “Meta-Analyses of Post-Acquisition Performance: Indications of Unidentified Moderators,” Strategic Management Journal 25, no. 2 (February 2004): 187-200.

8. R. Cross, R. Rebele, and A. Grant, “Collaborative Overload,” Harvard Business Review 94, no. 1-2 (January-February 2016): 74-79; and R. Cross and P. Gray, “Where Has the Time Gone?” California Management Review 56, no. 1 (fall 2013): 50-66.

9. G. Oster, “Characteristics of Emergent Innovation,” Journal of Management Development 29, no. 6 (2010): 565-574.

10. M. Uhl-Bien and M. Arena, “Complexity Leadership: Enabling People and Organizations for Adaptability,” Organizational Dynamics 46, no. 1 (January-March 2017): 9-20.

11. A. Hargadon, “How Breakthroughs Happen: The Surprising Truth About How Companies Innovate” (Boston: Harvard Business Press, 2003); A. Hargadon and R.I. Sutton, “Technology Brokering and Innovation in a Product Development Firm,” Administrative Science Quarterly 42, no. 4 (December 1997): 716-749; and J. Singh and L. Fleming, “Lone Inventors as Sources of Breakthroughs: Myth or Reality?” Management Science 56, no. 1 (January 2010): 41-56.

12. M. de Jong, N. Marston, and E. Roth, “The Eight Essentials of Innovation,” McKinsey Quarterly, April 2015, www.mckinsey.com.

13. Uhl-Bien and Arena, “Complexity Leadership”; and M. Uhl-Bien and R. Marion, “Complexity Leadership in Bureaucratic Forms of Organizing: A Meso Model,” Leadership Quarterly 20, no. 4 (August 2009): 631-650.

14. L. Huston and N. Sakkab, “Connect and Develop: Inside Procter & Gamble’s New Model for Innovation,” Harvard Business Review 84, no. 3 (March 2006): 58-66.

15. L. Fleming, S. Mingo, and D. Chen, “Collaborative Brokerage, Generative Creativity, and Creative Success,” Administrative Science Quarterly 52, no. 3 (September 2007): 443-475.

16. R. Reagans and B. McEvily, “Network Structure and Knowledge Transfer: The Effects of Cohesion and Range,” Administrative Science Quarterly 48, no. 2 (June 2003): 240-267.

17. T.M. Amabile, S.G. Barsade, J.S. Mueller, and B.M. Staw, “Affect and Creativity at Work,” Administrative Science Quarterly 50, no. 3 (September 2005): 367-403.

18. E. Catmull, “How Pixar Fosters Collaborative Creativity,” Harvard Business Review 86, no. 9 (September 2008): 63-72.

19. L. Fleming, “Finding the Organizational Sources of Technological Breakthroughs: The Story of Hewlett-Packard’s Thermal Ink-Jet,” Industrial and Corporate Change 11, no. 5 (November 2002): 1059-1084.

20. R. Cross, W. Baker, and A. Parker, “What Creates Energy in Organizations?” MIT Sloan Management Review 44, no. 4 (summer 2003): 51-57.

21. R.S. Burt, “Structural Holes and Good Ideas,” American Journal of Sociology 110, no. 2 (September 2004): 349-399.

22. J. Battilana and T. Casciaro, “Overcoming Resistance to Organizational Change: Strong Ties and Affective Cooptation,” Management Science 59, no. 4 (April 2013): 819-836.

23. R. Cross, J. Linder, and A. Parker, “Charged Up: Managing the Energy That Drives Innovation,” Management Quarterly 48, no. 2 (summer 2007): 14-29.

24. Cross, Baker, and Parker, “What Creates Energy in Organizations?”

25. J. Rao, “W.L. Gore: Culture of Innovation,” Babson College case no. BAB698 (Babson Park, Massachusetts: Babson College, 2012).

26. D.Z. Levin and R. Cross, “The Strength of Weak Ties You Can Trust: The Mediating Role of Trust in Effective Knowledge Transfer,” Management Science 50, no. 11 (November 2004): 1477-1490.

2 Comments On: How to Catalyze Innovation in Your Organization

  • M L Bhatia | June 14, 2017

    MY NAME IS CORRECTLY MENTIONED. iT IS ONLY AFTER READING THE ARTICLE THAT i CAI CAN OFFER MY COMMENTS. THANKS.

  • Scott Ruschak | July 11, 2017

    I have witnessed these organizational dynamics work successfully in the non-profit world also — even for small to medium sized NPOs. The central connectors from different groups — i.e. “program” , “fundraising/development”, and “admin”- were isolated from each other and stayed within distinct groups. Each group can only make incremental changes by themselves. Some of the groups were also remote, and this created challenges to promoting adaptive space. We found 2 components were necessary: (1) a broker(s) who needed to draw them out and bridge the gap, and (2) adaptive spaces like multi-day cross-team workshops. I would add also that the brokers were not always the leaders of departments (though some were), but often lower-level staff who were wired to serve as bridges (and usually had broad training in multiple departments or disciplines). One caveat, though – executive leaders who are not enlightened to the power of informal organizational networks can completely disrupt innovation (in a negative way) – by interfering with the creation of adaptive spaces, failing to recognize key brokers and central connectors, and promoting others who are similarly unenlightened.

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