Historically, most managers equated innovation primarily with the development of new products and new technologies. But increasingly, innovation is seen as applying to the development of new service offerings, business models, pricing plans and routes to market, as well as new management practices. There is now a greater recognition that novel ideas can transform any part of the value chain — and that products and services represent just the tip of the innovation iceberg.1
This shift of focus has implications for who “owns” innovation. It used to be the preserve of a select band of employees — be they designers, engineers or scientists — whose responsibility it was to generate and pursue new ideas, often in a separate location. But increasingly, innovation has come to be seen as the responsibility of the entire organization. For many large companies, in fact, the new imperative is to view innovation as an “all the time, everywhere” capability that harnesses the skills and imagination of employees at all levels.2
Making innovation everyone’s job is intuitively appealing but very hard to achieve. Many companies have put in place suggestions, schemes, ideation programs, venturing units and online forums. (See “A Glossary of Established Drivers of Innovation.”) However, the success rate of such approaches is mixed. Employees face capacity, time and motivation issues around their participation. There is often a lack of follow-through in well-intentioned schemes. And there is typically some level of disconnect between the priorities of those at the top and the efforts of those lower down in the organization.
The Leading Question
What conventional wisdom about innovation no longer applies?
- Online forums are not a panacea for innovation.
- Innovation shouldn’t always be “open.” Internal and external experts should be used for very different problems.
- Innovation must be bottom-up and top-down — in an approach that’s balanced.
Moreover, Web-based tools for capturing and developing ideas have not yet delivered on their promise: A recent McKinsey survey revealed that the number of respondents who are satisfied overall with the Web 2.0 tools (21%) is slightly outweighed by the number who voice clear dissatisfaction (22%).
1. For a taxonomy of different types of innovation, see S. Conway and F. Steward, “Managing and Shaping Innovation” (Oxford: Oxford University Press, 2009), 13-14.
2. See P. Skarzynski and R. Gibson, “Innovation to the Core: A Blueprint for Transforming the Way Your Company Innovates” (Boston: Harvard Business Press, 2008).
3. See “Building the Web 2.0 Enterprise: McKinsey Global Survey Results,” July 2008, https://www.mckinseyquarterly.com/Business_Technology/BT_Strategy/Building_ the_Web_20_Enterprise_McKinsey_Global_Survey_2174.
4. See M. Hansen and J. Birkinshaw, “The Innovation Value Chain,” Harvard Business Review 85, no. 6 (June 2007): 121-130; and A. Hargadon, “How Breakthroughs Happen: The Surprising Truth About How Companies Innovate” (Boston: Harvard Business Press, 2003).
5. See, for example, J.H. Dyer, H.B. Gregersen and C.M. Christensen, “The Innovator’s DNA,” Harvard Business Review 87, no. 12 (December 2009): 60-67; and Skarzinski, “Innovation to the Core.”
6. A. Giridharadas, “Democracy 2.0 Awaits an Upgrade,” International Herald Tribune, Saturday-Sunday, Sept. 12-13, 2009, Currents, sec. A, p. 1.
7. M. Witzel, “Managers Who Use a Little Imagination for Big Rewards,” Financial Times, May 6, 2008, 18.
8. E. Byron, “A New Odd Couple: Google, P&G Swap Workers to Spur Innovation,” Wall Street Journal, Nov. 19, 2008, sec. A, p. 1.
9. See, for example, E.L. Deci, R. Koestner and R.M. Ryan. “A Meta-Analytic Review of Experiments Examining the Effects of Extrinsic Rewards on Intrinsic Motivation,” Psychological Bulletin 125, no. 6 (1999): 627–668.
10. H.S. James “Why Did You Do That? An Economic Examination of the Effect of Extrinsic Compensation on Intrinsic Motivation and Performance,” Journal of Economic Psychology 26, no. 4 (August 2005): 549-566.
11. K.J. Boudreau and K.R. Lakhani, “How to Manage Outside Innovation,” MIT Sloan Management Review 50, no. 4 (summer 2009): 69-76.
12. E. Kahn, citing Eric Mankin, “Innovate or Perish: Managing the Enduring Technology Company in the Global Market” (Hoboken, New Jersey: John Wiley & Sons, 2007), 19.
13. J.W. Rivkin, D. Leonard and G. Hamel, “Change at Whirlpool Corporation (B),” Harvard Business School case no. 9-705-463 (Boston: Harvard Business Publishing, 2006).
i. For more details see Skarzynski, “Innovation to the Core”; and T. Davila, M.J. Epstein and R. Shelton, “Making Innovation Work: How to Manage It, Measure It, and Profit From It” (Upper Saddle River, New Jersey: Wharton School Publishing, 2006).
ii. L. Dunnavant, cited by A. Muoio, “They Have a Better Idea ... Do You?” Fast Company, (August 31, 1997), 2. i.