On the MIT Sloan Management Review website, Julian Birkinshaw, Cyril Bouquet and J. L. Barsoux dispel some popular myths regarding innovation in the modern business environment, pointing out that there is much conventional wisdom that no longer applies.
Observing the changing nature of innovation, they say: "Historically, most managers equated innovation primarily with the new development of 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."
They add: "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."
Now, rather than innovation being the preserve of a select band of employees, the shift in focus means innovation is seen as everyone's responsibility. This brings new challenges, and the authors set about researching the innovation practices that work. In doing so, they uncovered some "surprising findings".
In their article they highlight some of the key insights from their research, centred around five myths that persistently haunt the innovation efforts of many organisations.
THE EUREKA MOMENT
Explaining the first myth, Birkinshaw, Bouquet and Barsoux say: "For many people, it is still the sudden flash of insight that defines the process of innovation.
"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."
However, the reality is somewhat different, with the maxim of innovation being 5% inspiration and 95% perspiration being closer to the truth.
The authors say: "If you think of innovation as a chain of linked activities – from generating new ideas through to commercialising them successfully – it is the latter stages of the process where ideas are being worked up and developed in detail that are the most time consuming. Moreover, it is also the latter stages where problems occur."
The eureka myth might account for big brainstorming events – like 'ideation workshops' and 'innovation jams' – being popular with so many companies. But while these events can produce useful ideas, Birkinshaw, Bouquet and Barsoux say most companies fail to think through the consequences of staging them as they underestimate the work required to bring the ideas to fruition once the workshop is completed.
Also, the events can be "disempowering" if the organisation doesn't have the capacity to act on the ideas generated.
The authors say: "We heard quite a few grumbles during the research from individuals who had put forward their bright ideas through a workshop or online forum, but received no response – not even an acknowledgment."
To avoid falling foul of the eureka myth, you should be very clear about the problems you are trying to solve and focus your ideas around them. Then be prepared to put in the necessary work to put those ideas into action.
BUILD IT AND THEY WILL COME
The advent of 'Web 2.0' and the growth of online communities and social networking has seduced many people into thinking that these new ways of interaction will transform the way things get done at work. But for every success story there's a failure, and many virtual communities end up "underused and unloved".
Sometimes a forum doesn't take off as the novelty wears off and interest dwindles. In other instances, ideas that get posted are "off-topic, half-baked or irrelevant".
The authors advise: "The most important point is to understand the types of interaction that occur in online 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. But 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 online forum can be highly efficient."
"Open innovation" is the idea that companies should attempt to harness the ideas beyond their formal boundaries. The authors offer the example of LEGO, which has long been using customer ideas as a source of innovation, even labelling new products as having been "created by LEGO fans".
However, Birkinshaw, Bouquet and Barsoux say that while many large companies believe an open approach to innovation is necessary and the benefits are obvious, the costs are considerable.
Practical challenges in resolving intellectual property ownership issues, lack of trust on both sides and the operational costs of building an open innovation capability are all complicating factors. Therefore, the authors believe that open innovation is not the future, but rather part of the future, and that the best approach is to be selective in the use of open innovation tools.
They say: "External innovation forums have access to a broad range of expertise that makes them effective for solving narrow technological problems; internal innovation forums have less breadth but more understanding of context. Smart companies use their external and internal experts for very different types of problems."
PAY IS PARAMOUNT
There is a dominant theory that pay structure should reward ideas, because innovation involves effort above and beyond existing responsibilities. However, Birkinshaw, Bouquet and Barsoux believe this is a red herring and money is not an effective incentive for intrinsically enjoyable activities like innovation.
They say: "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 behaviour, which hence undermines their intrinsic task interest and creative performance."
The authors observe that there is much enthusiasm among those in R&D settings for bottom-up activism or "intrapreneurship".
The reasoning behind it is that top executives are not close enough to the action to come up with or implement new ideas, so there is a need to push responsibility for innovation downwards. But the authors say they have yet to find cases where dramatic changes have emerged through bottom-up initiatives.
According to Birkinshaw, Bouquet and Barsoux, while there are plenty of examples of successful innovations that started out as below-the-radar initiatives, at some point all these innovations were picked up and then prioritised by top management. Successful innovation, therefore, requires the close attention of both facets.
They conclude: "Bottom-up innovation efforts benefit from high levels of employee engagement; top-down innovation efforts benefit from direct alignment with the company's goals. Smart companies use both approaches, and are adept at helping bottom-up innovation projects get the sponsorship they need to survive."