Innovation is a large opportunity in all organizations. However, it requires persistence, a plan and engaged employees to succeed.
Leaders cannot ‘demand innovation’ from others. They must demonstrate how to drive innovation through their own personal stories.
Here is my recommendation to giant companies that want to encourage innovation: Cut the CEO’s salary in half. Put that money in an R&D fund, overseen by a board of seasoned entrepreneurs and investors from outside of the company. Ask employees who have an idea for a new product line or service to write business plans and pitch their ideas to this board. Give the employees who come up with the ideas that get approved the majority of the equity–so they have an incentive to focus on ideas that will pay off, just as entrepreneurs do–and reserve the rest of the equity for the company, with a very small portion for the board, as compensation for vetting all of the plans. The blockbuster ideas will have a big payoff for the company even if it is a minority investor.
Meanwhile, if you are a corporate employee who wants to act on your great ideas, here’s an idea. Instead of getting depressed after your boss says no to your next brainstorm, channel your creative energy into finding a job at a company where entrepreneurial thinking is part of the culture–or team up with some other creative colleagues and start your own business. You’re not likely to get a chance to do something ground breaking at a corporation that wants everyone to focus on the “right” ideas.
Like Bimodal IT, we should split innovations into two parts, slow ‘mode 1,’ responsible for internal improvements and cost savings, and fast ‘mode 2,’ which emphasizes radically different ideas and “Fail Fast, Succeed Faster” paradigm.
Like the creation of any good strategy, the process of developing an innovation strategy should start with a clear understanding and articulation of specific objectives related to helping the company achieve a sustainable competitive advantage. This requires going beyond all-too-common generalities, such as “We must innovate to grow,” “We innovate to create value,” or “We need to innovate to stay ahead of competitors.” Those are not strategies. They provide no sense of the types of innovation that might matter (and those that won’t).
The crowdsourcing idea is that rather than relying on a few experts (perhaps your own employees) to solve specific innovation problems, you open up the process to anyone (the crowd).
In an interview with Bloomberg, the former Microsoft CEO Steve Ballmer said he wishes he realized how Apple’s pricing structure for the iPhone would work: through carrier subsidies:
“I wish I’d thought about the model of subsidizing phones through the operators. You know, people like to point to this quote where I said iPhones will never sell because the price at $600 or $700 was too high. And there was business model innovation by Apple to get it essentially built into the monthly cell phone bill.”
The IT industry is caught in a vortex of supervendors who claim that they can purchase innovation. They claim this is superior to internal R&D. We believe this is not sustainable. Acquiring innovation is one thing. Maintaining it is impossible. Users will not accept architectural mediocrity. This will challenge the business models of supervendors.