Stop Blabbing About Innovation And Start Actually Doing It

These days, every established company is at risk of having its industry—and its own business—disrupted by a startup. Cognizant of this, companies devote a lot of time to talking about how important it is to innovate. But here’s the truth: most companies can’t innovate because everyone is paid to maintain the status quo.

This is the single biggest reason companies fail to do anything new or exciting. You and everyone else are maxed out making sure your company is doing what it’s supposed to do; innovation is what the weekends are for.

Despite the real risk involved, this actually makes sense. Companies are set up to do one thing very well. That’s the business they’re in. All of the roles in the company are defined and structured to create the best environment for doing that one thing as efficiently as possible. The number of people employed by the company fluctuates with the workload. More work, more people. Too many people and too little work means layoffs or mismanagement. Success is doing the same thing you’ve always done, just a little bit better, achieving just a few more sales or shaving a hair off of costs. Change is discouraged by time constraints and the stifling number of approvals needed. Failure is punishable by pink slip. Every day is the same.

Yet, today, your entire industry can change in the space of a headline. If your business can’t innovate, it won’t survive when the startup in the garage across town that doesn’t have to answer to your shareholders does all the things legal has been telling you that you can’t do, all the things that you don’t have time for. It’s never been more urgent to stop talking about innovation and actually start doing things differently. And, with digital, the opportunities have never been greater. Instead of innovating on your weekends, overcome the structural impediments and time constraints to real change by approaching innovation from two directions: outside-in and inside-out.

“Outside-in,” when not based on acquisition, often comes in the form of a skunkworks project. It’s colloquially defined as a startup funded by the parent company, but kept separate from the dysfunction and sluggishness of the whole, in order to incubate great technological advancements. I’ve referenced this tactic before, as the first step big businesses should take to evolve their organizational structures. Google, JetBlue, NBCUniversal, and News Corp. have all used the strategy.

Here’s the recipe:

Set the right goals. A skunkworks project should be tasked with developing a new, specific tech product or service.

Give the team freedom to create. Bureaucracy, office politics, and the aforementioned requirement to keep the ship sailing straight ahead all slow down and inhibit big advancements. To succeed, the skunkworks team must be kept free from these deterrents.

Appoint separate senior management. Management by committee is not an option. The quickest route to failure is slow decision making. The skunkworks team should report directly to a senior-level executive who is authorized to green-light initiatives that are separate from the company’s main purpose and to implement these new solutions.

Choose a separate location. The team should not be housed in the corporate headquarters. Ideally, it should live nearby, but in some cases, it needs to be in a completely different location to be able to access the right talent. When Johnson & Johnson decided to build a unit oriented to design, creativity, and technology, the division planted a flag in an old industrial building in a trendy neighborhood in New York. Its corporate headquarters are in suburban New Jersey.

Mix up the staff. The staff should be a healthy hybrid of high-performing internal employees and newbies, so that some participants are familiar with the company’s core business while others have an open mind and fresh ideas.

Give it time. Really well-developed products often take a year from the time people start working on them until launch. You can get things done in six to nine months, but it’s unusual, especially if the team refines it with iterative improvements.

Bring it back into the fold. Once the project is complete, skunkworks team members should move back in with the parent company. They either become a distinct department or are dispersed throughout the company, in order to effectively run and manage the particular product.

On the other hand, “inside-out” innovation is all about incentivizing existing staff members to be revolutionary within their own jobs. The most important ingredients are largely cultural:

Freedom to fail. Traditionally, companies are averse to risk, so if you fail at something, it hurts your career. But to innovate, you need to be able to try new things without risking your livelihood. As Thomas Edison said, “I have not failed. I've just found ten thousand ways that won't work.”

Free time. Performance evaluations for managers should include assessment of the volume and quality of new ideas they brought to the table. If the company’s priority is solely productivity, no one will have time to think about creating something new, let alone bring it to life.

Training. An office that encourages and facilitates education openly admits there’s room to grow and inspires people take that leap.

The risk involved in these changes is less than the risk of not making them. Innovation is outside the comfort zones of most businesses—but so is Chapter 11.

Aaron Shapiro is CEO of Huge, a global digital agency based in Brooklyn, and author of Users Not Customers.

[Image: Flickr user Derrick Collins]

Add New Comment

36 Comments

  • Deborah

    A colleague of mine, Bob Rosenfeld – who worked for many years in innovation starting at Kodak back in the "good ol' days" – came to understand and build his career around how people work together across their often hidden differences to develop an innovative product or service.  He developed a tool called the Innovation Strengths Preference Indicator® (ISPI™) that helps individuals and teams understand whether they are more on the Builder (detail-oriented, systemic, repeatable) or Pioneer (paradigm-breaking, idea-generating, creative) side of the spectrum, or somewhere in between (known as Bridgers).  He also talks about which type of people a team needs at which phases of a development process.  It is a tool that can help organizations "stop blabbing about it and start doing" innovation.

  • BillZ Clinton

    This article is a little lofty, indeed, trying to standardize innovation into a list of do's and dont's seems off. Companies have to decide if they want to be a start up culture and take risks or be a moneymaker and grow slowly and organically through a series of relationships and smaller innovations and operational adjustments.

    One question I have: just wondering when Aaron Shapiro became an expert on innovation? Frankly, his company doesn't do anything extraordinarily innovative, they build large e-comm websites and tablet applications for middle American brands, there's nothing innovative about that, there are a million agencies that do that kind of work.

  • Brian Gladstein

    What's always been amazing to me is that so many companies fail at their innovation initiatives... EVEN IF they are doing the things that you mention in this post Aaron.

    Companies need to create innovative products - that's true - but to have a greater chance at success they also need to discover and reach their target customers, and communicate to them in an engaging way. And the sad truth is that even the innovative companies often fail at this task. Sales and marketing teams at companies have a dis-incentive to selling new products... it's often easier for people to make their numbers by doing the thing that is more proven, less risky, and easier to predict.

    Companies can create a go-to-market tiger team as part of their innovation strategy - one that is good at discovering customer needs, navigating communication, and reaching new markets outside of the existing corporate machinery.

    I got inspired to write my own post on this topic: http://explorics.com/2012/04/2...

    Thanks Aaron! 

  • William Miller

    Aaron, there are three parts to the problem. First, only
    9% of U.S. businesses attempt any product or service innovation and only
    another 9% attempt any internal process innovation. Fire the CEO's and BOD's for not making the investment in innovation that should be BOTH incremental and radical for survival. 
    Second, effective RADICAL innovation requires a new methodology- the fourth generation (4G) of innovation theory and practive since 1900. 4G has twelve new prinicples and practices that tranform nearly every discipline such as finance, marketing, opeations, engineering, R&D and IT. For example, intangible capital (IC) accounting is needed and  FASB should do it's job and add IC methods. Financial statements (P&L, Balance sheet) don't measure knowledge, partnerships, processes, or business models. Third, universities don't yet teach 4G but they are beginning to teach parts of 4G. Steve Blank teaches part of 4G at Stanford which changes how start-ups discover market needs and validate solutions before launch and also how they develop and execute business plans.

  • RoyLuebke

    As a researcher on the subject, it appears that a preponderance of companies focus on incremental innovations, i.e. short term, low risk, low return types of changes.  The leadership's tolerance for risk on more transformational changes is at the heart of the issue.

    While a focused effort on creating something new and a bit more transformational is what is needed for long term profit growth, isolating the team can create internal resentment, i.e. only the cool kids get to work on the fun stuff, the rest of us serfs get to toil in the mine.

    I agree with some of the author's premise in that there should be a concentrated effort,  just don't make it a secret project.  Try to keep the effort inclusive and open, and use it to develop an organizational competence with a set of capabilities that helps identify customer-focused opportunities and a wider set of strategic alternatives.  Be careful not to create an us versus them point of view internally.

  • Sunil Malhotra

    The whole problem is the us versus them and aka either versus or mentality, like you rightly point out Roy. As long as the versus bug exists, I doubt we'll be get out of incre-mentalilty. ;-)

  • Bob Jacobson

    Fifty-five years ago, Isaac Asimov offered the same advice regarding innovation with sharp-edged wit and humor in his short story, _Profession._  It's a good read.  If you ever wondered if you are an innate innovator, you will know after reading this story.  And then it will be with you for the rest of your life.

    http://en.wikipedia.org/wiki/P...  

    Profession has become a classic science-fiction fable and is available in many anthologies.  You can acquire an assemble-it-yourself copy of the story on the website, www.abelard.org .

  • alexander zagoumenov

    Robert, thanks for the actual link! I was about to leave when I first saw the homepage of Abelard :)

  • wilco van batenburg

    Interesting
    discussion here. We just studied this topic in detail by surveying 260
    innovation professionals (http://tinyurl.com/bsbbt8o)
    and pretty much
    concluded similar things. In order to be the point I would like to emphasize is
    that being successful in innovation depends on both informal and formal
    mechanisms as you mention here. And yes, there is a lot of blabbing on the
    topic! We see that even though innovation is considered a highly strategic
    topic it is not organized in such a way. Innovation leaders understand the need
    to have an explicit innovation strategy and to support it with formal
    innovation governance mechanisms. However, only a minority of our respondents
    agree they have an innovation strategy or an effective governance for
    innovation.

    Next to
    that, in order to be successful, you need a portfolio of initiatives with both
    high risk high reward, as well as low risk incremental innovation initiatives.
    As long as a firm fails to put in place proper organizational alignment of
    innovation efforts, and neglects to put in place an effective organizational
    structure that goes for all types of innovation efforts, it will never become
    an innovation leader.

  • Sunil Malhotra

    Too many debates going around about what innovation is and what it isn't. Even more about how to innovate and provide value and whether organisations have it in their DNA to 'learn' to innovate. As usual, the quest for ONE right way. This search for ONE is what has caused us to stand rooted in the industrial era. Our thinking continues to use past knowledge and we believe that simply projecting our understanding on the screen of the future will create a better future.

    We also like to bask in our own preferences of what is right -- viz. whether innovation must operate within the structures and walls of an organisation OR it is better effected as a skunkworks from outside; whether it should be designated as a separate function OR should fall under an existing department; etc ... We can't seem to believe that ONE can mean both (holistic) and need not necessarily be an EITHER/OR situation (one-size-fit-all).

    In simple terms innovation is just about thinking without restraint and trying without constraint. Although it is all about making life better, it isn't simply about improving existing products.

  • oneumbrlla

    Our incubation lives inside well known PARC, and we are doing exactly that, innovating based on years of incredible research.  We are start-up professionals, not researchers, and generally the mentality of the true innovators, or future thinking ideas, is not constrained by that which drives those in start-ups.  Start-ups have to define markets, prove market awareness and acquire customers with  clear idea on how they are going to make money so they can get investment to scale.  Researchers are paid to think outside the box in a big way.  I agree with Chas, you do not only need context of how you innovate, but the actual content and skills to being it to life in a way that makes money.  Money is what drives VCs and big corporations. And while I am a died in the wool believer in creating products that solves problems reality is that many of the big winners in the media, Instagram, Draw something are social plays not problem solvers.  So, the world is expanded and thinking outside the box of where the value is  beyond the obvious can only come from innovation in thought and act.

  • Chas Martin

    Innovation by declaration is a frequent and flawed strategy. Giving people the time to create and the freedom to fail is not enough. Most people don't know how to come up with a REAL breakthrough idea. At best, they imitate other successes. That can create incremental change which many organizations hail as "innovation".
    Real innovation takes guts and skill. It demands methods to rewire how people think. Unless you coach your team to think differently, they will continue to think the same way. Lateral thinking, parallel thinking, concept extraction, inverted logic and numerous other techniques - easy to learn and use techniques - can open the doors to new possibilities. Sports teams do not invent new offenses or defenses on the fly. They develop new techniques first. Then they drill until they are comfortable. When they hit the field, they are prepared to create the breakthroughs.
    I think you have underestimated what it takes to be innovative. Context is not enough. Team members need content on which to develop innovative insights.

  • William Miller

    Yes and I like your sports analogy, Read my comment on 4G innovation which is a new methodology that applies lateral thinking and other ways to think differently and more effectively but also creates coaching for innovation project teams in Innovation Extension Centers. The investment, effort and methods required to support innovation, especially radical innovation, have been greatly underestimated.

  • Bill Reichert

    Aaron, I'm a little disappointed.  This is a thin rehash of an old idea.  The reality is that a lot of big old stodgy companies are indeed implementing aggressive innovation strategies.  They are not just blabbing about innovation.  But of course they are discovering that it is really hard.  Not because they are stupid and are undermining themselves by perpetuating the status quo, but because it is very hard for most innovation projects to move the needle at the scale of the corporation.  

    There is no simple "recipe" for corporate innovation.  It requires a portfolio of approaches -- inside operating divisions, outside operating divisions, strategic investments, joint ventures, and acquisitions.  It also requires the cultural environment you touch on, but it is naive to suggest that you can magically enable a culture in which everyone is "free to fail."  And you wouldn't want to create that culture.  

    "Free to fail" is a false characterization of what really goes on in Silicon Valley and other entrepreneurial cultures.  The core value is "rewarded for taking brilliant calculated risks."  Edison and Jobs are not famous because they failed.  They were not rewarded for failing.  But they succeeded because they learned from their failures, they persisted despite their failures, and they ultimately hit on the right solutions.  

    Also, your characterization of the goal-setting process is wrong.  You don't want to mandate the "creation of a specific product or service."  The charter should be to solve a problem or exploit an opportunity.  True innovators don't care about the invention -- the specific product or technology -- they care about the solution, as measured by customer delight. 

    -- Bill Reichert, Garage Technology Ventures 

  • Aaron Shapiro

    Bill, Thank you for your thoughtful comments. I'm sure you'll be happy to know that I actually agree with most of what you have to say. This piece was intended to relay my perspective on why some companies struggle with innovation, based on my personal experience working with the digital and marketing teams at many large companies. 

    While many organizations do a great job innovating, many struggle, probably more often than people realize.  I've seen first-hand situations where there is a lot of press around a company's innovation initiatives and the degree to which they are embracing digital, and then when you inside the organization you see that in actuality, there's not much going on.   This doesn't happen for malicious reasons or because people are stupid or incompetent; I find it is because many companies are not structurally set up to innovate.  For example, I was recently in a meeting where the President of a division of a major multinational approved a large ecommerce initiative that would have transformed their company.  It died on the vine because the division manager who is responsible for the P&L lacked the funds to implement, and if he shifted budgets to this project, it would have negatively impacted their personal bonus.  There is, of course, no one recipe or one-size-fits-all solution -- each company needs to implement a plan that makes sense for its business, its industry and the context of the situation they find themselves in. 

    By "freedom to fail," I don't mean to encourage failure but to encourage moving toward agile, iterative processes of experimentation and trying new things on the path to achieving a big goal.  Too often I see large companies set up innovation projects that must get something perfect in one shot, because there's no money or willpower to evolve beyond that.  And, in some corporate cultures, I see there is a high degree of risk aversion that discourages people even trying to tackle a big, risky, high ROI initiative in the first place.  I've had a few clients tell me in confidence that they're embarking on this big risky thing because it is the right thing to do, and they've accepted the fact they they might get fired for it.  Many people wouldn't put their jobs on the line for innovation.

    As for goal-setting, I don't believe we're at odds here either: I agree that all innovative products or services come from the solving a problem and meeting a real customer need. 

    Thanks again for reading and I appreciate your interest in this subject.

  • Debbie Robinson

    You must have the right 'mix' of people in your team. You need 'Innovators' People that have a highly original and creative approach to problems. The down side is they can be introverted and maybe forgetful and lack attention to detail. They tend to be radical thinkers and to challenge the traditional way of doing things. Therefore you need others in the team to balance this , to pay attention to accuracy, complete tasks etc etc. It's about getting the right people doing the right jobs. Ones they naturally excel at and enjoy.

  • Jatinder Singh

    Two very important topics I would like to point out: First and most important is Culture: most big corporations just don't have the right culture (unless you are Google or Facebook) to let a culture evolve, even miles away from mother ship, that will induce Innovation. This culture is a mix of not only risk tolerance, but also reporting structure, facilities, equipment, services, game rooms, etc. Secondly, the Talent Acquisition. If the companies fail, which they often do, in developing the right Culture, they can simply forget about getting any meaningful Talent that will spend time doing Innovation for them. As I have read before "Culture eats Strategy for lunch". Nothing will work, if the environment isn't conducive for Innovation, which includes all the things you mentioned, but also a major shift on how the top boss thinks about the Culture of the Skunkwork organization. One simple example - just dare to give these innovative team members a larger cube or computer compared to the rest of the organization, or a free lunch, or a free bus ride... and enjoy then enjoy the show.

  • Miriam Gilbert

    Outside-in incubators work if you are a company with spare resources - i.e. money & time - to actually do this. I know it sounds like an excuse but many a SME finds themselves under too much pressure to set up skunkworks operations. So are they forever doomed? 
    And yes, there is always a lot of talk about embracing change and taking risks and creating a culture where this is possible - yet, most companies don't have this culture, even after decades of management literature telling them they need it. 
    A way to avoid those obstacles, help with the risk attitude and result in real innovation is bringing together organisations from different backgrounds, size and industry - to learn from each other but also, crucially, explore avenues that each individually would not even have thought of!
    The whole being greater than the sum of its component parts, springs to mind....