Organizational innovation isn’t just about having original ideas — it isn’t even always about originality — it is about the ability to mobilize those ideas into a product or service.
Innovation: The Organizational Amplification of an Idea
The knowledge spiral or SECI model by Ikujiro Nonaka and Hirotaka Takeuchi is probably the most famous in the field of knowledge management (KM). But why is it a spiral and not a circle? The model is most commonly used for tacit-explicit knowledge debates, but it was also meant to illustrate a key message about innovation: Japanese companies were successful because they could make incremental innovations, each one building on an organizationally-embedded knowledge base.
SECI model developed by Nonaka (1994). Used under Wikimedia Creative Commons license
This idea of amplification is the difference between a good idea 'floating around' a company and the company acting on that idea at scale. Although tools to share and collaborate are important enablers, it is the softer factors that really matter:
1. The ability to have honest conversations about progress. If people are afraid to say “the project is delayed” to stakeholders, they will keep taking safer options. Often business deadlines aren’t real, but people sweat them because they’ve given a date to some senior person. You can’t accurately predict timescales for true innovation because you’re learning as you go. If you want predictability you tend to favor things you’ve tried before.
People say innovation means letting people fail. But we also need to stop people weakly succeeding. Think of internal projects, for example: they rarely have a clean stop as a "fail," instead they limp along and disappoint.
2. Time to play. If people are 100 percent occupied doing business as usual, they rarely will be able to step back and do things differently. This is especially true of process innovations, where the good ideas originate from the people doing the job (unlike product innovations where you can dedicate R&D). You need to create some slack (see Tom de Marco’s excellent book) and let people experiment, recognizing that output is likely to dip during this time.
3. External connectedness. There are many volumes on "disruption." One common theme is that groupthink is the enemy of innovation. Your experts are the most likely to put down a new idea that runs contrary to everything they know. Having mechanisms to bring the outside in will help: diversity in recruitment, secondments in and out, sabbaticals, trade shows, social networks, university partnerships and open innovation platforms, for example.
4. Commitment to take to market. You only really know if something will work when you get data from the real world. Some companies are internally very innovative but then sit on patents and products because they are afraid to put them out there (and yes, I know there are other reasons they sit on patents). Digital products in particular, are amenable to launching with a minimum viable product and then iterating. Many start-ups do this, but bigger companies need to overcome their reluctance.
5. Willingness to let go. Kodak often comes up as an example of a company that failed to innovate. Yet they invented the digital camera that was at the root of their ultimate demise. What they didn’t do was put enough weight behind marketing the product and developing it further when it meant diverting resources from its traditional product lines.
6. Money for uncertain outcomes. A clear innovation process is important to nurture ideas beyond the prototype stage. A key part of this is putting money into things that don’t necessarily have a clear ROI at the start. As with the commitment to market, you don’t have the data at this point to judge if it's truly innovative. This isn't to say that you should continue funding bad ideas, only that ideas need the oxygen of cash to develop.
Note that none of these factors says you need to get rid of hierarchy. I'm not even sure that high levels of connectedness internally is necessarily a good idea. Very dense networks can suppress new ways of doing things by drowning them out. For example, a study of Yammer usage in a large consultancy by the University of Sydney found that 25 percent of all posts were "aligning activities," basically people telling their peers "this is how we do things."
Innovation can of course happen in a networked organization — people may use personal ties to mobilize resources when they're not available by formal routes — but a strong network isn't a necessary condition.