The No. 1 Challenge to Innovation

19 December, 2014 / Articles

The No. 1 Challenge to Innovation The biggest challenge to innovation is not how to generate new ideas and opportunities. It’s how to make innovation a deeply embedded capability in the organization. What usually happens is that companies focus most of their efforts on the front end of innovation – so they launch some kind of ideation initiative with a lot of hoopla and they get a whole bunch of ideas. But then they hit a wall because there is no back end – there is no organizational system for effectively screening ideas, aligning them with the business strategy, allocating seed funding and management resources, and guiding a mixed portfolio of opportunities through the pipeline toward commercialization. So, invariably, what we find is that the whole innovation effort eventually withers. And all those enthusiastic innovators inside and outside the company become cynical and discouraged as they watch their ideas go nowhere.

The real challenge, therefore, is to turn innovation from a buzzword into a systemic and widely distributed capability. It has to be woven into the everyday fabric of the company just like any other organizational capability, such as quality, or supply chain management, or customer service. In other words, for innovation to really work, and to be sustainable, it has to become a way of life for the organization. Yet how many companies have actually achieved that? The sad truth is this: most organizations today still have absolutely no model, no practical notion, of what the back end of innovation actually looks like. If you asked them to build a corporate innovation system that seamlessly integrates leadership commitment, infrastructure, processes, tools, talent development, cultural mechanisms and values, they wouldn’t even know where to start. That’s the Number One challenge we have to address.

When you ask most people to describe their company’s “corporate innovation system”, all you usually get is a blank stare. Sure, they may tell you they have recently been involved in some sort of idea submission scheme, but if you ask them what their company actually does with all the ideas – how many of them have so far been turned into experiments, how many are receiving more serious funding and attention, how many ventures are heading for commercialization, and how much money those ventures are expected to generate – people’s answers tend to become a lot more vague. The sad truth is that most organizations have not yet developed a clear model—reflected in management practice—of what the back end of innovation actually looks like.

In my speeches, I often compare the front end of innovation to the sparkplugs in an engine – the exciting ideation part where new ideas are born from inspiration and breakthrough thinking. But I argue that literal sparkplugs would be completely useless if there were no engine around them – no mechanical system for taking those sparks of fuel and using them to propel the vehicle forward. And that’s the rub. What most companies are missing today is an “innovation engine”: a high performance organizational system that can continually pick up promising ideas and transform them into powerful new ways to create value and wealth.

Imagine you typed a few words into Google, pressed the search button, and nothing happened. Have you ever thought about how Google manages to deliver all those results in the blink of an eye? The reason we call it a search “engine” is that behind Google’s simple and playful user interface is an incredibly complex system comprising a million servers, racked up in clusters at data centers all over the world, all working together to scan billions of websites at breakneck speed. Without the back end of Google – without that engine – all we would have is a lovable logo on a clean white web page. Similarly, organizations are finding out that without the back end of innovation, all they get is a lot of ideas at the front end which end up going nowhere.