How good at innovation are you really?

By Robin Bolton

For the Deseret News

Published: Monday, June 6 2011 6:02 p.m. MDT

Growing up, I vividly remember watching Garrison Keillor's A Prairie Home Companion on the Disney Channel. I loved that it was a place where "all the women are strong, all the men are good looking, and all the children are above average." That sounded like exactly the type of place I would like to live. But then I got a bit older and realized - we can't all be above average.

The same thought occurred to me while reading McKinsey's 2010 Innovation and Commercialization survey. More than half said that "their companies are better than their peers at innovation." With the success rate of innovation estimated at anywhere from 2 percent to 30 percent, the bar for "being better than [your] peers" is not that high. But, we can't all be above average. Our experience frequently points to three root causes.

Root Cause #1: A poor understanding of what innovation is

Consider Leonardo Da Vinci and Thomas Edison: Is each man creative, innovative, or both? While both men are undoubtedly creative geniuses, we would consider only Edison to be innovative because only Edison made money from his inventions.

In the McKinsey report, only 39 percent of respondents indicated that their companies are good at commercializing new products. Assuming that all of these people also believe their companies are better than average innovators, that means 16 percent of the executives who believe their companies are above average innovators are bad at commercializing new products. Problem is, you can't be a good innovator and bad at commercializing innovation.

Root Cause #2: A belief that innovation should be free of constraint

Few things are more terrifying than a blank sheet of paper. When working with clients, I often, quite literally, see fear in the eyes of even the most senior executives when they're asked to volunteer an idea. It isn't until we present various tools and frameworks to guide the ideation process that the deer-in-headlights look disappears.

Unfortunately, only 29 percent of the McKinsey survey respondents felt that their companies effectively set formal priorities for innovation, only 23 percent had better than a somewhat formalized commercialization processes, and a full third admitted their organizations had no formal commercialization processes for innovation at all.

Root Cause #3: A blind-eye toward organizational antibodies

As Mark Johnson outlines in his book, Seizing the White Space, every organization has rules, norms, and metrics that connect the elements of its business model and ensure the continued functioning and success of the existing business. Over time, the explicit elements of the model (customer value proposition, profit formula, resources, processes) can fade, but the rules, norms, and metrics survive and work implicitly to sustain the business. They can also become organizational antibodies that kill innovation.

Sadly, the McKinsey report indicates these organizational antibodies are alive and well at many companies. Sixteen percent of respondents said their companies suffer from the "not invented here" syndrome, and an additional 16 percent felt "there is no tolerance for experimentation," an act vital to innovation. Worse, the same percentage reported that "if a new product isn't successful right away, it is killed." Even more sobering is the 30 percent of respondents who indicated that "overcoming internal corporate politics" is the single greatest innovation challenge they face.

So what does this mean for your company? Are you laboring under similar misconceptions about your organization's innovation capabilities? And if so, how could you know? Fortunately, such disconnects between belief and reality can be discovered and fixed through a certain amount of straightforward soul-searching. Ask yourself these questions:

What percentage of your new inventions have been set on the path of commercialization?

If the number is lower than you'd like, you're probably confusing creativity with innovation. To make the shift, start by creating a common language (and expectation) that innovation is something new that makes money. Intuit founder Scott Cook tells teams working on disruptive innovation not to do volume forecasts because in new ventures these numbers are fundamentally unknowable. "Instead," he says "we have teams focus on how deep is the customer problem that's unserved and how good is our solution at solving it? If those two are strong, then we have a reasonable shot at a good business."

Can you describe the process you use for prioritizing, evaluating, and commercializing innovations and how that process is different from the one you use for the day-to-day business?

If not, set clear priorities for the type of innovations your organization will support and a process that will take them from lab to market. For example, A.G. Lafley laid out a clear mandate as CEO of Procter & Gamble: each business's portfolio would need to contain 60–70 percent sustaining, 10–30 percent disruptive, and the balance commercial innovations.

When new ideas are proposed, are the loudest voices those of devil's advocates pointing out why it won't work or that it's been tried before? Do people get permission only to pursue new ideas in their "spare" time?

If so, organizational antibodies are at work. Rather than being devil's advocates, senior leaders should be engaged as problem-solvers committed to helping ideas work – even if they didn't work in the past.

We can't be like the children of Lake Wobegon – all of us above average. But with some soul searching and some very hard work, companies can raise the average rate of successful innovation.

Robyn Bolton is a principal at Boston-based consulting firm Innosight, where she specializes in consumer packaged goods and consumer healthcare.

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