Innovation : The Classic Traps

Most companies fuel growth by creating new products and services. Yet too many firms repeat the same growth sapping mistakes in their efforts to innovate. For example, some companies adopt the wrong strategy: investing only in ideas they think will become blockbusters. Result? Small ideas that could have generated big profits get rejected. For years, Time, Inc. didn’t develop new publications: managers wanted any start-up to succeed on the same scale as the enormously popular People magazine. Only after Time decided to gamble on a large number of new publications did revenues rise. Other companies err on the side of process strangling innovations by subjecting them to the strict performance criteria their existing businesses must follow.

Your reward? Better odds that the new ideas percolating in your company today will score profitable successes in the market tomorrow.

It has and it always will !!

It’s inevitable that historical memory will fade—but not inevitable that we lose the lessons. Here’s a chance to collect some of what is known about innovation traps and how to avoid them.

Strategy Mistakes: Hurdles Too High, Scope Too Narrow
The potential for premium prices and high margins lures executives to seek blockbuster innovations production System. Along the way, they expend enormous resources, though big hits are rare and unpredictable. Meanwhile, in seeking the killer product, managers may reject opportunities that at first glance appear too small, and people who aren’t involved in the big projects may feel marginalized. For years, large consumer products companies typically screened out ideas that couldn’t result in revenues of several hundred million dollars within two years. Launching too many minor product extensions that confuse customers and increase internal complexity is also another mistakes entrepreneurs makes.

Remedies for Strategy Mistakes: Widen the search, broaden the scope
Companies can develop an innovation strategy that works at the three levels of the “innovation pyramid”: a few big bets at the top that represent clear directions for the future and receive the lion’s share of investment; a portfolio of promising midrange ideas pursued by designated teams that de- velop and test them; and a broad base of early stage ideas or incremental innovations permitting continuous improvement. Influence flows down the pyramid, as the big bets encourage small wins heading in the same direction, but it also can flow up, because big innovations sometimes begin life as small bits of tinkering. An innovation strategy that includes incremental innovations and continuous improvement can help to liberate minds throughout the company, making people more receptive to change when big breakthroughs occur.

Process Mistakes: Controls Too Tight
A second set of classic mistakes lies in process; specifically, the impulse to strangle innovation with tight controls—the same planning, budgeting, and reviews applied to existing businesses. The inherent uncertainty of the innovation process makes sidetracks or unexpected turns inevitable. Performance reviews, and their associated metrics, are another danger zone for innovations. Established companies don’t just want plans; they want managers to stick to those plans. Rewarding managers for doing only what they committed to do and discouraging them from making changes as circumstances warrant is what every organizations are facing today.

Remedies for Process Mistakes: Add flexibility to planning and control systems
One way to encourage innovation to flourish outside the normal planning cycles is to reserve pools of special funds for unexpected opportunities. That way, promising ideas do not have to wait for the next budget cycle, and innovators do not have to beg for funds from mainstream managers who are measured on current revenues and profits. For example, the knowledge that innovations could move for- ward through rapid prototyping—learning from a series of fast trials—might mean that certain milestones triggering review and additional funding would occur faster than they would for established businesses, following the rhythm of the project rather than a fixed quarterly or annual calendar. The key is flexible, customized treatment.

Structure Mistakes: Connections Too Loose, Separations Too Sharp
While holding fledgling enterprises to the same processes as established businesses is dangerous, companies must be careful how they structure the two entities, to avoid a clash of cultures or conflicting agendas. The likelihood that companies will miss or stifle innovations increases when the potential innovations involve expertise from different industries or knowledge of different technologies. Managers at established organizations may both fail to understand the nature of a new idea and feel threatened by it . Even when a new venture is launched within an existing business, culture clashes become class warfare if there are two classes of corporate citizens – those who have all the fun and those who make all the money.

Remedies for Structure Mistakes: Facilitate close connections between innovators and mainstream businesses
While loosening the formal controls that would otherwise stifle innovations, companies should tighten the human connections between those pursuing innovation efforts and others throughout the rest of the  business. Productive conversations should take place regularly between innovators and mainstream business managers. Innovation teams should be charged with external communication as part of their responsibility, but senior leaders should also convene discussions to encourage mutual respect rather than tensions and antagonism. To further its close connections with the mainstream business, the department offered free training to the rest of the company.

Skills Mistakes: Leadership Too Weak, Communication Too Poor

Undervaluing and underinvesting in the human side of innovation is another common mistake. Top managers frequently put the best technical people in charge, not the best leaders. These technically oriented managers, in turn, mistakenly assume that ideas will speak for themselves if they are any good, so they neglect external communication. Or they emphasize tasks over relationships, missing opportunities to enhance the team chemistry necessary to turn undeveloped concepts into useful innovations. Innovators cannot work in isolation if they want their concepts to catch on. To establish the foundation for successful reception of an innovation, groups must be able to present the radical so it can be understood in familiar terms and to cushion disruptive innovations with assurances that the disruption will be manageable .

Remedies for Skills Mistakes: Select for leadership and interpersonal skills, and surround innovators with a supportive culture of collaboration.
Companies that cultivate leadership skills are more likely to net successful innovations. One reason many enterprises could succeed quickly and profitably is its careful attention to the human dimension. Entrepreneur should build a close-knit team of talented people who bonded with one another and felt passion for any mission. Soon the group will become one of the most desirable places to work. it develops strong relationships with senior executives who will help in dealing with tensions in the middle, and also communicate well and often about why the unit needed to be different.

Established companies can avoid falling into the classic traps that stifle innovation by widening the search for new ideas, loosening overly tight controls and rigid structures, forging better connections between innovators and mainstream operations, and cultivating communication and collaboration skills.

Innovation involves ideas that create the future. But the quest for innovation is doomed unless the managers who seek it take time to learn from the past. Getting the balance right between exploiting (getting the highest re- turns from current activities) and exploring (seeking the new) requires organizational flexibility and a great deal of attention to relation- ships. It always has, and it always will.

Article : HBR Innovation: The Classic Traps

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