In the early 1980s, IBM faced an existential crisis. It wasn’t the competition that nearly brought it down, but a fear of change — a common barrier to innovation. To regain its edge, IBM attempted to emulate the innovation-driven culture of smaller companies, launching internal initiatives to foster entrepreneurial thinking.
In my book The Innovation Edge, I lay out the building blocks for building a highly innovative organization within large, mature businesses. It focuses on how to emulate smaller, innovative companies within the large company environment. However, before those building blocks can be put in place, some natural killers of innovation must first be addressed and eliminated from organizations.
The Eight Common Culprits
Let’s name the eight most common “innovation killers.” By their very nature, they must be eradicated from organizations before an innovation mindset and culture can be established within them.
1. Resistance to Change
Organizations often cling to the familiar, rejecting external ideas or new approaches that threaten the status quo. Kodak’s initial reluctance to embrace digital photography, despite having the technology, is a textbook example of this mindset. Overcoming this inertia requires fostering a culture of adaptability.
2. Bureaucracy
Bureaucratic hierarchies and rigid structures stifle innovation, creating cumbersome approval processes and limited flexibility. For example, Nokia’s downfall in the smartphone market is often attributed to its bureaucratic inertia, which hindered timely decision-making and adaptation. Addressing this requires streamlining structures and processes and fostering a more agile, adaptive organization.
3. Short-Term Orientation
Focusing on short-term objectives and immediate financial results can deter investment in long-term innovative projects. Companies prioritizing quarterly and annual earnings over strategic innovation may miss out on future growth opportunities. Overcoming “short termism,” balancing short-term performance with long-term innovation is crucial for sustained success.
4. Risk Aversion and Avoidance
We have had middle managers recount to us that their senior manager has told them that they plan to only be in their current job 2-4 years before moving on and it is incumbent on their staff to not “screw it up.”
Beyond that, we have seen organizations with a mindset within the middle management ranks that they have the best chances of advancement if they don’t make waves or have any major failures. These and other factors all contribute to organization-wide risk aversion and risk avoidance at its most extreme. The key is not avoiding risk; it is knowing how to manage it effectively.
5. Silo Mentality
Most organizations are structured into vertical silos with most communication flowing vertically within those silos. Most work processes, however, flow laterally across multiple departments. Departments operating in isolation can hinder cross-functional collaboration, which is essential for strategic innovative solutions. Encouraging open communication and teamwork across departments can break down these silos and promote a more creative environment.
6. Command and Control Management
While denying that they are autocratic, many middle and senior managers micromanage their organizations, making most of the significant decisions themselves. In addition, many control systems and short spans of management control are in place to ensure that managers and employees execute exactly as intended. This assures that an organization will fail to innovate and adapt to its rapidly changing environment.
7. Environment of Complacency
Success can breed complacency, leading organizations to resist change and stick with familiar strategies. This is commonly seen in businesses late in their S-curve, the business cycle of their existing paradigm.
The business is enjoying much success at this time, but it is a business living off the momentum of past innovation success. It may seem counterintuitive, but at the very time when you are most comfortable because of your ongoing success, that should be the time you are least comfortable, knowing that major changes to your industry and business are likely already in progress somewhere else.
8. Organizational Politics
While this subject is not often discussed, organizational politics is death to innovation. In a highly political environment, members of the organization spend much of their attention on dealing with politics and protecting themselves and their organizations.
In such an environment, managers will take zero risks and not take any chances with anything new or innovative. In most cases, office politics is created by one or a few individuals, and it must be rooted out before an organization can move on to innovation.
Changing the Management Mindset
These barriers to innovation are significant, but they can be overcome. It starts with changing the underlying management mindset. Before this can happen, it is crucial to understand what is in the current mindset that is causing these barriers to exist or, at least, allowing them to exist.
For example, if the organization is highly bureaucratic, why is that so? Is it something that has just emerged and evolved, and nobody has questioned it? Is it necessary for the management team to ensure the giant ship is going in the right direction? Is it essential to maximize control over what is done within the organization? Only an honest evaluation of the management mindset can reveal this.
As another example, does the management team primarily focus on short-term (a year or less) results? Why is that? Is the management focus mainly on today, not tomorrow? Is it because the incentive systems are designed to create that emphasis? Is it because the organization is enjoying reasonable success doing what it currently does? A change in management mindset cannot occur without honestly facing and answering these types of questions.
A management team must step back and be prepared to do a full self-analysis. It must ask itself what perceived success factors it has been operating under that may not be good or may be changing. It must examine the management team and organization for these potential barriers and be prepared to address them.
The emerging self-realization may not be comfortable, but it is necessary for fundamental change and a shift to strategic innovation.