If they want to compete successfully in the future, companies should hold off on rapid ideation and faster commercialization until they take an unflinching look at what is truly stifling breakthrough innovation. In this article, Soren Kristensen provides insight on how honest self-reflection can free you from your biggest impediment to growth.

Globalization, emerging markets and mobility have prompted all businesses to reassess their viability, shifting breakthrough innovation from a competitive advantage to a competitive imperative.

Many companies are hanging their hopes on the promise of improved customer insights via new social media, crowd sourcing and listening channels. In theory, the potency of these ideas will catalyze a new organizational velocity around innovation, making them first-to-market with audience-pleasing products and services that previously proved elusive.

But in reality, unless businesses address innovation’s silent killer, ideas (no matter how great) will continue to run headlong into the same barrier they always have — only now they’ll be doing it twice as fast and far more often.

It is a massive misperception that a scarcity of good ideas is the enterprise’s biggest obstacle to breakthrough innovation. That distinction goes to complexity, which manifests as capacity-killing bureaucracy.

75 percent of 650 world business leaders surveyed said bureaucracy within their own organizations presents the biggest barrier to innovation.

Ironically, somewhere along the line companies allowed departments once charged with pushing boundaries to become the most paralyzed by conventional thinking.

This issue is pervasive. According to the London Business School, 75 percent of 650 world business leaders surveyed in May 2011 said bureaucracy within their own organizations presents the biggest barrier to innovation.

Translated:  Most companies don’t have an issue with speed, but inertia.

How did we get here?

Many of these departments are corporate appendages, existing in an ivory tower alongside the rest of the enterprise. Their intransigence has been caused by mounting complexity around globalization, distribution, direct sales and internal checks and balances. Ad hoc responses to these variables have somehow become institutionalized. Meanwhile, the path forward for innovators has constantly changed, leading departments to hold their collective breath and wait for conclusive answers.

The result: An incredible amount of waste. According to Accenture research around “Fast Innovation,” more than 80 percent of new product development time is spent waiting, and 40 percent of all innovation resources are expended on product revisions. Despite this deliberate process, 4 of 5 executives surveyed said they were ultimately unhappy with their innovations.

Is it any wonder these companies default to the safety of line extensions? Another Accenture survey revealed that 73 percent of companies tend to pursue incremental changes rather than new concepts.

Disrupting these patterns is fundamental to competing in an age of volatility where product cycles will be much shorter and more dynamic.

Traditional management has looked at operations from the inside out, relying on supply chain improvements, economies of scale and manufactured demand, all done with short-term management goals and shareholder concerns in mind.

But going forward, winning companies will be managed from the outside in, seeing everything from the customer’s standpoint and adjusting operations accordingly. As Umair Haque pointed out in The New Capitalist Manifesto, this is a fundamental shift “from outputs to outcomes.”

Making the Change

Making this critical shift starts with challenging a culture that has failed to address a swollen base load, then reassigning assets so the organization has the capacity to do big things.

Is your organization coordinating its work through dynamic links, rather than hierarchical bureaucracy?

How much change must be undertaken by your company? Ask yourself these questions:

  • Is your organization permanently focused on generating positive customer outcomes, rather than outputs?
  • Are your managers enabling your workforce, rather than acting as controllers?
  • Is your organization coordinating its work through dynamic links, rather than hierarchical bureaucracy?
  • Are you exercising radical transparency so that employees can openly communicate and quickly solve problems as they surface?
  • Are communications conducted in horizontal adult-to-adult conversations, rather than command and control?
  • Are you fundamentally concerned with units sold, or the quality of those units?
  • Can your organization accept that winning ideas might come from outside its four walls?

If you find your organization to be on the short end of these questions, here are two ways to send an immediate shockwave through your bureaucratic culture:

  1. Instead of starting at the top and driving measurements down from growth platforms, measure various stages of the innovation process based on removing impediments to delivering customer-driven products to market. Make individuals, from the CEO to warehouse supervision, responsible for executing around innovation
  2. Review how leadership is incented, making sure executives are properly motivated to experiment with new concepts.

Counterintuitive, but true

The end game is to create a company where innovation strategy and growth strategy are indistinguishable, with C-suite executives involved in the process from the outset. Companies will know they’ve arrived when they find themselves treating innovation just as they would any other department.

By changing the way work gets done the burn rate of resources can be exponentially reduced.

By changing the way work gets done the burn rate of resources can be exponentially reduced, the portfolio can be balanced with ambitious breakthroughs and customers can be invited with confidence to co-innovate.

When all is said and done, your company will become not just fast, but effective.

Has your innovation process been set back by complexity in the past? What did you discover to be the best practices for breaking through and creating increased innovation capacity?

By Soren Kristensen

About the author

Soren Kristensen is a senior executive in the North American Innovation and Product Development practice, a global management consulting, technology services and outsourcing company.