A Framework for Innovation

How does a large company create an environment that encourages and leverages internal innovation? Here is my checklist of prerequisites for "enterprise" innovation:

Great people. You may think this goes without saying, but it cannot be emphasized enough. You cannot hire drones who put in 8 hours for a paycheck and then head out the door. You need passionate, creative people, people who love their work, people who are impatient with "getting by" and want to be the best at what they do. These are the Innovators. Without them, innovation does not happen.

A clear vision. Innovation happens at the edges. It is not a top-down directed process, it is an organic, bottom-up growth. In order for the innovators at the edge to produce innovations that are relavent to the business, top management must articulate and communicate a clear vision for the direction of the company. If the innovators can see the direction, they will innovate in that direction and get you there faster. If not, they will innovate in random directions, and you won't get the full benefit of innovation. A clear vision is the difference between innovation and distraction.

Spare capacity. Innovation is experimentation. Innovators need time to experiment, and they won't have that if 100% of their time is allocated to executing your current plan. This is the hardest thing for top managers to accept, but it is absolutely essential. You need slack time, or there simply will not be any innovation. Allocate one slice of your capacity for executing the plan. Reserve a second slice for unplanned work and process improvements. Allocate a third slice explicitly to innovation. The relative size of the slices will be entirely dependent on your own business and your desired outcome. My personal preference is 50/30/20.

Freedom to make decisions. Innovators by definition have to make decisions, make changes, form partnerships, and allocate resources from the pool of spare capacity. If permission is required to accomplish these things, then innovation will be quashed before it can succeed.

Accessible Business Intelligence. If you are going to give innovators permission to make decisions, you must give them the information and tools they need to fuel decision making. Innovators need transparent access to customer data, product data, sales data, cost data. Without it, they are shooting in the dark, and the chances of success are low. Innovators also need easy access to tools for gathering their own data, for evaluating experiments and measuring success vs. failure.

Freedom to fail. Innovation is experimentation, and experiments, by their nature, do not always have the expected outcome. When Innovators exercise their power to make decisions, some of the decisions will be wrong ones. Innovators need to feel secure that they will not be punished for taking a chance if it doesn't work out. Remember, these folks are corporate employees, not risk-taking entrepreneurs. They don't stand to make millions if their innovation succeeds, so they shouldn't have to give up their health coverage and pension if it doesn't. Make it clear that failure is a learning opportunity, not a firing offense.

The above are a few requirements for fostering innovation in large companies. Ultimately, innovation only happens where the culture supports it. Managers at all levels build company culture through their hiring and firing practices first, and management styles second. If your managers fear the new and different, your culture will never innovate. Ensuring the above factors at all levels of the organization should help to unchain your hidden innovation potential.

What's missing from this list? How does your company encourage (or discourage) innovation?