The APQC Blog

What Great Innovative Companies Have in Common

I recently talked to Claude Legrand, managing partner of Ideaction, Inc. to find out what makes companies leaders in innovation and what makes other companies struggle.

APQC: What sets successful companies in innovation apart from the rest?

Legrand: Knowledge about the innovation process is the key differentiator between innovative companies and other companies. Companies that innovate systematically understand how innovation happens; they innovate on purpose and in very structured and organized ways.

Some of the things leaders of innovative organizations do are:

  • they make innovation a top 3 priority and keep it constantly top of mind;
  • they understand the distinct roles of the leaders (to promote innovation), of the Managers (to manage innovative teams) and of the Employees (to innovate);
  • they ask for innovation from everyone, from Sales to R&D, from HR to Operations or Finance;
  • they create the internal conditions for innovation to flourish (culture, processes, skills, talent, etc.);
  • they invest in innovation processes and skills for their employees and managers;
  • they measure the key drivers of innovation, from time spent by the executives to number of ideas to failures and successes; and
  • finally they recognize and reward innovation and innovators.

APQC: What do organizations that fail to innovate have in common?

Legrand: Organizations that fail to innovate each find different ways to prevent individuals and teams from innovating. What they have in common is that the leaders may understand the absolute necessity to innovate in the current environment but don’t understand that innovation is a rigorous process, not a corporate value or an attitude that only “creative” people possess. Because they don’t understand innovation, they make costly mistakes such as copying innovative organizations (who have a totally different DNA) or hiring “creative types”, both solutions that are 100% certain to fail and probably create sustainable damage.

The fact is that most of the leaders of large established organizations studied and made their marks in business during the industrial economy when process, focus and hard work were more than enough to succeed. They never learned how to lead and manage an innovative organization. But the best known management programs didn’t teach innovation leadership and management until recently (and many still don’t).

You can read a detailed analysis of how organizations kill innovation in the newsletter “The Problem with Innovation” available to download at: http://ideaction.net/images/documents/White-Paper-The-Problem-with-Innovation.pdf

The biggest failure however is to believe that past success will continue. On the contrary, past success during the industrial economy is one of the biggest obstacles to innovation and success in the knowledge economy.

Only the best managed companies are making the transition.

APQC: How can leaders encourage innovation at their companies?

Legrand: In order to really encourage innovation in a sustainable way we have found that most leaders first need to understand how innovation happens and what their role is. That is why I co-authored the book Innovative Intelligence – The art and practice of leading sustainable innovation in your organization (Wiley 2011). What they will find is that there is no quick fix and that, for example, innovation must become one of their top 3 priorities. This is usually where they stop as they are not ready to make the commitment and accompanying investment.

Leaders must understand that they don’t need to be the innovators (for which most leaders are usually grateful), but that they control all the levers that can make innovation happen, or stop it.

Asking or preaching innovation has absolutely no value, what counts is creating the necessary changes in how the organization runs to enable innovation. Some of the key levers that must be aligned are:

  • their own leadership  style and the necessary involvement to promote and protect the innovation initiatives;
  • their corporate priorities where “becoming innovative” must be prominent;
  • their culture, for example, cross-functional teamwork (and not regular silos), risk taking, openness to change, trust and diversity;
  • their organizational practices such as how HR, Finance and IT interact with the core business. One good start is to include “innovating” as part of everyone’s job  description and goals; and
  • what gets measured.

APQC: Do you have any tips for organizations looking to close their innovation gap?

Legrand: There is no magic bullet to make an organization more innovative, only a series of steps that must be customized to the DNA of each organization. We have found that the following steps allow organizations to focus on what is really important.

The first is to learn the differences between an innovative and a non-innovative organization.

The second step is to quietly work on creating the conditions for innovation to flourish. This should include working with key enablers such as HR or IT and making sure that their practices support innovation and don’t stop it. The practices were usually created for excellent reasons during the industrial economy but they are now counterproductive as they reinforce silos and the status quo.

The third step, only when the organization is ready, is to make innovation a top 3 priority, with clear definitions. That usually gets the attention of the leaders and managers. And making innovation a priority must be accompanied by resources commensurate with the new importance of innovation, in particular in training at every level and in new processes.

Creating an innovating organization is not magic; it is hard work and commitment. What leaders must be careful of are on one hand shinny, magical solutions and on the other hand believing that the status quo and following the successful  past has no risk.

Check out an infographic about the research results below.

You can download the ASTD infographic on innovation here.