By Langdon Morris

There are six distinct innovation views that typically need to be integrated into one clear perspective in order to come out with the best possible results: three outsider viewpoints and three insider perspectives: Outsider Perspectives – Knowledge Channel Innovation, Peer-to-Peer Innovation, Outside-in Innovation; Insider Perspectives – Technology-Driven Innovation, Bottom-Up Innovation, Top-Down Innovation. This is Part5 of a six-part series examining each of these perspectives.

Among the six innovation perspectives, top-down innovation has, perhaps, the most nuances – the role of top managers in the innovation efforts of their firms is sine qua non, which is to say, there is no innovation without leadership. Top management’s role in innovation is as much a matter of attitude as it is of expectation; a matter of strategy as it is of policy; and a matter of enabling innovation while simultaneously eliminating the obstacles that impede it. The fact that all six of these characteristics must all come into play together renders top management’s role complex.

Attitude

No single person can innovate on behalf of an entire organization, because innovation is a collaborative activity that requires the will and imagination of many people. These people are not just insiders, but outsiders as well – such as customers, suppliers, competitors and even regulators. Top managers do not and cannot create most of the innovations that their organizations develop, but they may be able to inspire innovation. This happens with the attitude they bring as manifested in their willingness and ability to listen, to encourage and to appreciate intelligent failure. The attitude boiled down to its essence is that, “We are a team and everyone on our team innovates.”

Expectations

So if senior managers do not expect innovation, innovation probably will not happen. Leaders must communicate this expectation broadly and consistently, and they must live their expectation in their daily behavior. Senior managers should ask people what new ideas they are thinking about; what problems they are puzzling over; what innovations they have contributed to recently. In so doing, managers convey their expectations as they learn what is on the mind of the people they work with.

In this way a leader exemplifies the power of questions, for it is by preparing and asking the right questions that top managers lead best – questions are far more powerful tools for organizational development than answers.

Policy

In addition to questions, of course, managers’ expectations are also embodied in the policies they adopt. A complete list of innovation-supporting policies could be longer than the dictionary, as they would involve each and every aspect of how a company operates – some to focus on include metrics and rewards.

Define how your company measures success. Do you plan on, anticipate, invest in and expect innovation to return value in the market? You should. Do you measure each person’s contribution to innovation? You should do that, too.

Do you reward innovation? To paraphrase CEO Jeff Bezos describing an Amazon.com award: We give an award to people who implement their ideas, and the idea does not have to have worked, as long as it was well thought out. The key criterion is that the award is given only to people who execute their idea without asking permission. Bezos is pursuing a key management agenda: encouraging people to take innovative initiatives, emphasizing that this is often best done without permission (i.e., without tedious decision making through layers of management).

Another powerful innovation policy is Cisco’s way of reimbursing employee travel. As you probably know, some companies take weeks or months to pay you back, and the reimbursement channel may involve a number of review and approvals. Does this add value? Probably not, so Cisco follows a completely different path. Expense reimbursement is processed through an online application; you fill a web form and off it goes. The employee’s manager is automatically notified by email when the reimbursement is requested and has the option to look at the request. If the manager does not look at – and in someway alter/contest – the reimbursement request within a couple of days, the reimbursement check is automatically approved. The bias in most companies is approval; the exception at Cisco is approval – managers have better things to do. Arguably, this is a minor issue, but it sets a tone and establishes a culture and a style – exactly what senior managers need to do

Sometimes the most innovative policy is to have no policy at all. Brazil’s Semco takes things further than Cisco – at Semco there are no company policies about travel. Employees are empowered to decide for themselves when and how to travel and, having those responsibilities invested in them, probably spend less than they would if a policy dictated what kind of hotel to stay in. This is just the tip of the Semco iceberg around innovation – the entire company is organized around the principle that people need to decide for themselves how their work is organized.

Strategy

Globalization of economies demonstrates the power of innovation and creativity to overturn the established order. No niche, no corner, no crack, nor crevice is safe from the competitor who comes from across the street and around the world to enter your market. How do companies defend their positions? Your strategy is innovation, and your innovations are strategic.

To think strategically about where to invest in innovation, effective senior managers position themselves at the intersection of critical information flows that run through their organizations. It is from such a position, one that they may uniquely occupy, that they can see patterns that others probably cannot see; it is from their understanding of these patterns that they shape corporate strategy.

But they are not the only ones to see patterns, for often the information about emerging patterns never reaches them, but instead remains disintegrated, fragmented, dispersed and unused. For example, some years ago the workhorse of corporate computing was the mainframe and no other type of computer was considered relevant for big jobs. And then, seemingly overnight, industry pioneers created a new class of machines called workstations, which proved useful at many corporate computing jobs and much cheaper than mainframes. One HP manager recounts that the corporate computing customers who would not talk to him one year suddenly realized that workstations could replace mainframes, and they said, in unison, “Help me get rid of that thing!”

This was bad news for IBM, because its senior management had not foreseen the workstation market. Field management was clamoring for a workstation product as the tide turned, but could not persuade top management to support the production shift. This was a pattern-recognition failure, and in the following few years IBM was forced to lay off thousands of people as its business was radically restructured. A management change brought in the next IBM CEO – a former IBM customer, Lou Gerstner, who was previously the CEO of Kraft. Gerstner understood what IBM’s customers wanted and he turned the company from an inward-looking hardware-dominated firm to a more attentive services provider.

Innovation strategy is, thus, a matter of attending to the strong signals as well as seeking out the weak ones; it is a truism of the innovation field that innovation rarely occurs in the core, but more often on the fringes. The information flows that matter are both conventional and unconventional – integrating these flows improves the odds that your strategy really is strategic.

The other key role of senior management is investment. Ultimately, the realization of strategy is a consequence of how much, where and for how long funds are provided.

Enablers

Top managers enable innovation in their firms through a combination of all of these attributes and actions. A list of enablers, then, is something of a restatement of the themes mentioned above, but are a set of management goals.

In particular the key enablers include the function of leadership itself, which is built on a foundation of the second enabler, trust. Why has the American auto industry plummeted to depths of despair? One of the many causes is lack of trust, an artifact of decades of labor-management dissension, which separates managers from workers and precludes collaboration, a critical innovation process that is vital for survival. Another key enabler is risk. Innovation requires risk and the willingness to face, and learn from, failure. The formula is simple: if there is no risk, there is no innovation. The role of methods, innovation methodologies, is to mitigate risk by instituting processes that optimize innovation efforts, maximize learning, and accelerate results.

Innovation without methodology is luck – there are creative people in your company and given half a chance they can create some innovations. But if a company relies on random efforts then the company risks its future success on chance. You have to develop and apply methodologies to make the shift from luck to consistency, predictability and sustainability. Without the right innovation methodology you risk too much – you risk your future.

Removing Obstacles

Top managers must work diligently to remove the obstacles that can impede innovation. There are four primary types of obstacles – behavioral, organizational, infrastructure and methodological.

There are many obstacles to innovation in the average company, but innovation enemy number one is “punishment for failure.” Innovation is inherently risky; if your company does not fail now and then, then the company is not risking enough. But if failures are punished, then a company is saying do not take risks. And without risks, there is no innovation! Risk is inherent in innovation and failure is inherent in risk. Companies have to make intelligent risks and failures safe. Companies can learn more their failures than their successes, so if they systematically reject failure, then on many levels they are also rejecting learning.

Another of Amazon.com’s innovations is an award that is given to people who save money by stopping the company from doing stupid things. With this award comes the public acknowledgment that organizations do stupid things, and it is each employee’s job to stop the stupidity.

Organizational obstacles include departments and committees – businesses have to have them or there would be chaos; but companies also have to transcend the barriers that are inherent in departmental, hierarchical organizations. Innovation is usually driven best by cross-functional (i.e., cross-departmental) teams. The lack of appropriate infrastructure for learning and sharing is a critical problem in many companies; the lack of effective innovation methodology is a killer, too.

Summary

Promoting an attitude and expectation of innovation, instituting policies and strategies that makes innovation real, and enabling innovation while engaging in dedicated obstacle obliteration are six essential roles for managers. Separately and together they contribute to the development of an organization whose very being, whose culture, is suffused with innovation in all of its manifestations.

Promoting an attitude and expectation of innovation, instituting policies and strategies that makes innovation real, and enabling innovation while engaging in dedicated obstacle obliteration are six essential roles for managers. Separately and together they contribute to the development of an organization whose very being, whose culture, is suffused with innovation in all of its manifestations.

Creating an organization that follows a “permanent innovation” plan – a paradoxical state in which the persistent novelty of innovation is a permanent expression of the individual people and their collective spirit – is one of the most critical roles of top management, the essence of top-down innovation. Doing so challenges many of management’s lesser instincts – the need for control is replaced, in former GE CEO Jack Welch’s words, with “something better;” the need to have answers is replaced with the search for better questions; and the obsession with individual performance is replaced by the acknowledgment that it is teams that produce critical outputs amid vastly complex conditions of the modern economy. Top-down innovation is essential to the future of all businesses.

About the Author:

Langdon Morris is a partner of InnovationLabs and author or co-author of six books. His most recent work, “Permanent Innovation: The Definitive Guide to the Principles, Strategies, and Methods of Successful Innovators,” is available as a free download at http://www.permanentinnovation.com. Contact Langdon Morris at lmorris (at) innovationlabs.com or visit http://www.innovationlabs.com.