by David Youland, Senior Consultant

The pure scale of an established organization can produce inertia. Yet if a company rests on its size/scale alone, it can easily lose touch with evolving customer needs, new competitors and new business models. Large organizations, much like elephants and sea-faring supertankers, are very slow to change direction and fall victim to “the way things have always been done”

Building an organizational capability that drives innovation involves 3 essential leadership tasks:

  1. Creating a clear innovation strategy;
  2. Designing an innovation system and having the right tools in place to innovate; and
  3. Building a culture and mindset that is conducive to innovation.

Many organizations fail to develop an innovation strategy in the first place, and the strategies that do exist may have been in place by default — operating on autopilot.

The creation of an innovation-centric culture is of paramount importance compared to strategy and systems. The wrong culture will inhibit, if not destroy, innovation in any organization. Volumes have been written and documented about systems, including gated systems and more recently what’s referred to as agile development.

Successful innovation-centric organizations exercise and promote

  • a tolerance for failure
  • the freedom to try new things
  • the willingness to speak up
  • an openness to teamwork
  • allocating time to innovate
  • less hierarchy

Top-performing innovation cultures also have a clear product innovation and technology strategy, resource commitment and portfolio management and an effective gated or agile idea-to launch process.

Growth teams do best when they work independently from the everyday business and perform optimally when small in number (the ideal team size is five to seven) and with a core team dedicated to a project. Studies done by several firms have shown that physical proximity is one of the keys to good teamwork, especially with product and service development teams. These studies indicate that physical distances beyond 100 yards thwart team interactions.1

Penalties for failure and weak reward systems won’t foster improved new product development. Many companies provide time off (while at work) for product developers and researchers to explore new ideas. Google allows 20% of an employee’s time to be spent on innovation projects of their preference.2 Since 1920, 3M has followed a policy of allowing researchers to spend up to 15 percent of their time working on projects of their choice. The company also permits freedom to fail; this policy doesn’t penalize employees for trying new products and inventions that later don’t work.3 Many of 3M’s best-selling products were the result of failed inventions. 3M Post-It® notes are a well-known example. 3M founder William McKnight stressed the importance of allowing staff to innovate with an uncommon degree of freedom. In his words, “Encourage experimental doodling. If you put fences around people, you get sheep. Give people the room they need.”4

Innovative organizations also empower innovation champions. Champions within an organization have a vision for a future mass market and are often mavericks that don’t fit neatly within the corporate bureaucracy. They also have a burning conviction to persist against the heavy odds against them. They’re willing to take risks to bring their vision to fruition. While the opposite often happens, organizations need to make a special effort to nurture and protect these individuals from organizational antibodies.

Finally, it is important to explore opportunities with a “fresh” set of eyes and to be willing to challenge current assumptions and explore new possibilities. In many cases, deeply held standards and practices are no longer the best solution and are still being offered despite changes in the environment or customer value chain.

At Luminas we are cheerleaders for companies who choose to pursue outside-in thinking. Based on years of experience, we believe it’s the only way to build organic growth capabilities and gain a clear understanding of the differential value that you provide to your customers, and discover how to align their growth priorities with your own. We’ve sat at the table with leaders who do this and watched them experience profitable, sustained organic growth. Let’s talk!

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1 Cooper, R., Winning at New Products: Accelerating the Process from Idea to Launch, Toronto, Stage-Gate International, 2001.
2 Tellis, G., Unrelenting Innovation: How to Build a Culture for Market Dominance, Josey-Bass, San Francisco, A Wiley & Sons Imprint, 2013.
3 Tellis, G., Op cit
4 Cited in a presentation by Eric Galler, 3M Vice President, Corporate Marketing, ISBM August 2014 Members Meeting, State College, PA.