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5 Things Managers Should Know About Innovation (But Most Don’t)

2018 July 4
by Greg Satell

Every business knows it needs to innovate. What isn’t so clear is how to go about it. There is no shortage of pundits, blogs and conferences that preach the gospel of agility, disruptive innovation, open innovation, lean startups or whatever else is currently in vogue. It can all be overwhelming.

The reality is that there is no one “true” path to innovation. In researching my book, Mapping Innovation, I found that organizations of all shapes and sizes can be great innovators. Some are lean and nimble, while others are large and bureaucratic. Some have visionary leaders, others don’t. No one model prevails.

However, there are common principles that we can apply. While there is no “right way” to innovate, there are plenty of wrong ways. So perhaps the best way forward is to avoid the pitfalls that can undermine innovative efforts in your organization and kill promising new solutions. Here are five things every business should know about innovation.

1. Every Square-Peg Business Eventually Meets Its Round-Hole World

IBM is many peoples’ definition of a dinosaur. Not too long ago, it announced its 22nd consecutive quarter of declining revenues. Nevertheless, it seems to be turning a corner. What’s going on? How can a century-old technology company survive against the onslaught of the 21st century phenoms like Google, Amazon, Apple and Facebook?

The truth is that this is nothing new for IBM. Today, its business of providing installed solutions for large enterprises is collapsing due to the rise of the cloud. In the 90s it was near bankruptcy. In the 50s, its tabulating machine business was surpassed by digital technology. Each time eulogies are paraded around for Big Blue it seems to come back even stronger.

What IBM seems to understand better than just about anybody else is that every square-peg business eventually meets its round-hole world. Changes in technology, customer preferences and competitive environment eventually render every business model irrelevant. That’s just reality and there really is no changing it.

IBM’s secret weapon is its research division, which explores pathbreaking technologies long before they have a clear path to profitability. So when one business dies they have something to replace it with. Despite those 22 quarters of declining revenues it has a bright future with things like Watson, quantum computing and neuromorphic chips.

It’s better to prepare than adapt.

2. Innovation Isn’t About Ideas, It’s About Solving Problems

Probably the biggest misconception about innovation is that it’s about ideas. So there is tons of useless advice about brainstorming methods, standing meetings and word games, such as replacing “can’t” with “can if.” If these things help you work more productively, great, but they will not make you an innovator.

In my work, I speak to top executives, amazingly successful entrepreneurs and world class scientists. Some of these have discovered or created things that truly changed the world. Yet not once did anyone tell me that a brainstorming session or “productivity hack” set them on the road to success. They were simply trying to solve a problem that was meaningful to them.

What I do hear a lot from mid-level and junior executives is that they are not given “permission” to innovate and that nobody wants to hear about their ideas. That’s right. Nobody wants to hear about your ideas. People are busy with their own ideas.

So stop trying to come up with some earth shattering idea. Go out and find a good problem and start figuring out how to solve it. Nobody needs an idea, but everybody has a problem they need solved.

3. You Don’t Hire Or Buy Innovation, You Empower It

One of the questions I always get asked when I advise organizations is how to recruit and retain more innovative people. I know the type they have in mind. Someone fashionably dressed, probably with some tasteful piercings and some well placed ink, that spouts off a neverending stream of ideas.

Yet that’s exactly what you don’t want. That’s exactly the type of unproductive hotshot that can stop innovation in its tracks. They talk over other people, which discourages new ideas from being voiced and their constant interruptions kill collaboration.

The way you create innovation is by empowering an innovative culture. That means creating a safe space for ideas, fostering networks inside and outside the organization, promoting collaboration and instilling a passion for solving problems. That’s how you promote creativity.

So if you feel that your people are not innovating, ask yourself what you’re doing to get in their way.

4. If Something Is Truly New And Different, You Need a “Hair On Fire” Use Case

As a general operational rule, you should seek out the largest addressable market you can find. Larger markets not only have more money, they are more stable and usually more diverse. Identifying even a small niche in a big market can make for a very profitable business.

Unfortunately, what thrives in operations can often fail for innovation. When you have an idea that’s truly new and different, you don’t want to start with a large addressable market. You want to find a hair-on-fire use case — somebody that needs a problem solved so badly that they either already have a budget for it or have scotched-taped together some half solution.

The reason you want to find a hair-on-fire use case is that when something is truly new and different, it is untested and poorly understood. But someone who needs a problem solved really badly will be willing to work with you to find flaws, fix them and improve your offer. From there you can begin to scale up and hunt larger game.

5. You Need To Seek Out A Grand Challenge

Most of the problems we deal with are relatively small. We cater to changing customer tastes, respond to competitive threats and fix things that are broken. Sometimes we go a bit further afield and enter a new market or develop a new capability. These are the bread and butter of a good business. That’s how you win in the marketplace.

Yet every business is ultimately disrupted. When that happens, normal operating practice will only make you better and better at things people care less and less about. You can’t build the future by looking to the past. You build the future by creating something that’s new and important, that solves problems that are currently unsolvable.

That’s why every organization needs to seek out grand challenges. These are long, sustainable efforts that solve a fundamental problem in your industry or field that change the realm of what’s considered possible. They are not “bet the company” initiatives and shouldn’t present a material risk to the business if they fail, but have a transformational impact if they succeed.

As I noted above, there is no one “true” path to innovation. Everybody needs to find their own way. Still, there are common principles and by applying them, every business can up their innovation game.

– Greg


An earlier version of this article first appeared in

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