7 Barriers to Internal Innovation
In my last article, I laid out research that shows that employees, more so than entrepreneurs, are behind the innovations that have most impacted society. The idea that entrepreneurs are revolutionaries while employees in established firms work out the details, that entrepreneurs innovate and employees execute, that small firms freed from the burden of established business models and dogma disrupt while established firms implement is not supported by history.
However, that is not to say that innovating as an employee inside an established firm comes without challenges. Too many promising innovation attempts from within established firms fail. By many counts, over 90% of attempted internal innovations fail.
Why do so many attempts at internal innovation fail? What is the difference between those that succeed?
To answer these questions, I started interviewing internal innovators. After three years, I had conducted over 150 interviews, each time asking, “In your experience, what are the biggest barriers to driving an innovation from within?” To go deeper, I interviewed innovation experts such Bharat Anand (Harvard), Steve Blank, George Day (Wharton), John Hagel (Deloitte’s Center for the Edge and Singularity University), Gary Hamel (London Business School), Roger Martin (Rotman School of Management), and Rita McGrath (Columbia) to capture their points of view.
I collated and grouped all of their answers. This exercise surfaced seven barriers to innovation I found repeatedly mentioned as the most common challenges:
- Intent: Many would-be internal innovators have simply given up trying; they have abandoned the intent to find and pursue new innovations.
- Need: Most employees do not understand what kinds of innovations their organizations need (e.g., less than 55% of middle managers can name even two of their company’s top strategic priorities), so for ideas, they look in the wrong places and then propose ideas of little strategic value.
- Options: Would-be internal innovators often grow frustrated because they become fixated too early on a few, or even worse just one, innovative idea, instead of continually generating a flow of new ideas and managing them like a portfolio of options.
- Value blockers: It is commonly accepted that innovative ideas are inconsistent with, and therefore disruptive to, a company’s current business model. This established model creates erect value blockers that prevent an appropriate new business model from forming around the new idea.
- Act: Established organizations tend to ask one to prove an idea will work before giving permission to take action. Yet most new ideas are better suited to the opposite approach: taking action in order to prove the idea. This puts would-be internal innovators in a catch-22: they cannot prove their idea will work so they cannot take action.
- Team: Scaling new ideas often requires one to pull together a cross-silo team that runs at a rapid pace and is geared toward learning rather than delivering results. Corporations are geared for the opposite: they are siloed, act slowly, and value results (over learning).
- Environment: Getting support for new ideas is politically complicated because the leadership behavior, types of talent, organizational structures, and cultural norms that help established organizations sustain their core operations also tend to hinder internal innovativeness. Would-be internal innovators struggle to find “islands of freedom” from which they can access the talent, structures, cultural norms, and leadership support that support attempts at innovation.
I’ve ordered these barriers into a sequence that outlines a path of innovation. The names of the barriers form an acronym (IN-OVATE) that hopefully will make them easy to remember. By recognizing where you are on the IN-OVATE path, predicting which barrier you likely to face next, and pulling out the appropriate tool, you will be able to more skillfully guide your idea from conception to realization. By recognizing where your organization blocks the path of internal innovation along this IN-OVATE path, you will be able to unlock a flow of value-generating ideas.