Innovator’s Way Key Takeaways | Agarwal, Himani

Over the years, “Innovation” has become the central theme of corporates. However,
despite the massive investment of time and money, corporates fail to harness the power
of innovation. So why the large corporates seem to fail in being more innovative when
compared to smaller firms?
Following are the three main pitfalls for creating an innovation machine as a large corporate
and recommendation on what to do about them.

• Lack of clearly defined Innovation Strategy, goals and misalignment with

business strategy
More often, Corporate innovators innovate because everyone is doing and it is cool to
do so. Unfortunately, business leaders are blind-sighted by new buzzwords such as
Digital Transformation, AI, Block Chains, 3D printing, etc.
Organizations define the overall business strategy and specify how they should translate
the business strategy into operations and how different functions (marketing, finance,
HR) will support it. However, most of the time, the business strategy does not define
innovation goal(s). E.g. Stating that we will increase our revenues by creating innovative
products. The statement above is abstract. It fails to answer how the innovation goals
are linked with day to day operations. As a result, different parts of the organization can
easily wind up pursuing conflicting priorities.
Employees do not get a clear picture of what kind of innovation they are supposed to
do.
Do they need to come up with entirely new products or make changes in existing
products?
Do they need to focus on improving operations to serve the customer better, or do they
need to develop new business models?

Having a clear Innovation Strategy helps align the innovation efforts with business
strategy. The innovation strategy can provide structure and dictate how a company looks
for new problems and solutions, select the ideas aligned with overall business strategy,
hence get funded, etc.

• Organizational culture is the most commonly overlooked key factor for

innovation.
Encouraging creativity is key to innovation, but companies may usually not provide a
conducive environment for innovation. Innovative cultures are often misunderstood as
an open environment with tolerance for failure, willingness to experiment, safe to speak
up and non-hierarchical. But, each of these elements needs to be balanced.

Tolerance of failure should be balanced with no tolerance for incompetence, requiring

having highly competent people. The usual norm of celebrating failure should be
replaced with celebrating learning. E.g. If a new prototype fails to work as expected due
to a previously unknown issue, then it is worth celebrating the learning if that knowledge
can be applied to improve future designs.

• Leadership and structure of the organization

Where does innovation sit in an organization is an essential factor. There is not a single
type of org structure that will fit all. The most dominant organizational structure
is hierarchical (centralized) due to its manageability, but it may be limiting the innovation.
The hierarchical structure can create a bottleneck for information flow and cause a
 Innovator’s Way Key Takeaways | Agarwal, Himani

delay in decision making. The frontline employees are involved in the day to day
operations and thus can provide innovative ideas. However, if those ideas are not heard
by management, it institutes the mentality that their(front line employees) inputs are
neither required nor wanted. On the other hand, many organizations have driven more
innovation from a decentralized approach. Higher employees morale, faster decision
making, and equal opportunities are advantages of a decentralized org structure.

There is no best recipe to structure an organization to be more innovative. Ultimately

the org structure depends on organization design. In any organization, the way leader
behave sends strong signals to employees. It is the leader who can motivate and set
the tone of innovation in any organization.