How to compel innovation in large business

When people talk about business innovation, they often center the discussion on startups and small organizations. Introducing innovative practices is far easier on a smaller scale where new practices and ideas can be easily applied. But what about large enterprise?

Those looking to innovate within a larger organization will find a steeper hill to climb. Company culture, legacy systems, and long-standing internal processes can all impede change, even when it would benefit the business. That doesn’t mean it’s impossible to drive innovation through a large business, but it requires a different approach. Successful innovation depends upon effective communication and an understanding of the different elements of the innovation process.

In this article seven key steps are outlined that companies can take to help drive innovation.

  • Create dedicated innovation teams
  • Introduce an idea sharing platform
  • Create a screening process for all the ideas
  • Employ innovation advocates
  • Encourage collaborative experimentation
  • Communicate with your employees
  • Be specific with your communication

What are the biggest barriers to innovation?

Several obstacles that often stand in the way of enterprise innovation are as follows:

First, innovative products, services, and business units may underperform compared with established offerings or departments. As such, organizations can be hesitant to invest in potentially disruptive technologies that offer no immediate financial benefits.

However, innovative solutions typically increase in performance and profit metrics at a much quicker rate than legacy offerings. Demand for these kinds of offerings bubble up from below, out of sight from decision-makers. By the time companies’ act, they may have already been left behind by early adopters.

This phenomenon is known as “submarine disruption” due to its bottom-up impact. One example would be solid-state drives, which historically have been much more expensive than disk-based hard drives, but have grown in popularity in recent years.

The second barrier is the threat that disruptive and innovative solutions pose to existing lines of business. Stakeholders from those business units may push back on any change that could divert resources from them or replace them entirely. It’s especially difficult to get buy-in for innovative initiatives if the affected business unit continues to generate a profit.

Combine those challenges with persistent shareholder pressure to increase revenue and lower operational costs, and it becomes clear that enterprise innovation is a tall task.

Overcoming innovation obstacles

Taking inspiration from Geoffrey Moore’s “four zones” theory on organizational structure, Levitt and Mokrian argue that the best way to practice enterprise innovation is to unify what have traditionally been competing forces. That is, the revenue-generating side of the business underwrites research and development that leads to innovation, which produces new avenues to make money.

The business units that essentially fund R&D may dictate how those investments are allocated and insist all work focuses on supporting core products and services rather than exploring alternatives. To address this concern, businesses should create a framework that facilitates disruptive innovation and transformation while continuing to support the business lines that are currently bringing in revenue.