Idea 65: Making your organization good at innovation

Your organization itself has to provide an environment in which creativity and innovation can flourish.

The five hallmarks of organizations that are good at innovation (and are not just paying lip service to it) are:

1. Top-level commitment.
2. Flexible in organizational structure.
3. Tolerant of failure (and not risk averse).
4. Encouraging of teamwork and innovation.
5. Good at open and constructive communication.

Managing innovation… [is a] challenge to management… especially top management, and a touchstone of its competence.

Peter Drucker

Organizations need to work at the main ingredients for success in managing innovation and apply themselves to the five hallmarks listed above.

Top-level commitment

This commitment must be visible and audible. Top management must ensure that any blocks to innovation are removed and that the presence of inhibiting bureaucracy or individuals does not foul up the process. Chief executives and senior managers must value new ideas and innovation and participate actively to ensure that everyone knows of their commitment to positive and useful change.

Sometimes the need for short-term profits can dull the edge of creativity and innovation. Only top management can prevent this happening – by taking the long-term not the short-term view.

Flexible in organizational structure

The antithesis of the innovative organization is the bureaucratic one. Weber's characteristics of bureaucratic organizations are as follows:

• Authority is impersonal and formal.
• A strong emphasis on functional specialization.
• A rule for every eventuality.
• A strong emphasis on hierarchy and status.
• Clearly laid down procedures (red tape).
• A proliferation of paperwork.
• Security of employment and advancement by seniority.

At the opposite end of the scale is the flexible organization, which is one:

• Capable of responding to changing situations.
• Where barriers between staff in different areas are minimized.
• With a flat rather than pyramid organizational structure.
• Where decision making is pushed downward to where the organization meets its customers or suppliers.
• With entrepreneurial flair present at all levels.
• With the ability to develop and test more than one solution to problems encountered.
• With efficient rather than stifling monitoring systems.
• With enough ‘discipline’ to get things done.
• With a balance between freedom and order.

Tolerant of failure

Innovation and risk go hand in hand. Management that goes into critical overdrive when mistakes occur (rather than analyzing them to learn from the failure) smothers creativity and innovation. Risks can yield failure, but not taking risks can spell total disaster and an end to profits and growth.

Unless failure results from negligence, recklessness or complete incompetence, managers should not seek out scapegoats or exact revenge. Profits are the reward for taking risks and innovative organizations learn to live with risk.

Encouraging teamwork and innovation

In innovation it can be said that none of us is as good as all of us. Teamwork and innovation are better in organizations where:

• The climate is open.
• Participation is encouraged.
• Facts and information are readily available.
• Change is managed positively.
• Resources are provided for training and development.
• Rules are at a minimum (with policies and guidelines instead).
• Internal communication is good and more by mouth than memo.
• Respect is given to all colleagues (but not on demand by management – it has to be earned).
• Managers are themselves highly motivated.
• Teamwork often transcends departmental boundaries.

Good at open and constructive communication

Communication should be good laterally and vertically (and flatter organizations should – in theory at least – encourage good lateral communication). Should managers ensure a good flow of information, ideas can emerge as a result. Cross-fertilization can create more (and better) ideas, particularly where departmental, divisional boundaries are crossed.