Institutionalizing Innovation

Many of the case studies describing how established companies have created new growth businesses focus on a single success. The companies that get it right deserve respect and admiration. However, with innovation, the challenge continues. Success requires the ability to churn out successful growth businesses year after year, over and over again.

The authors build on the ideas of The Innovator’s Solution, by Clayton M. Christensen and Michael E. Raynor, incorporating insights from their work with companies on innovation issues over a five-year period. Drawing on examples from Delta Air Lines, General Electric, Intel, Procter & ; Gamble, Scripps Newspapers, Shell Chemicals and Target, the authors maintain that successful innovators rely on three basic elements: blueprints for growth, innovation engines and systems and mind-sets.

Creating blueprints requires managers to articulate what the organization “wants to be” and allocate resources to achieve that vision. The authors compare funding innovation to managing investment funds comparing different types of projects to investments with varying levels of risk. Creating the growth engine requires setting up a screening and development process that focuses on reducing uncertainty, and an innovation structure that helps oversee highly uncertain projects. Unless these elements are in place, new ideas tend to be modified to look like things the company has done in the past, undermining the company’s ability to pursue highly differentiated new strategies. Unless management creates a supportive climate and leads by example, efforts to achieve innovation can still fall short. Senior managers need to be involved in idea screening and development, share a common language of innovation, draw on substantial external input and create policies and incentives that encourage people to take managed risks on the path to innovative growth. Finally, the authors provide a blueprint and checklist for beginning the process of transforming an organization into an innovation dynasty.