Tuesday, December 18, 2007

Why Companies fail to innovate?

Today companies are scrambling to be innovative. Success stories of innovation at Apple, Google, Toyota, Samsung, GE, P&G, etc., has made innovation as a key requirement in many organizations.

Several companies in BRIC economies are now thinking on how to build a culture of innovation in their organization. However hard they may try, many of these firms will fail to build a culture of innovation if they do not overcome the following shortcomings.

I have compiled the areas where most Indian companies have serious challenges when it comes to creating a culture of innovation in their organization. The challenges can be classified into three broad categories:

1. Leadership

  • Lack of Vision or strategy for innovation
  • Setting short term goals for innovation
  • Lack of an innovation policy or an unclear policy
  • Focus on past & current successes rather than the challenges of the future
  • Company wide commitment towards innovation is missing
  • Company leaders do not take ownership for innovation
  • Innovation is deligated to mid-level management
  • Top leadership is constantly shifting priorities
  • Top management is unwilling to change at the pace demanded by innovation.
  • Company Politics in resource allocation for innovation and recognition
  • Stong hierarchy - over-management and review of new ideas
  • Micromanagement by top management
  • Risk aversion at the top management - Punishment for failure
  • Rewarding crisis management rather than crisis prevention
  • Underfunding new ideas in the name of profitability or business needs
  • Unwillingness to kill an innovation projects that are not succeeding.

2. Human Resources

  • Inadequate "innovation coaching"
  • Lack of awareness towards Intellectual property rights
  • Lack of creativity training
  • Lack of proper brainstorming facilties
  • Idea review by "senior" committee
  • No reward & recognition programs
  • Innovation not part of the performance review process
  • Innovation management is an ad-hoc process
  • Innovation is a function of R&D department
  • Culture that promotes hierarchy & power position over merits/performance
  • Overloaded workforce - capable persons are overwhelmed with work
  • Micromanagement by mid-level managers
  • Lack of creativity time for employees
  • No policies to encourage and manage networking with other organizations
  • Lack of opportunities for employees form formal & informal networks
  • Lack of customer interaction or Inadequate understanding of customers’ needs
  • Addiction to left-brained, analytical thinking - "data is God".

3. Company Systems

  • No systems to capture and document ideas
  • Inadequate knowlege management & knowledge sharing systems (KMS)
  • Inadequate systems to capture knowledge from past failures & past successes.
  • Lack of Innovation management tools
  • Lack/limited of access to global information databases
  • Lack of work collaboration, work flow management tools
  • Lack of interaction with Universities and other organizations
  • Current IT systems are rigidly managed with little inputs from users

In most cases, the task of creating a culture of innovation involes removing the above mentioned bottlenecks and then create adequate support systems to encourage innovation. People are naturally creative, when they are provided the right environment, innovations will start flowing naturally.

Ninedots, an Innovation consulting company in Bangalore helps organizations build a culture of innovation by looking into the organization’s current leadership, current practies and systems and advising on the action plan. Ninedots also conducts training in creativity, innovation, change management, problem solving & decision making, innovation managment, IPR, and leadership for innovation.

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