Monika Rozalska-Lilo

9 Reasons for Internal Innovation Failures

Written and edited by Monika Rozalska-Lilo, Florian Fischer and Kristen Onorato.

The threat of external disruption drives corporations out of their “what worked yesterday will still work tomorrow” mentality, resulting in adopting, among others, various internal and external innovation programs. Internal innovation activities (as opposed to external programs, i.e. involving external innovators, e.g. startups) are present in almost any large corporation and are often the first step into the world of corporate innovation.

We took a closer look at corporate innovation programs (sign up HERE to receive our free report soon) and confirmed our suspicions: great innovation rarely comes from internal innovation programs. Such programs tend to exceed budgets, stray away from management’s expectations, not capitalize on employees’ potential, and are not properly assessed, yielding ineffective results.

With this blogpost we’d like to share with you both the reasons why most internal programs suck and some ways to turn them into success.

#1 Lack of Fearless Leadership

 “Taking the failures as lessons, adapting our concepts and persistently trying to improve upon  “our previous attempts are what sustain innovation in the long run.

Moisés Noreña, Former Global Director of Innovation at Whirlpool Corporation. Source: Management Exchange

Big companies often face a real challenge when incorporating innovation practices, even though their employees often possess the potential and skillset to innovate. Corporations’ rigid structures and risk-avoiding culture (stemming from intolerance towards failure) tend to deter such employees from leading the way to successful innovation projects. For these forward-thinking individuals, starting a project that could fail is seen as a career threat rather than an opportunity. In order to change this and make internal innovation more successful, potential innovative leaders need to be able to take confident ownership of their innovative projects and have both the room and internal support to fail.

 #2 Innovative Leaders Are Alone

To take an idea to the next level, innovation leaders need additional support: this ranges from increased time capacities, internal knowledge and data, financial resources, and, most importantly, access to relevant experts and senior executives.

Based on our experiences working with Fortune 500 companies, many employees did not have access to these resources and faced barring obstacles when they tried to obtain them. Additionally, if a project was an activity on top of a full-time job, internal innovators did not receive enough clear support from within the middle management and C-suite level employees – the two most effective groups in the corporate environment.

Middle management are some of the hardest working employees’ with a direct impact on employees’ effectiveness and the company’s development. These employees often face a dichotomy when dealing with innovation: even if they want to support the ideas, they do not have the capacity to actually help. On the other hand, when C-suite level employees support internal programs, they rarely get personally involved or even attempt to help leaders overcome corporate bureaucracy. As a consequence, innovative leaders tend to have very little internal support.

#3 Innovation Is Seen as an Additional Task

Internal Innovation programs are seen as an additional task and not taken seriously enough. This results in participants of internal programs getting caught between their job and innovation project, subsequently dedicating less time and attainable resources to their program. Moreover, innovation activities are not reflected in KPIs or appropriately evaluated. Under such circumstances, participants’ complete dedication is simply impossible.

Additionally, experts in different units within the company might be relevant sources of knowledge or mentors that could accelerate projects, however, the burden of adding on an additional task drives projects below their attention.

Thus, it could be useful to have a structure in place to ensure innovation activities are a key part of each employee’s job description, at least for the duration of the innovation program. Otherwise, these efforts will never become incorporated into the company’s DNA.

#4 Internal Programs Are Seen as a Holiday 

Is an innovation program a method of creating actual innovation or a way of rewarding and incentivizing employees to work even harder on their everyday tasks? The question is not trivial at all. If a program is offered only in the form of a training course, without a way to take potential innovations to the next level and no structure for employees to follow their innovations if successful, then the program will unlikely bring tangible results.

Typically, when internal innovation activities are delivered as training courses, participants learn the tools and methods, but are not expected to translate them into their daily activities. Oftentimes, the courses will be held at creative (or even exotic!) locations and – frankly – feel like a holiday from everyday work. Once the employees complete the program and return to their regular desks, they continue business as usual because the initiatives were not reincorporated into their daily work.

#5 Intrapreneurs Are Not Diverse Enough

“Without deviation from the norm, progress is not possible”

Frank Zappa

Internal innovation programs are often offered to a specific group of people inside the organization, e.g. R&D employees and engineers. That means that the group working on innovation is limited and not diverse, frequently already working together in one business unit.

The result is twofold:

  • Closed environments and missing interaction with employees of different backgrounds limits creativity and disruptive ideas;
  • Ideas lie very close to already existing products.

Fortune 500 executives even admitted in our Corporate Innovation Survey that one undermining issue preventing great internal innovation is that “potential innovators are not diverse enough, thus they are thinking of solutions too close to what the company already does”. Under such typical circumstances, very little – if any – substantial innovation will occur.

#6 Internal Innovation is not Project-Oriented

Many companies approach innovation in a non-project-oriented way. In our Corporate Innovation Report (sign up HERE to get it), we discovered 55% of the internal innovation programs are not structured (think about models like “one day a week for an innovation project of your choice”). Even more surprisingly, the majority of surveyed companies thought that innovation just happens and that it doesn’t need to be managed.

“A good system is crucial for managing innovation. A lot of people think innovation is an unstructured process. But we give creativity a room – we manage it in a really structured way – this brings better, more tangible results.”

Eitan Katz, former Head of Global Incubator @ HP Software

Additionally, most of the programs are costly and do not have a plausible way to measure their added value. Pursuing a more project-oriented approach could allow companies to define a clear scope and trackable program goals. In the end, working with such a framework alleviates the management of internal innovation and facilitates the alignment of strategic goals.

#7 Internal Innovation is hard to measure effectively

As a consequence of unstructured management and lack of project-oriented internal innovation, managing and measuring internal innovation becomes complicated. Structured, project-oriented programs with defined overall and team goals allow corporates to set innovation KPIs. These KPIs vary from the current processes because innovation works on a different time scale. It is trial- and error-based and doesn’t show impact immediately, so establishing a special set of “innovation KPIs” based on program goals can be a very effective approach towards innovation.

#8 Corporate Innovators are not Seen as Multipliers!

Only when a whole company treats an innovation program seriously, then their participants will have the true potential to become real carriers of change. This will enable them to pass on their knowledge to other employees, influence cultural changes on a business unit level, and mentor less experienced colleagues in adopting helpful methodologies.

Once talented employees have learned the proper innovation tools and become skilled innovators, they should get recognized as experts, receive credit for their hard work, and be empowered to lead the way for others. When these innovative individuals are given additional motivation to create more and become even better,  the overall innovative capacity of the company is naturally taken to the next level.

 #9  Intrapreneurs are Caged Up

For most corporations, creating an environment where innovative culture develops and prevails is a challenge, to say the least. To make it happen, employees must be able to leave their offices and get in touch with external innovators in the ecosystem. Innovation requires an open culture for curious employees to thrive and have space to experiment, fail, succeed, and learn.

Even internal innovation programs specifically designed to provide space and enable employees’ personal development sometimes do not even leave their HQ. This may discourage participants in evolving as innovation leaders or changing company’s DNA from the inside because of the lack of networking and freedom outside the company.

** This blogpost originally appeared on CREATORS BLOG.

About the Author
Monika Rozalska-Lilo has co-created and until recently served as the CEO of CREATORS, an innovation lab based in Tel Aviv that supports organizations in developing and improving innovation practices. Monika’s expertise includes corporate innovation, startup ecosystems, ideation methodologies and building & facilitating innovation programs. Before CREATORS, Monika served as Deputy Director of TheHive by Gvahim, a startup accelerator program for international teams in Israel.
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