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A Consultant's View

Prairie Trail Software, Inc. ............................................................. Sept 2012

Managing for Innovation

Many a company claims that it wants its workers to innovate. However, rarely does a company make the management changes that would foster innovation. A culture of innovation does not appear on command. It needs to be planted, nourished, and cultivated. We invest in ideas that do not pan out. We try things that don't work. A culture of innovation costs the company a lot to build.

The real question is: is it worth it to the company to allow company resources to be used on efforts that do not benefit the next quarter's results? In most companies, that answer is a clear "No." When a company is struggling to survive, everyone needs to be focused on that survival. However, after short term survival comes long term thriving. That is where new ideas and creative ways of solving problems will make a difference.

Once the decision is made to support innovation, then the question is: how to manage for innovation? For a new business idea to succeed, it needs freedom in which to experiment, resources with which to try, and a marketplace that can judge the results.

It is difficult to add innovation to an existing culture. In most corporations, the compensation model and the corporate culture are structured for very short term results.

The methods of management for survival and the methods of management for long term thriving with innovation are very different. When trying to survive, the management needs to be laser focused on the most important projects, the ones that have the highest probability of providing the needed cash flow, and reject everything else.

When managing for an innovative company, management has to be much looser and build a community of people wanting long term success rather than an army of obedient "robots". Instead of demanding obedience, management builds the vision of where "we can all go together" and allows others to determine which road we use to get there. We build a culture of respect for ideas that come from anyone.

To build an innovative culture, management switches from a "command and control" thinking into the risk taking of a Venture Capitalist. Instead of deciding how things will be done, management selects which employee idea to invest in. Management spends company resources on projects that non-management individuals selected, chose how to develop, and are promoting from below.

To select good ideas, look at the beliefs the employees have. Here are some guidelines:
1. The employee believes that if they are successful, the company will be more successful.
2. The employee believes that they are addressing a basic problem for the company.
3. The employee believes that they can solve that basic problem
Without these three beliefs, the project will fail to benefit both the employee and the company. Management will not be able to see the value of the person's efforts.