Perhaps one of the most difficult concepts for companies to apply continuously is innovation. No matter how exhaustively managers stress this idea to their employees, it always proves difficult to sustain innovation over the long-term – reflected by the struggles of main top innovators to remain at the top of their industries. For example, whilst Nokia innovated to produce the mobile phone, it was unable to spread this skill and knowledge to smart phones and other mobile devices. So, why is successful innovation so difficult to achieve?
To answer this question, we need to look a little deeper at what innovation means. Innovation is breaking from the past and creating something new. The dictionary definition gives synonyms of “revolution”, “upheaval” and transformation”; by its very nature, innovation is disruptive, and this therefore this presents two problems for firms.
Firstly, it is difficult to even create innovative ideas. It requires the right mindset and belief to be able to take risks and try something different to the rest. In analysis of these actions, firms must accept failure and learn from mistakes. This mindset can be limited in cultures where bad moves are punished, and failure is viewed as a sign of poor execution rather than innovative experimentation. Firms therefore need to re-evaluate the way they assess employee performance to encourage innovation and for people to look for ways to change the rules of the game.
Secondly, even if innovative ideas are frequent, it may be difficult to fully assimilate the company to move in a new direction. Organisations have complicated power structures that will be disrupted by the company operating in a new way, which will cause the balance of power to move within the company. Managers need to be aware of this resistance to change.
It is the combination of these two issues which makes innovation so difficult to achieve. At the core of both reasons is the need for a cultural shift within the company that encourages experimentation and risk taking. This may damage the short-term profits of the organisation, but it will help to build a more sustainable organisation that has a wider diversity of products and income streams. An innovative culture should be at the centre of organisation design.