Some organizations have a history of being innovative; others do not. Younger organizations are more open to change and more likely to innovate as they are not constrained by long-standing and established practices. However, younger firms are at a disadvantage with respect to innovation compared to more established companies that have stronger relationships with customers, more manufacturing experience in reducing costs and more experienced employees with a larger knowledge base, all of which can improve the company’s ability to generate innovation. But many successful large firms can experience structural inertia (rigidity of organizations’ practices and specifications) and become bureaucratic, which stifles their ability to innovate. Thus, the paradox for the modern industrial corporation is that, in order to grow, or even to survive, it is necessary to undertake technological change — change that is disruptive to its stable state.
What are the characteristics of a highly innovative company? Flourishing innovation can be attributed to corporate structural arrangements (for example, organizational adaptability, matrix organizations, job rotation programs and innovation banks) that enable an enterprise of effective social networks, such as integrated communication channels, communities of practice, internal expos and forums, employee culture publications and access to distinguished scientists. These types of organizations also tend to cultivate supporting cultural attributes for innovation — entrepreneurial values, calculated risk taking, tolerance of failure, collaboration and employee recognition and rewards — that facilitate working together to incorporate technical change for the corporation.
Enabling the Innovation Process
We can think of the innovation process as having three major phases: creativity, prototype design and testing, and diffusion to adopters. Previous case studies on advanced materials at Northrop Grumman provide strong evidence of the influences of organizational arrangements and an effective social enterprise in developing and advancing game-changing technologies throughout these phases. In addition, champions (such as creative scientists, entrepreneurial project managers, executive sponsors and end-user adopters) will typically emerge throughout the three phases of the innovation process to promote and advance innovative technology.
The Creative Phase: Several structural and social factors within organizations have a major influence in sparking the creativity of individual scientists. Organizational structures that provide interpersonal communication channels and a corporate climate marked by collaboration across levels promote creativity. Matrix organizations, in which mid-level employees report to both a project manager and a functional manager, force cross-area communication. Organizations with internally recognized and accessible senior technical staff members, such as subject matter experts and fellows, will facilitate social networking and technical discussions that create new ideas and increase the innovation rate. This informal organization, not generally shown on org charts, consists of ad hoc problem-solving teams of employees from different functions who exchange information and provide support for innovation.
Prototype Design and Testing Phase: Unlocking the value of creative ideas often requires a new design and testing a new prototype. Typically, the program manager or the corporate “intrapreneur“ will assemble a working team and procure funds to convert the creative idea into working prototypes to verify its value. However, the intrapreneur’s success in building the innovation tends to be as much a function of how well external relations are handled as of the technical feasibility of the idea itself. It’s critically important to keep supporters up to date on the project and its success, protect the group from outside interference and handle any subtle threats or opposition that could jeopardize the project. Hence, in practice — contrary to popular narratives about innovation being the result of an extraordinary, heroic inventor — innovation is a social enterprise. There is no “I” in innovation.
The Diffusion Phase: The culmination of innovation is the transfer of a product value to the potential adopters who will exploit the innovation and incorporate it as an ongoing organization practice. This is the most critical phase of the innovation process. Studies have indicated that, again, social practices make the principal difference, even more than the technical value of the innovation. Because of perceived risks or entrenched ideas and/or specifications, the innovation might be seen as controversial, and the target adopters might even refuse to use it.