Why Organizational Innovation Is So Difficult

In all ecosystems, organisms that evolve to survive the elements of their environments will likely continue their existence. Those that do not continue to evolve will most likely perish. Likewise, for business organizations to evolve, they must innovate their products, services, technologies, policies, processes and structures to capitalize on social, economic and industry trends within their environment. This is easier said than done. Organizational Evolution theory indicates that improvements through innovation are challenged by the complexity of business structures themselves, compounded by our own inability to comprehend the impacts of innovative ideas when presented with them. So what does it mean to evolve an organization and what are the secrets to doing it successfully?

The answers to unlocking innovation might lie within each organization’s genetic makeup. Innovations are usually stumbled upon through a series of events, not as ideas that suddenly flash into our heads. What happens to these? Depending upon the organizational culture and structural model, they may go nowhere. The organization’s culture may be one of rigidity that inadvertently squashes innovation, or conversely, the culture may be one that welcomes new ideas and evaluates their legitimacy. In the latter case, innovation has become a part of the business DNA and fresh approaches are seen as a vehicle to creating enhancements to the businesses value proposition in order to expand lines of business through adaptation to a changing environment. In this case, the business has been “tuned” to detect possible innovations and is geared toward exploiting new trends in order to grow the business.

As an example, look no further than the latte serving Internet cafes that populate virtually every city. Most are appointed with comfortable chairs, sofas and low-playing popular background music. They may serve scones and fruit cups as well as offer merchandise, such as: music CDs, expensively branded coffees and many related accessories. While we now take this business model for granted, it did not exist in this form mere decades ago. Through evolutionary development, innovations to the traditional coffee shop business model transformed the “get your coffee, then go” business approach into an “office” away from the office social destination that offers amenities designed to keep a customer onsite for as long as possible. Innovations in theses businesses occurred over time to capitalize on the popularity of the Internet and the changing consumer appetite for latte-type drinks and alternative business meeting places. Innovation led to a transformed business model that has been highly successful in most cases.

The coffee shop transformation described here represents a simplistic example to illustrate how evolutionary steps can occur through a series of minor innovations over time. In virtually every business, the same types of opportunities exist to transform through innovation. It requires effort and a disciplined approach, however. Developing trends are not always on our minds. We do not train our managers and staff to look for possible innovations. Instead, we focus on policies to drive behavior and a culture of conformity to get job roles accomplished to our specifications. Day to day operational concerns tend to crowd out strategic thoughts related to cultivating business innovations. This is especially true when you consider the complexity and scale of typical business organizations. Businesses can become policy driven monsters that function mechanically. Such organizations are inhospitable hosts for fragile ideas related to improvement, so opportunities for innovation that might otherwise fuel evolutionary development, instead get missed. The ramifications of these missed innovation can be costly.

Systematic innovation requires an advanced level of collaboration and communication not found in most companies. Higher-functioning businesses have learned this and in response have developed innovation frameworks to help uncover new ideas and process them through an evaluation and incubation period to help better understand the beneficial impacts the innovation may have on the business. With luck, these organizations will influence their evolutionary development positively. All businesses have the same opportunity to help influence their evolutionary development. Recognition of the innovation opportunity is the first step, followed by designing frameworks to help detect and capture innovation as it occurs.

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