Developing a Corporate Culture of Innovation

Printed: 9/2/2010

Greg Mills
date: Monday, April 10, 2000

It has been a phenomenon, in our lifetimes, that information has become a commodity in itself.... Technology is arriving faster than our ability to integrate it as a society and that trend has been seen in the corporate culture as well. Companies that stay on the cusp of technology tend to be the industry leaders. While there is room, in a booming economy, for “me too” products, the “home run ideas” are often based upon new technology.

There are a number of aspects of corporate culture we should consider. If I were the CEO of a company I would ask myself a number of questions. I will pose them rhetorically and then answer them....

1. When I compare my company to our strongest competitor, which of us has launched the most successful new products in the last year?

It takes time to develop a culture of innovation and the best way to gain an overall “score” for your firm is to look at the track record. Launching new products is risky and it must be done with care. However, risk must be taken to see tangible results. Often, those without the technological background to understand technology are forced to pass judgment on it. How many fabulous products have never made it to market because an anal-retentive engineer or ”blind” bean counter failed to see the potential?

While certainly, there are factors that are unique for each industry, horizontal growth through product line diversification is a very important way for a CEO to grow his firm.

2. If someone, with the “killer idea” I have been looking for, called and wanted to tell me about it, would I be accessible to them or would my staff “protect me” from the intrusion upon my valuable time?

There is a tendency for a receptionist or secretary to shield the boss from a “waste of the bosses time”. It needs to be stated that new ideas are a prime interest and that at least being exposed to the idea is important. The people who answer the phone are the part of your company that is most exposed to the outside world. Each and every person who answers the phone should know who is responsible for outside ideas. A policy should be well established to handle outside ideas...

I never will forget the time I contacted a rather large company and was frustrated and amused when a receptionist told me “I’m sorry sir, our company is not interested in new ideas”! She probably did not hear her boss say that, but rather got the idea from the way technology is handled at the firm.

3. Do we have an incentive program “in House” to stimulate innovation and reward it appropriately?

There should be an “idea of the month” award. The ideal time to make the presentation is when you hold a regular “idea Meeting” as discussed later in this article. There should be an appropriate reward for ideas that are worthwhile and make or save the company money.

I have a friend who came up with an idea for a product that made his company millions of dollars. He had assigned his intellectual property rights to the firm and never got anything more than “warm thanks” and a plaque with a silver dollar on it commemorating his idea. He proudly hung his plaque on the wall of his office, some janitor pried the silver dollar off the plaque. All my friend got for his million-dollar idea was a disfigured plaque. Needless to say he is no longer with them. If innovators are rewarded they will tendto continue to invent things and stay with you. Even if they are paid for what they do, an extra reward always reinforces innovation and stimulated it in others as well.

4. Do we have an established “chain of control” to funnel outside ideas into the channel for consideration?

Is there a certain person (not in R&D) who handles outside submissions?
Does everyone know who that is? Do they have the forms and knowledge to perform that task according to established company procedures?

5. What percentage of my current product line is based upon new ideas or patents less than 5 years old?

There should be a mix of old established products and new products. The former chairman of Microsoft said “a company that fails to obsolete their own products are doomed to see the competition do it.”

6. Do we have a stock form for Outside inventors to fill out that contains our policy regarding “Non Disclosure”?

This document is critical. While you must protect your investment in R&D, you must be fair to outside inventors if you really expect them to submit ideas to you. Extended periods for consideration are not fair or reasonable.

Demanding the sole right to an idea while you are considering the invention for 90 days may pander to the uninitiated inventors who think it takes a long time to “understand his invention”. Seasoned inventors ignore such clauses or just don't submit to companies that try to hold on to ideas they have no interest in pursuing.

Be fair with outside inventors and they may try again with their next idea that might be just what you are looking for. Don't burn bridges when you don't have to. If there is no chance the idea will go forward, do the inventor a favor and cut them loose. If it would not spill the beans on what you are doing, tell them why the idea is not useful to you.

7. Is the reward for a pushing for a “home run product” great enough to overcome the risk to a potential product champion in my firm?

If a Product manager gets fired when his product fails, the stakes are raised for all who know what happened and word gets around that product failure is also career failure at your firm. While certainly, we learn from our mistakes, the failure must be reduce from a personal failure to a product failure to insure that fresh ideas still flow.

8. Is our policy regarding employee intellectual property rights reasonable and a part of every employee's file? Have I given my employees permission to innovate?

The attitude of management filters down to the lowest level of employees in the firm. Even having a form every employee signs (spelling out intellectual property rights that are assigned to the company) speaks volumes about the value the firm places upon ideas.

The form must be reasonable however. I came close to going to work as an idea man for a large firm that demanded rights to all my ideas during and for a period two years after employment ends.... That is taking it too far, I eventually backed out of working there.

”Permission to innovate” reminds me of a story from my youth. I was working in the mail-room of my Uncle's company when I had an idea to improve a package filling machine my uncle had invented. I noticed that the machine took 15 to 45 minutes to reset for various densities of the many products in the line. The machine filled one-pound cans from bulk and the product was valuable enoughthat close tolerances were required.

My idea was not well received since my uncle was very proud of his invention and didn¹t want some “wet behind the ears” high schooler improving it. Hundreds of man-hours have been wasted in the 30 years since I had my idea for a volume indexing improvement to that old machine, ... that still fills one-pound cans of Hodgdon Gun Powder, to this day!

9. Have we had, regular, Company wide “New Idea Input Meetings”. Is there a suggestion box program in our company?

There is nothing like a demonstration to make a point of view known. This is true not only of politics. If there are regular company wide meetings to discuss the value of ideas, everyone in the company will know that you are serious. Executive meeting on the same subject are also critical.

10. Do we have an “Ivory Palace Syndrome” at work in our company?

Is there an attitude that your “in house experts” know it all? Are your technology managers blind to outside innovation since they trust that the company experts have a lock on industries technology? While incremental improvements are going to make you money, it is the discontinuous solution that may come from an outside inventor that puts you out of business.

I talked “shop” with a salesman for an electronic component company, on the plane, last time I flew on business. He was crowing about how good business was selling resistors, capacitors and the like to electronic manufacturing firms. We discussed technology advances and I shocked him when I suggested that within 10 years he should expect his business as he knows to decline. I reminded him that microprocessors replace hundred or even thousands of components each and that fewer conventional components are likely to be needed as they may well be printed directly onto circuit boards in the future.

In conclusion, the top management of a company determines by many separate actions the attitude and culture of their firm. It takes a while to make a cultural change, but the effort will pay off in the end!

Reprinted with permission