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Innovation is one of the greatest contributors to economic growth and corporations today must continuously innovate to thrive tomorrow. Yet for too many organizations, innovation clashes with the dominant corporate structures of the past. As a result, organizations become their own bottleneck: Forcing entrepreneurial minds and creative talents to adapt to their systems and, in the process, killing employees’ drive for innovation.

Over the past few decades, our economy has gone through multiple upheavals which have fundamentally changed the way business is done. From digital to sustainability to Industry 4.0, this trend shows no sign of slowing.

Yet, many corporates continue to exist in between all of these shifts: Trying to keep up with the future whilst holding onto the past. And nowhere is this more obvious than in their structure. Whilst many have survived multiple disruptions, too many have created organizational structures that are relics of a distant past.

As a corporate innovation consultant with over 20 years experience, I’ve seen so many organizations that set themselves up for innovation failure, I’ve lost count. Organizations with corporate structures that stick out like a sore thumb. Structures that force employees to adapt to their outdated system, rather than adapt to new ways of organizing.

In my experience, these rigid corporate structures are the greatest barrier to innovation success.

Hierarchy and bureaucracy kill innovation time and time again

Many in management positions believe that their failure to innovate lies on the shoulders of their employees.

In my experience, the opposite is true: Most employees have the capability to solve problems and be more entrepreneurial…but when only a fraction of their intellectual power is used daily, it kills entrepreneurial opportunities before they have the chance to arise.

In other words, when great people get swallowed up by corporate systems, it kills their motivation.

It usually goes something like this: an employee has an idea and they’re really enthusiastic about it. Then they take the idea and give it to their manager, who is also enthusiastic. As the idea goes up the line however, the message gets diluted. Eventually, the idea morphs into something that doesn’t resemble the original form and eventually, interest gets lost.

As a result, the status quo prevails and change is kept at bay.

Human beings are inherently creative

We’re intrinsically motivated to innovate and build things that we’re proud of. But when corporate systems (eg. excessive meetings, bland work, hierarchy and bureaucracy, etc.) get in the way, we start to lose motivation. When we’re unable to exercise these desires due to a system which isn’t flexible to change, we accept the status quo and get on with business-as-usual.

Why? Because people adapt to systems.

We adjust to our environment. We become paralysed in hierarchical or production focussed structures, unable to be creative or envision a better future for the organization. In other words, we become blinded to bureaucracy and instead of driving change, we begin operating within the system itself.

In this environment — where constant change and corporate structures are the only stable factors — this provides organizations with both a significant challenge and an opportunity to get ahead… if they can learn to let go.

What does this mean for innovation within corporate structures?

The inability to innovate is obviously problematic for a number of reasons. The foremost being: If you’re a large corporate trying to stay relevant in a rapidly changing world, innovation should be driven by changing customer demands.

If you’re not meeting these needs, then there’s almost certainly a digitally-native, lean, agile startup waiting to serve your customers better.

As a corporate organization, if you’re unable to innovate it’s not because you don’t have the right people or the right technology. It’s because you’ve created a structure where neither of these assets can live their full potential. And as a result, your customers suffer.

What do agile organizational structures look like?

The best way to win in corporate innovation is to embrace agility and lean startup mentality, which, in turn, leads to bottom-up entrepreneurship. Bottom-up entrepreneurship happens when employees see an opportunity within the organization and they have the space and the freedom to jump on it and the backing to follow it through.

They don’t have to fight with sales to get the names of a client which may want to participate in a new product trial. They don’t have to compete with HR to hire new people or legal in order to trial value propositions. They can move quickly and don’t get bogged down in bureaucracy.

Instead, bottom-up innovation leaders are supported by management to instigate change.

When empowered to be the drivers of change, employees are happier, freer and more likely to be deeply engaged with innovation when it’s fueled by their own initiatives. What’s more, work will be more fun. Working side by side with your customer connects your work with a sense of value and fulfillment. So does the ability to really service your customers.

How to get rid of the corporate structures?

There are four main structural issues which I have seen in corporates which struggle to optimize Innovation Managment:

  1. System. Allow employees to organize creativity and independently. Champion those who dare challenge the way things are traditionally done even if they fail. Reward those who succeed in line with their accomplishment — in a world where CEOs earn over 300x more than the average employee, entrepreneurship should be rewarded more than ever. Continuously and obviously remove structural bottlenecks which stand in the way of innovation.
  2. Vision/Moonshot. We often forget that entrepreneurs are embarking on their change journey’s for something greater. However, employees are driven by the same thing that drives entrepreneurs to innovate: to solve a problem that needs solving. Not only to address your corporate needs, but on a societal level. A moonshot connects this future-driven position with the present and helps employees take away these barriers to innovation. By connecting each little step forward to the greater moonshot, that greater purpose is brought into the day-to-day.
  3. Knowledge/Skills. Innovation isn’t magic. There are certain skills and knowledge and processes that contribute to success. For instance, at Aimforthemoon we have a defined playbook that we follow for corporate innovation and programs that we use to empower employees not only with the structure, mindset and moonshot, but also the softer skills like internal communication, team dynamics and securing executive buy-in.
  4. Culture/Mindset. Changing an organization’s mindset is extremely difficult. It doesn’t matter how much money or resources you put into innovation, what matters is the mindset of your organization. If your organization has the wrong mindset, all innovation plans are doomed to fail. And I’m not just talking about the innovation team: I’m talking from finance to HR. It’s integral to enable the entire organization with an entrepreneurial mindset to squeeze out the bottlenecks.

Essentially, for corporate innovation to succeed, we need to let go of the past and the rigid rules and regulations which are relics of yesteryear corporate structures.

Organizations need to move away from checking boxes because that’s how they’ve always done it and start thinking about the future. When these elements come together, corporates are more likely to withstand the test of time.