Why is it hard to be innovative at work? What’s the importance of innovation for managers, entrepreneurs, and employees?
Innovation doesn’t come naturally to most organizations, and yet it’s a necessity in modern business for people to think like entrepreneurs. Peter F. Drucker argues that even successful companies must make an effort to invest in innovation.
Continue reading to learn how to encourage innovation in the workplace.
Gearing Up for Innovation
Embracing an entrepreneurial mindset is a challenge for established and successful companies. The real impediment to entrepreneurship isn’t a company’s size, but its inertia. Successful businesses give the bulk of their resources to maintaining their existing operations, leaving little room for innovative side projects. However, preserving the status quo can be deadly, since disruptive innovations can undermine even the most stable companies. Therefore, Drucker argues that businesses have a social obligation to innovate, since their stability impacts jobs and the economy. Figuring out how to encourage innovation in the workplace requires a deliberate effort on a business’s part to divert resources to entrepreneurial endeavors, even if they don’t seem immediately important.
(Shortform note: Inertia isn’t limited to large organizations. Small-business entrepreneurs also suffer from a lack of forward progress, but for different reasons than those Drucker faults in big businesses. The lone entrepreneur may feel burnout, a lack of inspiration, or be simply overwhelmed by a mountain of decisions. The best way to stem individual inertia is to take any action, even if just on small tasks, to spark momentum and reboot productivity. Prioritizing tasks and listing goals can help to restore your sense of focus, but it’s also good to acknowledge your achievements in a way that boosts your confidence.)
To enable innovation, businesses must restructure themselves to reward entrepreneurial thinking. Drucker says to start by reframing your company’s mindset toward change. Instead of viewing it as a threat, actively empower employees to seek out opportunities for new products, services, and markets to enter. Innovation should be a routine operation, with goals, timelines, and dedicated resources. Additionally, businesses should proactively analyze and project the life expectancy of their existing products and services to identify areas most in need of innovation. By doing this, your business can develop a comprehensive innovation plan for success in an ever-changing marketplace.
(Shortform note: Some modern industries change so rapidly that companies must build entrepreneurial thinking into their structure from the outset. In No Rules Rules, Netflix CEO Reed Hastings and Erin Meyer explain that Hastings does this by eliminating many corporate controls over employees’ decisions. Instead, he empowers them with relevant information and disperses decision-making throughout the company. This open policy allows employees to operate autonomously and take ownership of their decisions. Despite this strategy’s potential risks, Hastings believes that in industries where staying relevant is crucial, adaptability trumps error prevention and maintaining the internal status quo.)
Innovation-Centered Leadership
Drucker also writes that companies should set up their entrepreneurial ventures so that they get the necessary executive support and oversight. He lists specific management practices that businesses should adopt to prioritize and nurture entrepreneurial thinking:
- Include opportunities for growth and innovation in the company’s regular reports. This helps ensure that managers don’t overlook potential avenues for progress amid the constant demands of the company’s day-to-day operational issues.
- Dedicate regular meetings for company innovation teams to report on their progress, publicly reinforcing the importance of these efforts within the overall organizational culture.
- Ensure that top executives regularly engage directly with employees across various departments, actively listening to their perspectives on the company’s challenges and opportunities.
- Make innovation a key metric in the company’s self-evaluation process, with each project having a built-in feedback loop to measure results against expectations. These loops enable the business to refine and optimize its innovation efforts.
To effectively nurture innovative ventures, Drucker advises businesses to structure all entrepreneurial projects as separate entities from the core business because the people who manage the primary business will inevitably prioritize it over any new projects. Innovative ventures should have a direct reporting line to an executive in charge of innovation, bypassing the traditional middle-management hierarchy. This executive can provide oversight while serving as the champion for the company’s entrepreneurial efforts. The innovation sector should have distinct expectations and metrics tailored to its unique challenges, and while it may not yield immediate returns, it should be designed with the potential for exponential growth if successful.
