This article is part of our guest contributor series.
Does your corporate culture support or hinder an innovative business model? Most companies have no idea.
Worse yet, many companies who invest in innovation often face a scarier problem: they believe the investments they are making—such as increasing R&D budgets or creating an innovation department or appointing an innovation czar—are helping them create an environment to stimulate innovation. In fact, the reality is the opposite.
You won’t generate breakthroughs by creating an innovation department. Innovation will only happen when you mobilize the creative power of your entire organization. One-off initiatives never work. You have to create a sustained environment where innovation thrives, something I call an Innovation Biome.
Emulate Amazon’s Innovation Biome
Amazon, probably the most innovative company of the past twenty years, has built an environment where innovation happens all the time and everywhere across the organization. However, if you looked at Amazon’s investment in innovation using conventional measures you would not think so. Take R&D spending for instance: In the list of the world’s top R&D spenders Amazon barely shows up. It reports a 2017 R&D spend of $329 million, merely a blip for a company with current revenues well over $200 billion.
In reality, however, no company invests more than Amazon on developing new customer value, innovation, and R&D. Amazon spends an estimated $23 billion on R&D, more than any other company on the planet. The difference is that at Amazon R&D is not a separate activity that is called out in financial reporting. It is part of its daily ongoing business. Amazon does not report a big R&D spend because innovation is unimportant; instead, it does this because innovation is so crucial that it is baked into everything the company does.
Amazon’s business model “encourages the simultaneous research, design, development, and maintenance of both new and existing products and services.” Amazon doesn't treat innovation as a separate activity: it is central to every activity.
This democratized approach to innovation is what has separated Amazon from other companies. In his 2013 letter to shareholders, Jeff Bezos states that the “decentralized distribution of innovation throughout the company--not limited to the company’s senior leaders--is the only way to get robust, high-throughput innovation.”
Building Your Own Innovation Culture
The only way to create an environment where innovation thrives is by making sure that innovation is part of everybody’s job. The most innovative organizations in the world understand this and use the strength of the entire organization to drive the creation of breathtaking products. Be warned: if you are unable to do this, your best innovators will leave to create value elsewhere.
In contrast, organizations successful at innovation have employees who are primed to create new value. They feel empowered to try new things. They believe they have the support to take risks and put their best ideas to work. These organizations have a culture that says “yes” to new ideas more often than saying “no.” Employees in these companies don’t have to ask permission to innovate: they simply do what they believe is right for customers.
The 5 attributes of the most innovative business models
You know your company is primed to innovate if the majority of the workforce exhibits the following five qualities:
1. They believe innovation is core to the mission of the company
2. They believe they are empowered to innovate
3. There is a mindset of continual improvement in every area
4. There is a system in place to support innovation. This means that if someone has an idea, they know what they need to do to test it or put it to work
5. There is a desire to build meaningful products that provide value to society, as opposed to releasing products simply to make money.
Organizations need to do everything in their power to ensure these five elements of innovation are present. If your company is positive in all five areas, that is simply brilliant. If you are positive across 3-4 of these attributes you are in good shape and have a better than average chance of consistently building new value through innovation. If you believe your company exhibits only one or two of these traits (or worse, none), you have a lot of work to do before you show growth through innovation and build your Innovation Biome.
Dr. Kumar Mehta is an bestselling author, innovation researcher and founder of Bridges Insight. He has studied innovation before innovation was a buzzword, basing his Ph.D dissertation on the diffusion of innovations. Since then, he has applied many innovation frameworks during his 14 years at Microsoft and throughout his tenure as an entrepreneur and CEO building out a large data analytics company. Kumar serves as a Senior Research Fellow at the Center for the Digital Future at the University of Southern California and helps organizations around the world with innovation, disruption and preparing for an uncertain future. He holds a Ph.D. in Pharmaceutical Socioeconomics from The University of Iowa.