Innovation is a frequently used buzzword these days.  It is an important concept for fast changing industries such as technology.  It also finds its way into other industries, which are not thought to require much innovation.  Commercializing a new idea allows a company to provide a differentiated product and experience to customers.  Unique product positioning is a powerful strategy to capture value.  The million dollar question obviously is how organizations drive innovation.  The topic keeps a lot of pundits and professors busy.   In my experience, innovative organizations exhibit several characteristics:  1) de-centralization of authority 2) small project team and small organization 3) cross pollination of ideas and 4) culture to encourage risk taking.  I’ll focus on the first two features today.  In a traditional command-and-control organization structure, strategic decisions including innovation typical come from the top or centrally.  While this approach improves control, it often omits important ideas from staff close to the frontline.  Second, organization leaders and other corporate staff have blind spots.  This can create biases in the process of innovation.  The second point is related to the size of the project team and the size of the organization.  While there are exceptions, speed and quantity of innovation is inversely proportional to organization and team size.  It is extremely hard for large organizations to innovate quickly.  Within the company, if the project team has many people, it will slow down the process of innovation.  Both points are well documented by successful tech companies in the valley.  For example, it is widely known that Google allows its staff 20% of their time to do whatever they want.   Compared to more mature tech companies such as Microsoft, Google often relies on smaller project team to drive new ideas.  A recent article in New York Times about Paul English, the cofounder and CTO of Kayak, a popular travel search engine, illuminates both points.  English mentioned that Kayak’s culture is such that even an intern is allowed to innovate and execute on new ideas.  According to English, most meetings at kayak have few participants.  The company discourages meetings involving many people.  While more people theoretically would bring more ideas, it is offset by increasing complexity of communication among many people.  I found Paul English’s analysis below to be particularly insightful and sum up my first two points of innovation well:

“It’s all about fast iteration. When you push down decisions, and you don’t require people to write up plans and do designs by consensus, enormous amounts of work just disappear. We cut out all the middle layers and you let the designers talk to the customers. Otherwise, something gets lost in translation with a lot of layers.”

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