How companies strangle innovation — and how you can get it right

I just watched a very smart company try to manage innovation by hiring a global consulting firm to offload engineering from “distractions.” They accomplished their goal, but at a huge, unanticipated cost: the processes and committees they designed ended up strangling innovation.

A shorter version of this post first appeared on the HBR blog
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There’s a much better way.
An existing company or government organization is primarily organized for day-to-day execution of its current business processes or mission. From the point of view of the executors, having too many innovation ideas gets in the way of execution.
The Tidal Wave of Unfiltered Ideas
Pete Newell and I were working with a company that was getting its butt kicked from near-peer competitors as well as from a wave of well-funded insurgent startups.
This was a very large and established tech company; its engineering organization developed the core day-to-day capabilities of the organization. Engineering continually felt overwhelmed.
They were trying to keep up with providing the core services necessary to run the current business and at the same time deal with a flood of well-meaning but uncoordinated ideas about new features, technologies and innovations coming at them from all directions.
It didn’t help that “innovation” was the new hot-button buzzword from senior leadership, and incubators were sprouting in every division of their company, it just made their job more unmanageable.
One of the senior engineering directors I greatly admire (who at one time or another had managed their largest technology groups) described the problem in pretty graphic terms:
“The volume of ideas creates a denial of service attack against capability developers, furthers technical debt, and further encumbers the dollars that should be applied towards better innovation.”

Essentially, the engineering organization was saying that innovation without a filter was as bad as no innovation at all. So, in response the company had hired a global consulting firm to help solve the problem.
After a year of analysis and millions of dollars in consulting fees, the result was a set of formal processes and committees to help create a rational innovation pipeline. They would narrow down the proposed ideas and choose which ones to fund and staff.
Build the Wall
I took one look at the process they came up with and could have sworn that it was invented by the company’s competitors to throttle innovation.

The new innovation process had lots of paperwork — committees, application forms and presentations, and pitches. People with ideas, technology or problems pitched in front of the evaluation committee.
It seemed to make sense to have have all the parties represented at the committee, so lots of people attended — program managers who controlled the budget, the developers responsible for maintaining and enhancing the current product and building new ones, and representatives from the operating divisions who needed and would use these products.
Someone with an idea would fill out the paperwork justifying the need for this innovation, it would go to the needs committee, and then to an overall needs assessment board to see if the idea was worth assigning people and budget to.
And oh, since the innovation wasn’t in this year’s budget, it would only get started in the next year.
Seriously.
As you can guess in the nine months this process has been in place the company has approved no new innovation initiatives. But new unbudgeted and unplanned threats kept emerging at a speed their organization couldn’t respond to.
At least it succeeded in not distracting the developers.
This was done by smart, well-intentioned adults thinking they were doing the right thing for their company and consultants who thought this was great innovation advice.