The structures and processes that have been put in place to help organizations run smoothly and execute repeatable operations are often challenged by new ideas and systems, which is why innovation naturally runs into conflict in existing organizations. But it is within an established organization that innovative ideas have the best chance to thrive. Startups win most of the mythical glory — but research shows that over 70% of the world’s most transformative ideas came from employees working within the organization.
Ideas that overcome the barriers to innovation in an existing organization gain access to scale, resources, and capabilities that entrepreneurs cannot easily match. In order to propel your ideas through the web of internal obstacles, you’ll need a strategy to predict and conquer organizational value blockers.
Even the best ideas can get blocked if they appear to conflict with some element of your organization’s existing strategy. Successful internal innovators find ways to present their ideas so they enhance the organization’s current offerings. You’ll want to identify potential areas of conflict, then decide how to deal with them. The key is to closely examine these eight elements:
Gordon Bell, former head of Microsoft Research, holds numerous patents and has seen the progression of many technology innovations. He explained the most common reasons established organizations reject new innovations: “If it is too close (to the current business model), it’s going to get killed because it threatens to cannibalize the business, and if it’s too far away, nobody wants to back it. You try to find a min-max, not too hot, but not too cold... You have to look at how close your products are to an existing product/channel.”
Look for the magic middle ground where the position is appealing to your current and potential members and where your organization can uniquely deliver. Take the unique assets your organization already has — current members, the value proposition, and a recognizable brand — and explore how you could benefit from or build on them.
The more differentiated your product is, the harder it will be for members to compare your offer to the alternatives. This lets you charge more, sell more and create additional value.
Think more expansively about what your membership, product or service really is. Consider the overlooked-yet-related services that are a part of your core product. Peloton doesn’t see itself as a player in the fitness business, but rather it’s a massive member organization within the fitness experience category and the relationship-building business.
Identify the list of products/services you offer and prioritize the attributes your core member cares most about. From this list, you can determine which product and what mix of product attributes your members love that have the potential to disrupt the marketplace without disrupting your organization.
Many of the most successful business innovations have succeeded not because their product/service was superior, but rather because they offered a unique pricing structure. Amazon Prime converted transactional e-commerce customers into members. Substack helps writers monetize their work by implementing subscription pricing instead of advertising.
Review the accepted way of pricing your existing products/services and consider options such as affinity, service level, subscription, freemium, membership or community access.
Most internal innovators cite placement or distribution as their most difficult challenge. This is because your company likely has invested time and resources into distribution norms. Innovations in placement have been the starting point for numerous breakthrough businesses. Take Wal-Mart, for example. The chain became a booming success by placing stores in rural areas while competitors, such as Sears and JCPenny, focused on cities.
Negotiation is key to overcoming your organization’s resistance to placement innovations. Understand your company’s current distribution model and open lines of communication with leadership and partners to propose any changes.
Promotion is everything you do to communicate your offerings to prospects, members, partners, and others. It involves marketing, sales, communications, and public relations. Challenges can come from strict branding guidelines that limit flexibility or approval lag times that slow you down.
You’ll need to engage early to get to know key players. Co-creating and developing awareness of guidelines can speed up approval processes and garner support for your innovation.
Physical experience is often overlooked in most organizations. What your members experience with their five senses (sight, smell, sound, taste, or touch) can be a major source of competitive advantage. Consider Hilton’s DoubleTree, whose warm, chocolate chip cookies have developed a passionate following.
Define the moments in your member’s journey where you might innovate their physical experience.
Operational inefficiencies are consistently identified as one of the most critical barriers to internal innovation. You’ll need to learn to embrace, understand and predict potential obstacles and then circumvent them.
Review areas such as program delivery, sales, customer service, human resources, and technology development. For each area, predict the process issues you may face and look for opportunities to create a strategically disruptive situation. Additionally, having change management practices in place can help your organization streamline updates.
I spoke to innovation expert Alex Osterwalder who told me that culture is essential to strategy.
“Very few companies deliberately design and manage their culture, and that’s key to everything you do ... without managing the culture, you will never get innovation,” he said.
People-focused policies are the most important factors in whether innovation efforts succeed or fail. Reflect on whom you want to hire, how you will organize them, your incentive system, and your culture.
These barriers can test even the brightest and most passionate internal innovators, but remember that by identifying and preempting them early, you can create something truly transformative. Think through each element of your organization — positioning, product, pricing, placement, promotion, physical experience, processes and people. Identify where conflicts may arise and where opportunities exist, and leverage them to propel your new ideas to success.