When it comes to innovation, most executives place a high value on variation. They set up formalized systems that encourage employees to generate ideas and submit them to their superiors. Even firms without a formal mechanism frequently empower their people to experiment without fear of punishment for failure. This approach is based on the knowledge that innovation is often a bottom-up process: Managers should cultivate many promising seeds to let a thousand flowers bloom.
But variation is only half the story—in true Darwinian fashion, it doesn’t work without selection. And this is where many companies fall short. Yes, choices about which ideas are worth pursuing and which are not are continually being made, but too few companies think about and organize selection deliberately, with a clear strategy in mind. The winnowing of ideas thus becomes a subjective process, wherein political interests and personal preferences determine which projects are funded and which are terminated.
I have observed the consequences of this trend firsthand at two multinational corporations that set up elaborate systems for soliciting employee suggestions, resulting in an abundance of employee proposals and ideas. In both cases, selection occurred at two points. The first was at the middle manager level. Invariably, these managers did not select the proposals that they found most promising, but instead chose the proposals they thought their superiors would want to see. They feared that passing along a bold, risky idea that their superiors might reject would be bad for their reputation. The second point started with this biased pool. Top managers picked the proposals they liked best—typically ideas that fit their preconceived notions of what the company should and should not do. As a consequence, although these companies did not seem to suffer from a lack of variation at the ideation stage, they experienced problems with their innovation pipeline.
To avoid these pitfalls, executives need to focus on developing a process that systematically manages selection in a way that aligns with their company’s strategy. For most companies, this is uncharted territory. The following five steps can help guide their way.
1. Enable selection to happen. The first thing that top managers need to accept is that they themselves should not decide which projects live or die.
At FremantleMedia Ltd., the London-based television production company known for such popular programs as the Idols and X Factor franchises, former CEO Tony Cohen put in place a formal process that ensured deliberate selection of new television programs. Cohen often received numerous proposals. But he resisted the temptation to select the ones he himself considered most promising. Instead, he built an internal system that would identify the best ideas, noting, “Why would I know better than anyone else in the company?”
Every year, the company organizes an event called the Fremantle Market. Senior executives from subsidiary production companies around the world gather in London. For one full day, they present their ideas for new television shows to one another, usually by showing part or all of a trial episode. The creator of each proposed production explains the setup and logic behind it and answers probing questions from colleagues about audience, costs, and the potential for spillovers into other media, such as the Internet. Because Cohen set up an internal licensing system, the different executives then have the autonomy to decide whether to license the show for their own country. Hence, ideas that attract the most interest will automatically be funded. If there is a lack of interest, the proposal will instantly be selected out.
2. Tap into the wisdom of your crowd. It’s not just senior executives who have something to offer. Taking advantage of the insight and understanding of a wider group of employees can also lead to better decisions.