Top 10 Sources of Innovation

US corporations invest more than $350 billion a year on innovation through R&D efforts. So it’s easy to assume that such formal efforts propel innovation more than any other factor.

But a recent study of 677 strategy leaders by CB Insights shows it’s actually employees who are driving the majority of innovation. According to the study, upper management may be responsible for radical, disruptive changes, but it’s the employees who are responsible for smaller yet more consistent innovation.

It turns out employees are a more powerful source of innovation than the formal accelerator and incubator efforts in which companies invest hundreds of billions of dollars, as shown in the study’s “Top 10 Sources of Innovation”:

  1. Customers
  2. Employees
  3. Competitive intelligence
  4. Supplier/vendors
  5. Academic partners
  6. Industry analysts
  7. Accelerators and incubators
  8. Corporate venture capital
  9. External ideation consultants
  10. Bankers & VCs

In fact, the majority of the most transformative innovations introduced over the last 30 years – from email to the cell phone to Microsoft Word – came from employees.

We must start unlocking the value of our employees to make the most of their ideas. Here are three ways to do that:

  • Make failure an option
  • Create a safe place to explore crazy ideas
  • Arm employees with innovation tools

Make failure an option

Often employees are hesitant to submit ideas because they’re afraid of looking foolish or losing respect from others if the idea fails. By making it clear that failure is not only okay but is in fact a very necessary part of success, you can help eliminate that reluctance and open the door for breakthrough ideas.

The Post-it Note story is one of the most legendary tales of failure turning into success. A scientist at 3M “failed” when he created a glue that wasn’t strong enough for its intended purpose. His colleague realized that the glue was just strong enough to keep his bookmark from slipping out of his book while still allowing him to easily remove it, and the Post-It Note was created. It went on to generate more than $3 billion in revenue for 3M in 2009.

“Experiments are by their very nature prone to failure,” Amazon CEO Jeff Bezos said. “But a few big successes compensate for dozens and dozens of things that didn’t work.”

Create a safe place to explore crazy ideas

Your employees have great ideas – maybe they just don’t know what to do with them.

Set aside time where employees can share their ideas. This could be a five-minute brainstorming session at the beginning of every meeting, or a longer monthly meeting dedicated entirely to sharing and discussing innovation.

For employees who may not feel comfortable speaking up at meetings, consider providing an idea submission hub that they can easily access to propose their innovations. This is exactly how Amazon Prime came about. An employee submitted the idea for free shipping to Amazon’s internal online idea submission tool. CEO Jeff Bezos saw the idea, liked it, and the rest is history.

Today, Amazon Prime allows you to pay an annual membership fee for free two-day shipping, access to free movies and TV shows, and more, and it has more than 100 million members.

Arm employees with innovation tools

You wouldn’t fault your child for missing a goal if they have never been to soccer practice. You wouldn’t hire a CFO who never took a finance or accounting class. And yet many leaders expect employees to somehow intuit the intricacies of successfully driving innovation.

Not everybody is a natural innovator. So if you want to create a true culture of innovation within your organization, offer training sessions or materials to help unlock every employee’s potential.

Some businesses provide internal training opportunities and materials, like Intuit’s Catalyst Toolkit, and Adobe’s Kickbox. And for those that don’t, colleges like Stanford University and Wharton Business School offer business innovation courses for professional development.

Conclusion

Companies care very much about innovation, which explains the large amount of money they’re willing to invest in R&D. About 85% of the CB Insights survey respondents said that innovation is “very important”.

But what if they were to divert some of that money to investing in employee innovation? What if more companies encouraged their employees to be the driving force behind not only small innovations, but also big, radical ones?

It could change the trajectory of your organization.

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