Without innovation, you're relegated to following others and reaping the meager offerings of a commodity business. Most entrepreneurs know this intellectually, but it's too easy to give lip service to innovation while undercutting the actual process in the office.
In a recent Harvard Business Review blog post, Harvard Business School professor Rosabeth Moss Kanter wrote what she called nine rules for stifling innovation. They come down to specific ways that people damage the innovation process, usually without realizing it. Here are three takeaways:
Innovation is inclusive, not exclusive.
A classic mistake--not just for entrepreneurs, but also for many established executives--is to assume that the good ideas come from a small circle of insiders. Such people may dismiss ideas presented by rank-and-file employees or simply restrict all innovative activity, like brainstorming sessions, to select groups.
This is a problem because innovation needs creativity, and one of the best ways to get creativity is to enable different ideas to meet each other. Netflix prospers today because someone realized that you could download files from the Internet, and movies are just very large files. Use only the insiders and you greatly limit the new combinations of ideas and experiences that you need because those people become used to each other. You need new blood to shake things up.
Innovation needs time and resources.
Any business process needs room to happen. Restrict the time, energy, and other resources required and it simply won't happen. Employees need space to daydream, experiment, and consider things that may ultimately lead nowhere.
If you make everyone account for every minute and penny in hopes of running a tight ship, you will choke off innovation for the sake of a false efficiency. Running a business requires taking chances and then using prudent risk management to keep the negative implications from being too great. The only guarantee you get is if you don't innovate, and that's one that entrepreneurs don't want.
Innovation needs a nurturing atmosphere.
The best products, services, and business practices didn't come fully formed. They emerged after a number of mistakes and wrong turns, all of which were actually investments in the final result.
If you want to encourage innovation, stop punishing people for mistakes, encouraging employees to compete for managerial favor, and publicly dismissing ideas from your team.