If you want to be truly successful, you've got to know how to innovate.
Take Blockbuster: The video rental chain managed to successfully transition from VHS to DVD, but failed to beat companies like Netflix and Redbox, which took its idea even further. Rather than upend its business (or at least find a smart way to save it), Blockbuster rested on its laurels, pretending it wasn't getting pummeled by Netflix, which distributed rentals via mail, and Redbox, whose $1 a day vending kiosks made the $5 to $6 "Blockbuster Night" all but pointless.
As the episode proved, innovation requires more than just setting goals. It requires creativity and seeing them through. For this, companies must adopt a "dualistic mindset," as Vijay Govindarajan, a professor at Dartmouth College, and Jatin Desai of The Desai Group, write in the Harvard Business Review. Such a mentality enables them to make smart new products, bring them to market, and prepare for the long-term growth and return on investment.
Still, many businesses stifle innovation before it has a chance to blossom. Here are three things that stop them:
Mismanaging great ideas.
The inability to "harvest and manage" great ideas can kill innovation. One such example is Sony, which "had the ideas and engineering competence to build the first iPod equivalent, but it couldn’t commercialize those ideas because of its own internal battles," say the authors.
Letting resources go to waste.
"In a matrix environment, many organizations compete for the same funds, which leads to duplication of resources and results in inefficiencies and waste," Govindarajan and Desai write. "The challenge is not that an organization has insufficient resources to invest in innovation; the challenge, instead, lies in where to most effectively funnel those resources, and how to do it."
"When organizations become huge, their pace of change and pace of action often slows down," the authors warn. "This leads to lack of urgency. Larger organizations with many people focused on execution can be slow to take risks and design new experiments."