Innovations are ALWAYS top-down

posted by Ravi Arora October 13, 2016

All innovations result in change – either in a process or in a product or in a service. These attempts to make changes to process, product or service in the form of innovation results in a positive or negative outcome for the organization. The same outcome also influences, however small, the performance of the individual who was owning the innovation (change). For such people, usually the downside of failures are far higher than the upside for an innovation attempt. The fact that innovations inherently have much higher uncertainty (known and unknown risks) – makes it very difficult for anyone to own or lead innovation projects. Unless one is mentally prepared to take the risk, he/she would not be willing to drive innovations.

Let us continue to think about innovation as something that results in a positive change. Who can make large changes in a country? – The Prime Minister (Or the President). Who can make a large change in a state in India? Chief Minister. In your profession, where can YOU make changes freely without asking your boss? Obviously in the area that you control (There are some exceptions here also which I will cover in my next post). Let us take a different scenario – Think about your house. Who can make a large change in the house where you live? You (or may be your spouse)!  Who can make a large change in the room of your teenage son or daughter? They themselves can and remember you cannot! The authority to make changes in an area or a subject typically lies with the lowest person who clearly owns it and not necessarily with the higher or highest person. (There are a few exceptions to this)

Is the reverse possible? Can your daughter make changes in your house? Will you allow that to happen especially if it is not discussed with you or is not as per your choice? –  No

If you agree with the above, do you think innovation can ever be bottom-up? No, innovations are always top down!

Innovations are top-down but not necessarily CEO led

But does it mean that innovations are always CEO led? No, top down doesn’t mean necessarily CEO led. In fact, if you observe carefully within your company, you might find that none (or hardly a few) of the innovations are CEO led!

Just like anyone can make changes in the area that he or she owns, anyone can innovate in his/her area. Senior managers who have a larger area of control or influence can take decisions of a larger change (innovation) that needs collaborations across different functions and may result in innovations that have larger impact. Lower the person in the hierarchy making changes (innovations), smaller (incremental) is the change (innovation) likely to be. An individual who is not managing any team has full ownership of his/her process and can drive innovations that result in a better process. This therefore leads us to a point where we can say that even incremental innovations are top down. Just like a mountain range has many peaks (though one may be tallest), every person in an organization is at top of some area and can potentially drive innovations in his/her defined area.

To summarize the discussion so far: (a) innovations are always top down and (b) Top down does not mean CEO driven.

The question then is: What is bottom-up innovation?

In all the literature, bottom-up innovation is actually used for bottom-up ideas. An environment where anyone in the organization can potentially share his/her ideas with other people in the organization at all levels. But how useful and important is it for people to share ideas with others? Very useful – simply because front-end employees interact far more with customers and other stakeholders. They also (use) run the key organizational processes and know the problems, issues and bottlenecks associated with them. All this gives them an edge to think of new ideas. On the other hand, people at senior levels have far more exposure to the external world and emerging technologies. If these two inputs – ‘problems and ideas to solve them’ and ‘knowledge about emerging technologies’ could converge, innovations are likely to happen more effectively. Therefore if people freely share their ideas with everyone, senior managers could look at the ideas and select the ones they are convinced about and also fall in their area. All managers (every top) should therefore create channels to invite and receive ideas from others – employees, customers, suppliers and partners. Remember the work on any idea begins only if the owner of that area is willing to take risk (means the person finds cost-benefit-risk favorable!)

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If everyone is sitting at a top, then why is everyone not innovative?

From the above discussion one could arrive at a conclusion that since innovation is top-down and considering that all managers are perched at one of the tops, everyone can innovate?

All managers are not equally innovative because of the varying levels of risk appetite. Inability and unwillingness to take risk could be either due to personality traits or due to circumstances. Managers who are risk averse avoid taking decision on riskier ideas even if ideas are in their own area. They instead push the decision upwards and as a result even incremental innovations get stifled. Higher is the manager in the pyramid, more is the required courage to implement risky/innovative ideas. Unfortunately, organisations promote people who avoid experiments (innovations) that could jeopardize their revenue or defect projections.

In some cases the absolute risk of implementing an idea is so high that the process controls don’t allow even the enterprising manager to take chances. What does the manager do in such cases?

This also leads to the last question of this post – If someone has a brilliant idea that is outside the area of his/her control (boss, peer or a subordinate), what does that person do? Just share and forget?

In both situations, we need an enterprising manager who would be persuasive and collaborative. There are situations when the owner (usually the boss responsible for the outcomes of innovation) doesn’t give a clear Yes or a clear No. In such cases, managers, who are passionate about their idea and have a higher risk appetite start implementing it. If the owner gives a clear No, a few managers, who are very passionate about their idea and have a higher risk appetite, leave the organization. If the idea is related to a new product or a service some end up starting their own venture. With the new venture they get to the topmost level and have full authority to implement their ideas which their bosses had earlier declined.

Most of the above argument has been made for Process innovations.  For Product innovations, the product managers calls the shot (top-down). Unlike process innovations where innovations can be done by anyone in his/own area, even a small idea that could change the product features, goes to product manager for approval.

I alluded to a few exceptions in the above post and that is what I will discuss in my next post using my interpretation of the ‘Theory of constraints’.