Innovation beyond the lip service

What does it take to create an innovation culture? 'Free work from jobs,' urges business guru Nilofer Merchant

Many executives salivate at the potentially powerful results innovation can deliver. Often, however, their organizations are too bureaucratic and hidebound to really make progress. What does it take to really open up and create an innovation culture?

As my SmartPlanet colleague Reena Jana reports , many organizations now "get" innovation, with 75% of the world's top 1000 companies ramping up spending in R&D and associated areas.

However, many organizations still continue to only pay lip service to the idea of "innovation."  In a recent interview, Nilofer Merchant, author of 11 Rules for Creating Value in the Social Era, compares many innovation efforts to an "air sandwich" -- that is, "the top tells the bottom what to do and all the stuff in the middle — the debates, trade-offs and necessary discussions — are missing." This air sandwich is "the source of all strategic failure and bureaucracy and slowness, she told MIT Sloan Management Review. "We need to go from a closed, exclusive concept of who can participate to an open and inclusive approach."

What does it take to get from here (bureaucratic culture) to there (innovative culture)?

Merchant, an entrepreneur in her own right as well as leading business thinker, says organizations need to embrace social technologies in a more forceful way. Not just Facebooking or tweeting one another, but something much deeper -- a truly networked organization in which all levels of employees or participants interact and share ideas. "Networks of connected people with shared interests and goals create ways that can produce returns for any company that serves their needs," she points out.

To accomplish that, these networks need to go far beyond 9-to-5 employees, Merchant continues. Rather, organizations that will succeed in today's economy -- and deliver the most innovation -- are built on networks of entrepreneurs, freelancers and even customers working as teams with on-site staff. "Work is freed from jobs," she says. "Most of the people who create value are neither hired nor paid by you."

The customer plays a particularly compelling role in value delivery, Merchant adds:

"The customer is no longer just the buyer but also a co-creator. Things like co-creation and crowdfunding and customization can lend a deeper value to the pricing. For example, when Burberry or Etsy lets me co-create a product, to design something the way I want it, then the value of the product fundamentally changes from 'shirt' to 'my shirt.'"

Singularity University provides an excellent model of a highly networked organization that brings in expertise on an as-needed basis, Merchant continues. The university delivers 300 hours of lectures with only seven full-time staff, who "form a nucleus or core group to handle program management, operations and communications." The organization builds from there, she states:

"Virtual work teams form as needed to coordinate curriculum intersections using Skype and other online tools... The talent ratio is 5% core, 15% curators and 80% specialists.... Instead of being about organizing in a hierarchical way that focuses on 'getting the right people on the bus,' this model is about building concentric circles of talent that change and resize as needed. People get on and off the bus, take turns driving, change the bus route: the construct of circles rather than hierarchies allows the organization to tap into a shifting global pool of just-in-time talent."

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