This article offers insight into how innovation is successfully accomplished by comparing the treatment of new ideas in high-

and low-innovation organizations.

Managerial Practices That Enhance Innovation

Andre L. Delbecq Peter K. Mills

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nnovation is widely held to be a vital component of a healthy organization. After all, it is innovation that enables an organization to respond to changing markets and thus retain its competitiveness. The nature of innovation has been the focus of many studies during the past two decades, yet a reliable model for successful innovation has not emerged. This is due in part to the highly individual nature of the subject: Every innovation is by definition unique. For example, on the individual level, cosmopolitans (those with an orientation that goes beyond their organizations) and locals are early adopters of different kinds of innovations, according to Marshall Becker. Interestingly, Thomas Robertson and Yuram Wind

found that those business units in which cosmopolitans and locals jointly make decisions are most likely to adopt innovations. Moreover, Walter Adams and Joel Dirlam found that relatively unsuccessful firms have been leaders with respect to some innovations. Michael Tushman noted that some effective innovating teams rely on boundary spanners to keep the other members informed, but other studies by Tushman and Robert Katz also found that teams relying on boundary spanners were less effective than when members kept themselves up-todate and performed their own boundary-spanning activity. Finally, even the size of the organization, in studies done by Edwin Mansfield, could not be correlated with successful innovation.

In the midst of this theoretical confusion, useful lessons for the practicing manager are often lost. The purpose of this article is to offer insight into some basic characteristics of both high- and low-innovation organizations. Over the past three years we have tested selected theses regarding innovationenhancing practices with several hundred managers in high-technology firms and health-services organizations. At this point we have come to a reasonable consensus regarding some practical processes that managers can put into place in most organizations. These processes are the focus of this article. We make no pretense that these processes are all a manager needs to know about innovation or that they serve as sole predictors of success or failure in innovation. They are, simply, actions that the managers in our sample of high-technology productproducing and service-providing organizations believe are within the capability of most managers to implement and that in both theory and practice help increase rates of successful innovation. Before we begin, let us briefly define our terms. Innovation is a significant change within the organization or its line of services or products that (a) requires a substantial adjustment in functions and/or structures, and (b) is successfully introduced, decided upon, and incorporated into the organization. As such it differs from incremental change (involving minimal disruption, usually within current tradition) and invention (which might not become institutionalized).

The process of innovation in organizations is dependent on the interaction among three variables: the motivation to innovate, the ob-

stacles against innovation, and the number of resources available to overcome or neutralize such obstacles. To make sense out of the innovation process, it is helpful to divide innovation into a sequence of phases based on Herbert Simons model of decision making. Successful innovation usually follows a sequence such as the following: Idea generation. A preliminary concept of an innovation is developed by an advocate within the organization. Preliminary analysis. A preliminary feasibility study is undertaken to see whether the innovation is desirable, achievable, and advantageous for the organization. Decision to adopt. A formal decision is reached to commit resources to the innovation. Implementation. Over time, the innovation is institutionalized as a permanent change in the organization and/or its outputs. This sequence of events varies in success stories. However, our purpose here is to be prescriptive, and since this outline is the preferred sequence in high-innovation organizations, we will follow it in presenting norms for structure and process. We will do so by describing how low-innovation and high-innovation organizations manage each phase; in the process we will present prescriptive norms for successful innovation. During the past three years we asked several hundred managers to tell us a success story, an innovation that they succeeded in incorporating into their organization, or a failure story, an innovation they still felt was technically correct but that was not successfully introduced. Following their descriptions of successesand failures, we analyzed the processes that either were present and explained part of the success, or were absent but could have been implemented to prevent or mitigate failures. Thus the norms evolved out of dialogue, and while they are consistent with many research findings, they
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represent summary judgments rather than conventional data and have been generalized further for the purposes of this article.

PROCESS PHASE ONE: IDEA GENERATION AND INITIAL MANDATE

Andre L. Delbecq is dean of the Leavey School of Business and Administration at the University of Santa Clara, in California. He received his B.B.A. cum laude from the University of Toledo and earned his M.B.A. and doctorate from Indiana University. For a number of years his research has focused on three topics: managerial decisionmaking techniques for strategic planning, the development of new products and technologies, and organizational design for facilitating innovation. He is the author of the Nominal Group Technique and the Program Planning Model, both of which have been widely adopted for facilitating decision making and planning. Delbecq is currently involved in studies of innovation in the high-technology industries in Silicon Valley. He sits on several corporate boards and is chairman of the board of directors of Nutech, a nuclear engineering services company in San lose. He has served on the Board of Governors and as chairman of the Public Management Division and the Organization and Management Theory Division of the Academy of Management and currently chairs the Managerial Consultation Division. He has been elected fellow of the Academy in recognition of his outstanding contributions in research, scholarship, and service.

The ways in which ideas were acted upon in low- and high-innovation organizations were markedly different and reflected two very different structural contexts. Low-Innovation Organizations

The process of idea generation and the manner in which the idea for innovation was initially pursued in low-innovation organizations are revealed in this typical failure story:
A professional or technical member of the organization sees an opportunity to combine a problem that clients or customers often complain about with a technical answer that he or she believes the organization could provide as a product or service. He or she presents the idea to the immediate supervisor, who is vaguely encouraging. Emotionally the employee feels the superior is supportive but cautious because of competing demands for resources. No special funds are available for innovation, but maybe a small amount of money can be scrimped together from the line budget. Let me talk to the top brass, the supervisor says. Later, very modest funding is made available, but top-rn-ment support regarding the project is still vague. Because of the limited funds, the advocate and one or two colleagues attempt to develop the innovation largely by working overtime. Meanwhile, the advocate feels some anger when a pet idea of another colleague-perceived by the advocate as a closer friend of the manager-receives greater support. Further, he or she notices that management also finds line-budget funds for another recommendation - made by a powerful clique - that is less controversial and closer to company tradition.

Peter K. Mills is an assistant professor in the Leavey School of Business and Administration at the University of Santa Clara, in California. He received his doctorate from the University of California at Irvine. Mills research interests are the design of service organizations, the pricing of power in organizations, and innovation.

In the eyes of the advocate, changing market conditions and customer requirements could have validated the legitimacy of the suggested innovation if he or she had re-

ceived sufficient support. However, starved for resources and obliged to work on the innovation largely as overload, he or she becomes discouraged and either lets the project fade for lack of attention, leaves the organization and develops the project as an entrepreneur, or joins a competitive organization in which the innovation is more likely to be favorably received. The failure stories are filled with themes of ambivalent support, inadequate resources during the fragile, initial periods of development, constant efforts to sell and justify increased need for resources (with concomitant personal risk), infighting over resources, and decisions based on political connections as opposed to unbiased assessment of alternative recommendations for innovation. While belief and enthusiasm carry the advocate forward for a period of time, frustration, a sense of betrayal, and lack of sufficient funds will often lead to one of the withdrawal scenarios already described. Technical inadequacy is seldom the explanation given for project failure. In summary, in low-innovation organizations: l Sponsorship is obtained by seeking resources through line managers primarily responsible for supporting existing activities. l Risks are assumed solely by the advo-

cate; he or she must often accept underresourcing, since permission and support depend on the patronage of managers who may see the request as outside normal budgets, or even as a nuisance. . The degree of organizational support assigned to a project generally is perceived as based on the values and interests of a dominant coalition rather than on the objective merit of the project. l Insufficient startup funds are allocated by squeezing token resources from line budgets and thus make innovation directly competitive with existing activities. l Decisions on startups of innovations occur randomly as individuals get ideas, whether or not the decision fits in with a planning cycle or the project is advantageous relative to other potential innovations. Incredible as it seems, this is the managerial context described by the majority of respondents to whom we talked about innovation in the average, complex organization.
High-Innovation Organizations

The stories in high-innovation organizations show the innovation advocates operating in an entirely different structural context. Individuals in these organizations indicated that spe-

[l]nnovafion in organizafions is dependenton fhe inferacfion among fhree variables: the mofivafion to innovate, fhe obsfacles against innovafion, and the number of resourcesavailable . . .I

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cial funds are set aside specifically to support innovation. Sometimes the fund is formally labeled venture capital or research and development. Sometimes it is simply a discretionary fund. But money is available that is intended solely for the purpose of stimulating new activities. The money cannot be folded into line budgets. Further, the fund is earmarked for real innovation; changes within tradition are expected to be funded by line budgets. In these organizations line managers are not the decision makers with whom the advocate deals. A special committee reviews proposals for innovations at regular intervals. The majority of these decision makers are individuals not responsible for current operations; they often are outside advisors and consultants. Sometimes innovation is relegated to a subcommittee of an external advisory group or board of directors. At other times, those in charge of innovation simply are a collection of organization wise men. While line management is usually represented on the committee by one or two individuals, the dominant membership is not

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vested, since they are not managers of existing operations. The review group often spends considerable time doing its own environmental surveillance, and is particularly sensitive to new developments in the economy and the market, among competitors, and in new technological developments. The review body seesits mandate as the expenditure of venture funds in a manner responsive to new challenges in the aggregate environment, not only in support of proposals that strengthen existing operations. Its decisions are not perceived as token largesse to pay off creative individuals. Rather, the review group funds feasibility studies as strategic decisions signaling an organizational commitment to respond to changes in the environment. The review body does not pay for the self-serving projects of prima donnas. By assigning one of its own members to work with the advocate and his or her project group in designing and carrying out a feasibility study, the committee guarantees that the study is an organization project-as opposed to Engineer Smiths or Dr. Joness project. The stories of managers from highinnovation organizations include references to R&D funds, venture capital, comparative proposal review, shared organizational sponsorship, and adequate funds for feasibility studies, as well as describe a clear point at which the feasibility-study group must report back to obtain a formal decision to implement. In summary, the managerial process of high-innovation organizations in early stages of idea generation and approval is characterized by: Separate funds for innovation. Periodic reviews of informal proposals by a committee separate from line management . Clearly mandated feasibility studies with adequate funds.
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Project groups to undertake the feasibility studies that are enlarged to include one or more opinion leaders other than the advocate. Not radical medicine, yet these practices are still absent from many contemporary organizations. None of the above practices diminish the importance of the original advocate or his or her belief, motivation, or energy. Without the advocate-the primary ingredient innovation seldom succeeds. But what these practices provide is adequate support and sponsorship so that a realistic feasibility study is possible without excessive overload, impoverished support, inadequate sponsorship, or excessive political sniping. These practices dont afford lavish support, but they do help achieve the support and sponsorship necessary to move creativity toward innovation. Implementation of most of the above practices was within the power of the CEOs and division managers with whom we talked. In most organizations in which they were not in force, managers felt that these practices could be successfully introduced; that their absence was due simply to oversight rather than intrinsic organizational barriers. Most managers felt they could persuade their organizations to begin such practices if evidence of their value was available. Finally, a word of caution. Innovation-enhancing practices in phase one should be kept relatively informal. Research, such as the work of Thomas Allen and Herbert Menzel, shows that informal interpersonal communication is a primary means of disseminating innovations and other important new ideas. The best proposals are four- to six-page concept documents. The most effective processes are distinctly nonbureaucratic. Dialogue and shared judgment are at the core. Paperwork is minimal.
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PROCESS PHASE Two: FEASIBILITY STUDYTO DEFINE THE MARKET NEED AND EXPLORE PCYI-ENTIAL SOLUTIONS

The scope of a feasibility study makes all the difference in determining real customer needs and how those needs most adequately can be met. Lozu-Innovation Organizations

The essential error made by low-innovation organizations when preparing a feasibility study is parochialism. For example, often the advocate -with one or two colleagues -will determine the demand for a new idea by speculating among themselves and adding only selective data that support their concept of the market. In effect, their feasibility study is largely an intellectual simulation, conducted behind closed doors and utilizing limited data. Not surprisingly, the result of such feasibility studies often include these classic errors: Overestimation of demand, so that revel

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nue expectations are entirely unrealistic. Underestimation of differences within the market, so that flexible designs with differentiated modifications desired by different consumers are not considered. Overly complex designs, attractive to the engineering sophisticate but intimidating to the uninitiated. Inadequate consideration of the orientation and training (and little or no consideration of the marketing) required to introduce the product to all but a small number of early adopters. In effect, technical adequacy (if not superiority) is substituted for market analysis and client sensitivity.
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High-Innovation

Organizations

In high-innovation organizations, closeness to the average potential user is the key. In fact, the entire feasibility-study team lives with a sample of potential customers by making use of a variety of involvement techniques: field visits, focus groups, in-depth interviews, and so forth. Further, a large number of organizational boundary spanners not formally a part of the feasibility-study group (sales,

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technical service, management) are also queried in the product-definition phase. Almost all innovation success stories include radical redefinition of the product or service as a result of taking into account the real world of the average potential customer. Making the product or service the customer really wants (rather than the product or service the engineer thinks the customer wants) often calls for substantial conceptual reorientation by the feasibility-study team. Similarly, cosmopolitanism is brought to bear on the solution contained in the proposed product or service. Since the innovation is new to the organization, successful feasibility-study teams reach deeply for ideas from noncompetitive companies in related fields, study previous design successes and failures, and talk with a broad sample of creative thinkers, both within and outside their own company, who are not part of the feasibility-study team. In a word, search behavior, as Herbert Simon would label it, substitutes for creative speculation. Transferrable lessons are less costly than reinventing the wheel. In summary, feasibility studies in high-innovation organizations include: Extensive and intensive interaction with clients and organizational boundary spanners, which often result in a reconceptualization of the product or service. Contacts within and outside the firm that help the study team incorporate a flexible core design that can (over time) permit variable models to appeal to variable client and realistically approximate groupings, production costs based on the experience of others who produced related products or services. All of this might seem to be a simple extrapolation of a basic marketing orientation. One must remember, however, that the individuals involved in product development are often not from marketing. The key is to
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structure a feasibility study that brings the design team as close to market realities as a key marketing person might be. Successful managers of innovation guide the feasibility study group through a real world exposure and sensitization process, which inevitably results in a reconceptualization of both the product and real customer wants and the design and manufacturing requirements based on the insight and experience of individuals outside the design team.

The advocate is inflexible in negotiation, insisting on the rightness of the feasibility study. Since no modifications are negotiated, the project is vetoed even though most people feel the core idea is correct. A powerful critic becomes an outspoken gunslinger, and management backs off support, even though the critic does not represent a majority opinion among reviewers. The proposal stalls in committee until people lose interest or the window of opportunity closes.
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PROCESS PHASE THREE: DECISION TO ADOPT

High-lnnovation

Organizations

It would seem that this third phase is the simplest. The group completing the feasibility study presents a proposal to management based on the study and gets a go or no go decision. In fact, this phase is subject to the greatest number of stumbling blocks.

Low-Innovation

Organizarions

Below is a list of just some of the adoption problems found in low-innovation organizations: The advocate is isolated from the feasibility-study group and is forced to negotiate one-on-one with a single superior. This creates a situation in which power and personality rather than the data from the feasibility study, determine the resources allocated to the project. . The advocate receives no formal commitment from the organization. Tentative permission to proceed is given, with equally tentative resource allocations that may be withdrawn later as new resource or political pressures emerge. Normally the advocate leaves the organization under these conditions. The go-ahead is given without clearance of the necessary resources. The project withers from insufficient support.
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In high-innovation organizations, the results of the feasibility study are first reviewed informally but always are followed up with a formal decision. Thus an opportunity exists for early dialogue, with time and support for building modifications into the proposal to increase potential for organizational acceptance. This interactive review process is neither a one-shot, go or no go review of a final proposal nor an endless review process. It is normally a one- to three-meeting sequence. The reviewers role is to help make proposals more feasible and not an opportu-

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nity to play critic. Reviewers have an obligation to see to fruition a number of proposals so that the overall innovation effort is not stultified. Since consensus is rare, some formal voting mechanism (such as ratings, rankings, or gradings) is used to aggregate the review committees judgment. No single reviewer, as a minority critic, can veto any project. He or she, however, can simply register a dissenting - but not necessarily overriding - opinion. Advocates from the feasibilitystudy group expect to incorporate modifications and do not demand that the purity of the original proposal be maintained. Mutual adjustment rather than hard bargaining among study group members is the norm. These adjustment, decisions are arrived at through group dialogue (both the reviewer group and advocate group are involved) to avoid petty personality conflicts and power games. Projects that need more than minimum resources to be done well are not put on starvation diets that doom them to a slow death. A critical mass of human and financial support is essential to success. Projects are reviewed periodically within a common time frame to allow for quality comparisons. The decision to adopt moves the

proposal forward with a clear organizational commitment to the implementation design and makes the risk an organizational one. The advocate does not carry the entire burden of possible failure on his or her shoulders. Should the results of implementation be disappointing, the advocate is not used as a scapegoat. The project was, after all, a shared organizational judgment. Indeed, in excellent companies good humor and reassignment with full dignity follow the failure of risky projects.

PROCESS

PHASE

FOUR:

IMPLEMENTATION

One might think that at this stage implementation is automatic. After all, hasnt the feasibility study and design provided an action plan ready to be carried out? Of course, it is not that simple. Low-Innovation Organizations

Two reasons cited for failure in the stories from low-innovation organizations are under-resourcing (which we have already addressed) and its opposite: trying an immediate, large-scale, direct implementation. This error is not organizational hesitance. Rather, it is a delusion of grandeur:

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Projects that need more than minimum resources to be done well are not put on itarvation diets that doom them to a slow death. A critical mass of human and financial support is essential to success.

Lets implement directly, immediately, and on a large scale. Lets commit a great amount of resources to assure success.n Unfortunately, the assumption of predictability upon which a direct implementation is based is almost always a fantasy. When the inevitable glitches occur, or when performance is unfavorable, the error is compounded as the organization throws more money at the problem to save face, even in light of negative evaluation feedback. This tendency to rush. in prematurely with direct, large-scale implementation efforts seems to be the result of a strong psychological urge to remove the cognitive dissonance associated with risk taking. It turns out to be exactly the wrong strategy most of the time and doubles the tendency for later scapegoating, since a great amount of resources were squandered before adequate feasibility data were obtained.
High-Innovation Organizations

High-innovation organizations, by contrast, begin with a small, controlled pilot study conducted by early adopters. The enthusiasm of early adopters (who often are advocates) allows them to be patient with glitches and to contribute to as well as support the necessary product modifications and organizational adaptation needed for new innovations. In the worst possible scenario -a test that proves to be a failure-a small pilot study permits the organization to withdraw the innovation with little loss of either face or resources, since commitment is limited in a pilot. In other words, pilot studies help maintain the attitude that the initial implementation is clearly experimental and the results will require further modifications before direct, large-scale implementation can occur. Even where the results are favorable, considerable qualification must occur

during the pilot as a prelude to later largescale implementation. For example, in a small-scale pilot: The product or service is debugged in the supportive atmosphere of early adoptors who want the innovation to succeed, are patient with trial-and-error learning, and assist in problem solving to work out glitches. The types of training materials, support services, instructional manuals, and so forth, that will be needed become clear. Time is available to develop these materials for customers. Further, service manuals can be prepared to specify practices necessary to deal with weaker or more eccentric aspects of even a good first-generation product or service. Modifications are made to make the product or service more user friendly. Experimentation leads to variations in design that can be offered in later product generations and will enlarge the range of options available to different users, thus enlarging the potential market. Estimates of service and assistance requirements develop so that maintenance and service cost estimates will be realistic. The pilot allows for organizational adaptation and market research, which support later technological transfer and broadscale marketing. It is always difficult to find the golden mean between adequate testing time and organizational adaptation and lost market opportunity. However, only one change is given to make a first impression; rushing in with a poorly performing product and inadequate support for customer orientation, maintenance, and service may prove deadly.
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SUMMARY In high-innovation organizations, special funds earmarked for research and development are used to support experimental activi-

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ties. A special committee accepts or rejects an innovators proposal and undertakes a feasibility study. The feasibility-study team uses a marketing orientation to determine if a real customer need exists and how it may best be met. By the time a proposal reaches the adoption stage, the advocates original idea has been modified by input from study-group members. The project is given an adequate funding level and is monitored and audited on a regular basis. Finally, implementation takes place first on a small scale so that, in the event of failure, a minimum amount of resources will be lost. Essentially, successful innovation depends on a companys willingness to commit the necessary time, money, and leadership to research and development. In the simplest terms, the difference between highand low-innovation organizations is that the latter are willing to follow up and follow through on behalf of new ideas.

SELECTED

BIBLIOGRAPHY

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Two classics deal with innovation as a process. The first is the major work by Everett Rogers titled Diffusion of Innovations (Free Press at Glencoe, 1962). Two decades have passed since its publication, but this book still offers the most lucid portrayal of innovation as a phased change that occurs over time. On the organizational side, Gerald Zaltman et al.s book titled lnnouations in Organizutions (John Wiley & Sons, 1973) gives particular attention to the relationship between management structure and the change process. This is our favorite source book for understanding the interplay between structure and process -or phases in innovation. The following sources deal with organizational factors in innovation: Innovation,

Integration, and Marginality: A Survey of Physicians (American Sociological Review, October 1960), by Herbert Menzel; The Speed of Response of Firms to New Techniques, (Quarterly Journal of Economics, May 1963), by Edwin Mansfield; and Big Steel, Invention, and Innovation (Quarterly ~ournaf of Economics, May 1966), by Walter Adams and Joel Dirlam. Examples of studies that have further explored the idea of cosmopolitanism in innovation are Sociometric Location and Innovativeness: Reformulation and Extension of the Diffusion Model (American Sociological Review, April 1970), by Marshall Becker; Hospital Adoption of Innovation: The Role of Integration into External Informational Environments (Journal of Health and Social Behavior, April 1978), by John Kimberly; Organizational Cosmopolitanism and Innovativeness (Academy of Management Journal, June 1983), by Thomas Robertson and Yuram Wind; and A Contingent Approach to Strategy and Tactics in Project Planning (American Planning Association Journal, April 1979), by John Bryson and Andre Delbecq. Two important studies on information processing and innovation are External Communication and Project Performance: An Investigation into the Role of Gatekeepers (Management Science, November 1980), by Michael Tushman and Robert Katz; Communication Across Organizational Boundaries: Special Boundary Roles in the Innovation Process (Administrative Science Quarterly, December 1977), by Michael Tushman; and Managing the Flow of Technology (MIT Press, 1977), by Thomas Allen. Finally, The New Science of Management Decision (Harper & Row, 1960), by Herbert Simon and Determinants of Innovation in Organizations (American Political Science Review, March 1969), by Lawrence Mohr are pertinent works on decision making and innovation.

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