Professor Rajesh Chandy imagines a world where innovative companies are the norm, explaining how to achieve it with six key traits.

1. WHAT IF ALL
Professor Rajesh Chandy imagines a world where
innovative companies are the norm, explaining how
to achieve it with six key traits.
COMPANIES WERE
INNOVATIVE?

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INNOVATION – SAVING THE WORLD?
Imagine if the world’s biggest problems, such as poverty,
global warming and disease, were solved by businesses
as a matter of course. We should imagine conditions like
these, because if all companies had innovation in their
DNA, they’d have the power to do just that.

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CROSS OUT YOUR BELIEFS – START AGAIN
Economists believe that R&D expenditure drives radical
innovation. Legal scholars think intellectual property’s key,
geographers believe countries and regions are and sociologists
will tell you that national culture and religion make a big difference.

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THE POWER OF THE MIND
In fact, what matters more than common beliefs are
‘cultural universals’ – cultural traits that drive innovation.
The next three traits all exist under the mind-set and
attitude umbrella of innovative companies.

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FUTURE MARKET FOCUS1
To what extent do senior decision-makers in a company focus
on the customers and competitors of the future, relative to the
customers and competitors of today? This is the most important
of all the cultural traits in driving innovation – if you have any
takeaway, let this be it.

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WILLINGNESS TO CANNIBALISE2
Innovative companies are more willing to eat their own lunch:
they are willing to reduce the value of investments that they
themselves have built. Who killed the Apple iPod? Apple did.
Cannibalising could involve reducing the value of products,
manufacturing, distribution channels, or skills.

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TOLERANCE FOR RISK3
Managers in innovative companies are more tolerant of risks.
But how do these companies guard against catastrophic risks?
First, they develop portfolios of products: some are radical and
risky, but most are relatively safe bets. Second, they don’t take on
all risky bets themselves, they seek external help.

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PRACTICES: THE POWER OF SYSTEMS AND PROCESSES
The next three traits are practices associated with the
day-to-day activities of innovative firms.

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INCENTIVES FOR ENTERPRISE1
Innovative companies offer more rewards for innovation. Rewards
don’t just involve money: they can involve recognition, autonomy,
and greater career progress. Moreover, incentives in innovative
companies are asymmetric – the rewards for success are higher
than the punishment for failure.

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INFLUENTIAL CHAMPIONS2
In firms that innovate, product and process champions flourish.
These individuals are typically good communicators and
gregarious in nature, with wide networks, and broad interests.
And they are doggedly persistent.

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INTERNAL MARKETS3
Ask how much internal autonomy your company offers.
Innovative companies, especially large ones, tend to promote
internal autonomy and internal competition. They resemble
marketplaces for ideas.

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Case studySummary
WHAT IT TAKES
If ‘cultural universals’ are what it takes for companies
to become innovative: could innovation save the world?
That’s another debate.

13. The full blog post was published on
London Business School Review online.
Visit the website: www.london.edu/lbsr