Taking ideas to market is key to successful innovation: Josh Lerner

Author Josh Lerner tells Ankita Rai that innovative organisations are not those that rely on a single person, but rather on structures and processes

How can you have an architecture of innovation when the whole concept of it rests on free flow of ideas?
One of the characteristics of knowledge is that it flows - ideas can rarely be contained within a single company or a nation for long, and even formal protections such as patents have limits. But this makes an architecture for innovation even more important. Firms cannot expect to simply come up with ideas on their own, but must be adroit at absorbing innovations from elsewhere. This requires an effective R&D organisation with appropriate incentives.

What are the pre-requisites to foster a culture of innovation in companies?

We often think that innovation is simply a matter of coming up with powerful and creative ideas. Great ideas are surprisingly commonplace. The real key is translating these into the marketplace. The Architecture of Innovation focuses on understanding these critical elements, drawing from both case studies and more systematic studies.

Why are some companies good at innovation while others are not?
There is a natural tendency to attribute effective innovations to a great man, whether a Henry Ford or a Steve Jobs, and clearly, vision and leadership do play an important role in boosting innovation. But in the long run, the most innovative organisers are not those who rely on a single person, but rather on an organisational structure - from the right financing choices to proper decision-making processes to proper incentives for researchers - that maximises the chance for success in developing and commercialising new ideas.

In the book Architecture of Innovation you have said innovation can be managed. Do incentives play a role in this?
Corporations face two barriers when trying to get incentives right. The first is a desire to not discourage co-operation - a research laboratory features people from different disciplines working together. If implemented incorrectly, an incentive scheme may lead to researchers hoarding ideas, and not cooperating with each other. Therefore, companies should reward researchers working as a team.

Second is a concern about equity: a fear that high rewards to one innovator will breed discontent if they exceed the pay packages of those around them. These worries are legitimate, but too often they become excuses for corporations to continue offerings flat incentives schemes with minimal added rewards for those who create great value. In a few instances where a corporation has offered uncapped rewards for important discoveries, a valuable breakthrough has sometimes led them to abandon their inventive scheme - in at least a few instances, before paying the innovators what they promised. This is a recipe for unhappy researchers and defections.