Innovation success more than big ideas

Doing innovation in Australia is hard due to the unwritten rules for those pursuing this creative pathway.

Companies prefer incremental innovations because these have low risk and are easy to manage. Here are the four rules that secretly bind corporate innovators and what to do if you want to break out of them.

Don’t innovate across departments

Every industry has problems that insiders know are solvable but cannot be solved.

These problems, such as tracking material through a mine from pit to port, are known high-value problems. But getting every manager in the company’s process chain to agree is nearly impossible. This is because their bonuses are tied to beating last year’s production by a small percentage, and they don’t want to jeopardise that target.

Someone always loses when you try to innovate across department boundaries and this loser will fight to stop the change.

If you want to innovate bigger you’ll need to go up the hierarchy and find someone who is responsible for the whole system. Just beware that they’ll likely trust the existing managers over the brash innovator who wants to go bigger. If you want their buy-in, you will need to make a highly convincing business case to them.

But they must also be the kind of executive who is willing to take a large amount of risk.

Support existing revenue streams

Big corporations exist to protect whatever reliably makes them money.

New ideas can create entirely new revenue streams. Imagine a resources company inventing a new way of collecting sensor data, or an automated approach to handling materials. These inventions are generic enough that they could become products of their own. Sadly, managers won’t get bonuses for creating new and different revenue streams.

This means improving existing revenue streams will always be chosen because they align with management bonuses and seem easier.

If you stubbornly want to create a new revenue stream anyway, then you will need to create a department focused just on this new product where the staff are rewarded by the products’ growth.

Stay inside the innovation team

Innovation teams are the worst place to be if your idea is big, but the best place if you want an interesting job.

That’s because these teams act as hubs for every idea the company has, and these ideas can be extremely distracting. Your big idea will take many years to become valuable, but it’s your job to experiment with other ideas that are coming in. Over time, you’ll lose your resources to the other small emerging ideas, and slowly the big idea will grind to a halt.

Get out and form a new department as quickly as you can.

Don’t change the risk category

Some innovations are so big and lucrative that a listed company should refuse to do them.

This seems unlikely given that a company’s primary objective is to make money, but it’s due to how companies are exchanged on the stock market. When an investor buys a stock, they are getting access to a certain amount of risk, and they will buy a whole bunch of stocks to spread their risk across the market. A transformational innovation could completely change the risk category of a company.

For example, imagine going from a mining company to a robotics company. If the innovation changed that company’s risk category, many shareholders would sell, even if the transformation made money.

If you are going to affect the risk category then you must get the board talking to the shareholders early. Otherwise the CEO of the company will shut it down before it gets too big.

Now you know the rules. I hope that you will find ways to break them. Go out and make some big innovations.

• John Vial has a PhD in robotics and has spent the past several years leading teams in major Perth businesses focused on AI and robotics