While innovation sounds cool, most innovation-centric business models assume the availability of infinite resources. In reality, most enterprises face resource-crunch and significant barriers. 

Gartner’s 2019 Technology Innovation Strategy Survey lists the top five barriers to innovation as:

• Employees focused on immediate goals (30%)
• Employees resistant to change (28%), which aligns to cultural factors
• Compliance restrictions (27%)
• Executive resistance (25%)
• Lack of funding (24%)

Contextual issues force more constraints. 

Smart CIO’s adopt a realistic approach to innovation by factoring in such constraints and co-opting plans to overcome barriers.

The Top Management’s Focus on the Immediate and Risk-Aversion

Many decision-makers focus on the immediate or short-term, tangible benefits. They prefer a lower but immediate reward to a higher but unproven or uncertain reward at a later, uncertain date. Top managers, having many things on their plate, rarely prefer to rock the boat with unproven disruptions. Many of them prefer a conservative approach of “if it ain’t broke, don’t fix it.” Most enterprises do not reward risk-taking, and the fear of failure becomes a big deterrent to innovate. 

Innovation requires leaders with charisma and vision. It thrives with transformational or transactional management styles. 

CIOs and other champions of innovators would do well to adopt the following tactics, to overcome the constraint of risk averseness and get the top management to allocate the required resources:

• Adopt an incremental approach: Take things one step at a time, so that the results are not too distant. Business realities in today’s fluid external environment demand flexibility and adaptability. An incremental method embeds such flexibility and adaptability into the scheme. It offers the added benefit of learning from mistakes, co-opting the latest and new technologies midway.
• Focus on “Low-Hanging Fruits” First: Focus on low-risk low-cost goals that deliver tangible value, to get started. Use success as a proof-of-concept to pitch for more resources from the top management. But do not lose sight of the original goals or the big picture while whetting down the goals. The low-risk goal adopted should make up a part of a larger whole.
• Work methodologically: Illustrate specific innovation goals in, say 18 months. Visualize goals in a constraint-free environment. Next, whet down the goals or expand the timeline, factoring in each constraint. 
• Set realistic expectations: Fix realistic and achievable waypoints. Accept and admit risks. Focus on the rewards of the risks, rather than give false hopes.

Funding Issues

Innovation will remain a non-starter unless the ones who hold the purse strings support it.

Absolute lack of funding is an issue for enterprises running in loss or those who have overdrawn their lines of credit. But for enterprises running in profit, and for those with a start-up war chest, constraints mean mismatched goals. Availability of resources is a matter of priorities manifested by the top management. 

Many enterprises fall into the trap of “performance funding,” withholding funding after a single failure. The top management regard success in quantitative terms, disregarding institutional complexity. They disregard the unique challenges posed by different social and cultural environments. The role of the CIO is to convince the top management about such factors and build a strong case against performance funding for innovation.

Smart innovators work within constraints, while side-by-side work to remove the constraints. They adopt methods such as Bricolage, bootstrapping, and cooperative arrangements with early adopters, to optimise available resources.

The Cultural Equation

Often the biggest constraint to innovation is the cultural barrier.

A bureaucratic organizational set-up, and a culture of “permissions and approvals” is a big barrier to innovation. In many enterprises, employees waste too much energy and time on meaningless reports and statistics. 

Innovation requires a shift from such an “assessment culture” to a culture of qualitative performance. 

Innovation thrives in the soil of transparency, openness, and free sharing of information. It works best with:

• a flat and hierarchy-less organizational structure 
• empowered employees, where employees have considerable work autonomy
• accountability, where each individual assumes ownership of their work.

CIOs need to take the lead in promoting such a culture and enlisting top management support for the same.

The Rank and File’s Resistance to Change

Reluctance to change is a significant constraint to get innovation moving.

Employees generally resent anything that disrupts their cosy ecosystem. Most of them view any change initiative with suspicion and insecurity.

CIOs and other champions of innovation have to: 

• Engage with stakeholders and build relationships. Convince them of the value of the innovation in the language or approach appealing to them. 
• Make innovation fun. Position innovation as a way of doing things differently, to break the monotony of work. 
• Curate and spread stories on how innovation will benefit everyone. The first questions many people ask when faced with a change or something new is “what is in it for us”
• Be realistic on what to expect from the workforce, without expecting miracles 

An indirect way to promote a culture of innovation is through diverse hiring. Prolonged exposure to foreign cultures offers a whiff of fresh air, which sets the stage to do something new.

Compliance Restrictions

The biggest constraint may not even be anything to do with the enterprise, or in the enterprise’s hands to overcome. Laws and regulations may stifle innovation. For example, India’s Patent Act allows third-parties to produce generic medicines out of patented formulas. While this improves the accessibility of costly drugs to the poor, it stifles innovation. Data protection laws restricting data storage locations improve security but inhibit innovation. Procedural laws which straitjacket businesses improve safety and protect customers, but stifle innovation.

There is no way to overcome these challenges. CIOs have to look at creative ways to innovative while remaining within the spirit and letter of the law. They have to factor in such constraints when planning for innovation. 

The Context

There is a case for changing the approach to innovation and the wider management concept surrounding it. The entrenched models worked in the context of a rising and affluent North American middle class in the 1950s to 1980s. Such models may not always be relevant today. Effective innovation requires adopting benchmarked models to local sensibilities.

Consider MJunction – an e-auction firm launched by Tata Steel and SAIL, two Indian conglomerates. The management team benchmarked the internal processes of eBay and also to two other European e-auction firms that went bust. They developed an innovative business model based on such processes. But they fine-tuned it to the Indian context through trial and error. The knowledge gathered during the exploration phase became valuable when tailored to the local market. Factoring in the “customer pain” of the targeted customers became the hit factor. 

Successful innovators persist and never give up. Innovation in a resource-constrained environment is often a game of patience and persistence. Those who persist deliver improved performance, growth, and more profits for their companies. Low-cost, innovative business models that do not put a strain on resources is the way to go.