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The Role of Internal Politics in Stifling Innovation in Large Companies

While fostering innovation should be a core priority for any large organization seeking to remain competitive in today's rapidly changing global market, internal politics within large established companies often serve as one of the most commonly cited barriers to disruptive innovation.


Today we will explore the research on how internal politics can stifle innovation efforts in large organizations and provide practical strategies leaders can implement to minimize political barriers and create a culture where innovative ideas can flourish.


Political Barriers to Innovation: A Review of the Research

There is a strong research base documenting how internal politics within organizations can undermine innovation initiatives. Several key themes emerge from this body of work:


  • Fear of Disruption: Employees higher up in the organizational hierarchy tend to resist innovations that could disrupt existing structures, processes, or business models they are invested in (Christensen, 1997). This creates a self-interest in maintaining the status quo rather than embracing potentially game-changing ideas.

  • Resource Allocation Battles: Innovations often require funding, personnel, and other resources that must be directed away from existing projects and teams (Kanter, 2006). This inevitably creates political maneuvering as different internal stakeholders vie for limited resources.

  • Turf Wars: Relatedly, innovations may threaten or overlap with the mandates of existing divisions or business units, triggering turf wars as political actors seek to defend their perceived territory and influence (Christensen & Raynor, 2003).

  • Bias Towards Incrementalism: Politically powerful actors often only endorse low-risk ideas that build incrementally on the past. Radically innovative concepts that present greater uncertainty tend to be marginalized (Kanter, 2006; Leonhardt, 2009).

  • Prioritization of Short-Term Over Long-Term: With quarterly reporting pressures and an ever-changing organizational landscape, political players are incentivized to demonstrate quick wins over speculative initiatives with longer time horizons (Tushman & O'Reilly, 1997; Christensen, 1997).


Overcoming Political Barriers through Organizational Design

Given these strong tendencies for internal politics to inhibit game-changing innovations, leaders must proactively shape organizational structures, processes, and cultures that minimize these barriers. Some effective strategies include:


  • Establish Separate Innovation Units: Physically or organizationally distinct skunkworks can develop breakthrough ideas insulated from day-to-day political pressures (O'Reilly & Tushman, 2004; Christensen & Raynor, 2003).

  • Clear Innovation Priorities and Targets: Senior leaders must clearly articulate innovation goals and hold internal political actors accountable by linking key performance indicators to achieving these goals (Tushman & O'Reilly, 1997).

  • Resource Autonomy: Dedicated funding streams, personnel pools, and decision rights minimize resource-based innovation "turf wars" (Kanter, 2006; Christensen & Raynor, 2003).

  • Multifunctional Teams: Cross-divisional collaboration exposes ideas to diverse perspectives while diffusing "ownership" that fuels political battles (Sull, Tedlow & Rosenbloom, 1997).

  • External Partnerships: Partnering with startups, universities, governments, and other external stakeholders on innovation initiatives helps bypass internal barriers (Leonhardt, 2009; Chesbrough & Rosenbloom, 2002).

  • Flatten Hierarchies: Flatter, less siloed structures empower middle managers and individual contributors to champion innovations without navigating complex approval processes vulnerable to politics (Christensen, 1997; Leonhardt, 2009).

  • Champion/Sponsor Support: High-level executive sponsors promote innovations by using their political capital to overcome resistance and allocate necessary resources (Christensen & Raynor, 2003; Kanter, 2006).


While no single approach is a silver bullet, a portfolio of these types of structural and cultural countermeasures can help inoculate organizations against the tendency for internal politics to derail game-changing innovations.


Case Study: Overcoming Political Resistance at 3M

As a practical example, the innovation strategies employed by industrial product giant 3M provide a case study in systematically mitigating political barriers. Founded in 1902, 3M now generates over $30 billion annually across multiple business segments ranging from healthcare to electronics to transportation (3M, 2021).


Despite its massive size, 3M has long emphasized innovation through its dual business model of core operations alongside independent "skunkworks” units granted significant autonomy (Leonhardt, 2009). Notable early innovations like Post-it Notes emerged from these freewheeling skunkworks units with flexible charters.


3M also allocates 15% of revenues annually towards R&D through a decentralized funding model giving business units independence over research agendas and budgets. Independent "R&D councils" set company-wide technology roadmaps to coordinate efforts while keeping politics at bay.


Additionally, 3M purposefully maintains a flat organizational structure minimizing layers of bureaucracy. Product ideas can spread organically across the company through cross-collaboration programs and informal networks. This bypasses political impediments in rigid hierarchies.


Overall, 3M’s model has nurtured a culture where innovative risk-taking and constant experimentation are celebrated rather than penalized. While incremental improvements remain priorities, radical innovation also receives dedicated cultivation. 3M has successfully translated this approach into one of the highest patent portfolios in the world, pioneering industries from aerospace materials to health technologies.


Case Study: Overcoming Political Resistance in the Pharmaceutical Industry

Another context ripe for applying strategies to minimize internal political barriers is large pharmaceutical companies. As in other sectors, tremendous industry pressures exist to maximize short-term returns while developing new blockbuster drugs requires immense long-term investments facing huge failure rates.


One pharmaceutical leader proactively addressing this challenge is GlaxoSmithKline (GSK). In recent years, GSK redesigned R&D into a network of decentralized innovation hubs globally with enhanced autonomy over resources and priorities (Wong, 2019). This helps circumvent political tug-of-wars at the centralized headquarters level.


GSK also launched venture capital arms and startup incubator programs to support external partnerships generating entirely new streams of science outside traditional in-house barriers. Over 200 such partnerships now fuel GSK's pipelines (GSK, 2021).


Crucially, GSK refocused senior executive incentives away from short-term financial metrics toward long-term innovation metrics like progress in experimental drug candidates and new scientific domains entered. This better aligns political interests with strategic priorities.


Early results suggest GSK's moves are bearing fruit. Multiple promising drug candidates have emerged from the restructured organizations, including vaccines for HIV, RSV, and other diseases. Investors have also rewarded the renewed commitment to breakthrough innovation lifting GSK's stock value 30% since 2016 reforms began in earnest (EvaluatePharma, 2021).


Conclusion

Fostering disruptive innovation should be a top strategic priority for any large established company seeking to thrive amid accelerating industry change. However, internal political dynamics often naturally serve as strong headwinds inhibiting creative ideas that challenge existing structures or priorities. Leaders must become acutely aware of these tendencies and proactively implement structures, processes, cultures and performance management systems that systematically counteract political resistance to innovation. Strategies like independent innovation units, multifunctional teams, external partnerships, flatter structures and revised executive incentives can help minimize these barriers when thoughtfully implemented together as part of an overarching innovation framework. Through diligently applying such countermeasures, even sprawling organizations like 3M and GSK have demonstrated how political barriers inhibiting innovation can be overcome. With the right organizational design choices, any industry leader retains the ability to cultivate a climate where breakthrough ideas can take root and flourish.


References


 

Jonathan H. Westover, PhD is Chief Academic & Learning Officer (HCI Academy); Chair/Professor, Organizational Leadership (UVU); OD Consultant (Human Capital Innovations). Read Jonathan Westover's executive profile here.



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