How Can Corporate Policies Best Encourage Innovation?

PolicyEvery company—from startup to Fortune 500—needs policies designed to safeguard the enterprise from employee behaviors that could cause problems. For example, they all need anti-bribery, collusion, ethics, social media and proper computer access policies, according to HR consultants. But what about corporate “green” and “quality” policies? Sometimes these policies have become overwhelming. What’s next? Proper bring-your-dog-to-work policy? It wouldn’t exist as a liability to think I jest. But do I?

Regardless, in hyper growth startups and other companies that rely on knowledge workers, the agenda for these value makers must remain as clear as possible. However, sometimes intellectual property (IP) creators inside companies get bogged down and cannot concentrate on the next breakthrough due to redtape. Bottom line: a corporate policy day of reckoning remains overdue.

Corporate Policies Backfire

While startups enjoy a bias for their ability to act nimbly unencumbered by a legacy of over-legislated company procedures in the opinions of many—especially tech company CEOs—others in the IP field differ. They feel that large enterprises also share this ability—at least until corporate bureaucracy gets involved.

“I have observed large multinational corporations that did not have extensive policies and processes, and their workers were entrepreneurial and empowered,” says Cary A. Levitt, chief operating officer, Dennemeyer & Co., LLC, a worldwide partner in IP management with both legal and portfolio services. “They were trusted to use their judgment to make decisions. When the business environment became more competitive, the company implemented detailed decision-making processes. Each decision had to be vetted by one or more panels. Bigger the decision, deeper the assessment, longer the timeline.”

This strategy backfired, according to Levitt. Workers became reluctant to bring ideas forward. And what innovative thoughts they did put forth got overburdened in a dispiriting review process—irrespective of whether they were approved—Levitt relates.

“Consequently, employees retreated to their offices,” he says. “Rather than innovate, they were determined to not create waves.”


Negative Consequences of Wave Action

Indeed, misguided policies can create negative consequences for those who would make waves within the corporate body of water, according to experts. In fact, during recent interviews with 40 executives at different large corporations, creative thinking consultant Susan Robertson found that blowback from failure to toe the company line remains one of the top two reasons for inability to innovate.

“Most people I interviewed were honest about the fact that they desperately need creative thinking, but it is stifled in their organizations,” Robertson says. “Reasons why were shockingly consistent—mostly due to systemic barriers that unintentionally demotivate creative thinking. The nature of any large organization creates powerful barriers to creative thinking.”

For example, the design director at a big consumer goods company told Robertson that creativity in face of corporate policy inertia compares to pushing an elephant up a hill. But at the conclusion of every day, the elephant always ends up back at the bottom of the hill, Robertson relates.

“Potential risks of thinking creatively seem to outweigh risk of continuing to do things the same way they’ve always been done,” Robertson says. “So there’s not only no motivation to think creatively but also motivation not to think creatively.”

Upon Further Review

Unwinding an overabundance of corporate policies can be difficult but worth it. However, instead of getting in this situation in the first place, a better answer remains not arriving there at all. This process includes adjusting and reviewing existing policies before they become inflexible and deadening, according to Levitt and others. In fact, some believe that corporate policies should have integration into the creative process of IP-driven companies because they can contribute to overall effectiveness of the organization when they don’t offer resistance.

“We firmly believe that frictionless flow of information within an enterprise is necessary for innovation to thrive,” says Niraj Jetly, chief operating officer, Nutrisavings, a program that helps healthcare and wellness providers educate consumers on healthy eating. “At the same time, standard corporate policies such as HR, IT, security and legal are extremely important to maintain checks and balances.”

Nutrisavings revisits policies and procedures periodically, revising them with an eye toward corporate governance and breeding new ideas, according to Jetly, such as during a recent design challenge exercise. Otherwise, Nutrisavings simplifies regular policy updates and compliance through an annual review and employee sign-off, Jetly relates.

Policy: One for All? Once at All?

While some organizations insist on annual corporate policy acknowledgment by employees, HR consultants feel that one time remains enough for personnel to affirm receipt and acquiescence. Of course, with any policy changes a new worker acknowledgment of the revision must also occur, according to Peter Rosen, president, HR Strategies & Solutions, an HR consultancy. Also, in his view, stale corporate policies can have an adverse effect on a company’s effectiveness and collective mindset—potentially the most important intangible among biofuels, virtual reality (VR) gaming, wireless and other innovation companies.

“Productivity can be negatively affected by morale, so policies need to be reviewed with an eye toward impacting morale,” Rosen says. “For example, one of my clients was having managers—exempt employees—punch the time clock because one of them abused the system. This affected the morale of the rest of management.”

Eventually—later than sooner—the CEO changed this requirement, then dealt with that one abuser, who was ultimately terminated, according to Rosen. Takeaway: unwieldly corporate policies cannot substitute for adroit executive decision-making.

Unpaid Innovation vs. Highly Paid Ignorance

Obviously, corporate policies also cannot replace how your company should find its next employees to staff your intellectual property-driven enterprise. Because innovation companies need to trust their workers to make the best decisions based on their talent and experience. Two vignettes of social media policy failure and success can illustrate this principle.

In the category of social media failure, UK retailer HMV underwent layoffs in 2013 but did not secure its Twitter account from fired employees. It so badly prepared for the 190-plus redundancies—60 of which existed in HR—that incensed staffers live-tweeted the meeting where the sackings became known—not to mention set up a hashtag for it. In fact, an unpaid intern created HMV’s Twitter account, and the director of marketing had no idea how the social media process even worked! Unpaid personnel show innovation but no judgement; highly paid upper management absent knowledge and judgment.

“HMV trusted its social media accounts to employees who lacked emotional intelligence to filter their comments during layoffs,” says Mark S. Babbitt, CEO and founder, YouTern, a social resource for young professionals, and author A World Gone Social: How Companies Must Adapt to Survive. “The result? A firestorm that required hundreds of man-hours to mitigate—and at least momentary loss of marketplace credibility.”

‘Be Real and use Your Best Judgment’

So where is the balance? How do companies create and enforce a social media policy that protects the brand while also enabling employees?

The answer could lie in the example of online retail innovator Zappos. According to Babbitt, Zappos leads with a simple yet powerful social media policy summarized by seven words: Be real and use your best judgment.

“Zappos knew building trust is far easier than exerting false control,” Babbitt says. “They bet that hiring the right people—and then trusting them to do the right thing—was a far more productive way to manage social media use by their employees. And the policy has served them well. Many Zapponians have served the company as brand ambassadors during their employment.”

And according to Babbitt, if you cannot trust employees with Facebook and Twitter, your problems run far deeper than mere corporate social media policy.


Warning & Disclaimer: The pages, articles and comments on do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of

Join the Discussion

7 comments so far.

  • [Avatar for Anon]
    January 8, 2017 02:05 pm

    You most definitely are not. You are also assuming that “military conflict” must be a large scale, declared war effort when no such assumption is warranted.

  • [Avatar for Benny]
    January 8, 2017 10:18 am

    Not 1945? What was it then? Maybe I’m not up to speed in military history.

  • [Avatar for Anon]
    January 8, 2017 10:09 am


    While the US has had mixed results, it is clearly untrue that the “won the toss in a military conflict” was 1945.

    While the group that you “could mention” (it isn’t that difficult to figure out), is noteworthy, you impugn your credibility attempting to make your point.

    Rather needlessly so.

  • [Avatar for Benny]
    January 8, 2017 02:07 am

    The last time the US won the toss in a military conflict was 1945. The US military system is not flexible. I could mention a certain military organization which has a reputation for coming out on top. In that organization, familiarity between lower and higher ranks is encouraged, to the point of first name terms, and when a commander is absent or incapacitated, the subordinates are encouraged to take over on their own volition.

  • [Avatar for Randy Smith]
    Randy Smith
    January 6, 2017 10:08 pm

    Great article. No more is this a problem than in highly regulated sectors such a medical devices and the bigger the company the worse the problem. I have witnessed a company where the Quality Manual (rule book) grew to become so proscriptive that it became the “playbook”. Innovation became virtually non-existent and product development suffered greatly. To top that off, without restructuring the organization, there is no turning back.

  • [Avatar for gene]
    January 6, 2017 10:31 am

    the MBA term is “decentralized decision-making authority”. successful companies do it.

  • [Avatar for Edward Heller]
    Edward Heller
    January 5, 2017 04:43 pm

    What one needs is to allow the people closest to a problem the ability to fix it.

    I recall a discussion comparing Soviet military doctrine with that of the United States. They: top down planning. We: every commander has flexibility.

    Prediction, the US would win every conflict.

    The origin of this doctrine were the Prussians who learned from their defeat at the hands of Napoleon. Auftragstaktik is what it is called.

    So, give the company a mission, but let the lower level commanders/managers, complete flexibility.