Silo Mentality and the Not-Invented-Here Syndrome Kill Innovation - How to Deal With Them in Big Companies?

He brought the idea to Western Union, who at the time was the king of telegraph wires in the US. This partnership would seem like a good fit, but Western Union scoffed at the idea, calling Bell’s invention a “toy.” Later, as we now know, Bell disrupted the communication industry.

This story is just one of the many examples of the Not-Invented-Here (NIH) syndrome, an attitude that places lesser value on ideas or innovations that come from outside the company.

NIH syndrome has a surprisingly large impact on innovation. In fact, it is one of the most commonly cited reasons sfor disregarding otherwise-good ideas.

Another issue stifling innovation is the silo mentality, a mind-set that prevents the sharing of information between different departments within the same company. A poll conducted by Netguru revealed that 37% of respondents believe corporate culture and silos to be the biggest barriers to innovation.

How do we combat these issues? We spoke with two innovation officers to see how they minimize the destructive effects of these attitudes that stifle innovation and the spread of knowledge.

Barbara Liebich-Steiner is the Chief Digital Officer at UNIQA Insurance Group. Headquartered in Austria, UNIQA comprises about 40 insurance companies operating in 18 countries in Central and Eastern Europe.

Barbara Fuchs is Head of Business Model Innovation at Ivoclar Vivadent, one of the world’s leading dental companies offering integrated solutions for dental professionals. The company is based in Liechtenstein and has subsidiaries in 30 countries.

Tomasz Grynkiewicz: Is the NIH Syndrome really so common or is it just a buzzword? Do you observe it at your workplace?

Barbara Liebich-Steiner: Yes. I believe it is commonplace - I think every big company has experienced it. When you try to change something at a company, you are seen as a virus, to use a metaphor, and as we know, viruses are not very popular. They attack and influence the system. But there are also good viruses that make you healthier, improve your immune system, and allow you to withstand bigger challenges.

My main goal as a Chief Digital Officer at UNIQA is to change the mindset of the people within the company to facilitate digitalization. And this change can only work for the better.

Barbara Fuchs: At Ivoclar Vivadent, we sometimes experience the NIH syndrome.

Therefore, NIH is not very much of an issue.

How do you deal with it? What’s the start?

Barbara Liebich-Steiner:

We conquer the NIH syndrome by involving people from both inside and outside the company.

We started this initiative called “New Way of Working” where we facilitate formats like the “NWOW Garage” to bring in people from all parts of the company and all levels with their ideas and we work on them together. We show them in practice how their workflow can improve if they do cross-functional tasks, if they communicate and cooperate with others on a daily basis, and use certain methods that can help them get new ideas tested earlier.

We also have “Voice of the Customer” evenings where we invite customers to speak. Everyone from the company is welcome to participate. It's heartwarming and very effective for our processes to see how customers are willing to engage. They tell us what they expect us to do better and what kind of products they would like to see. And the even more interesting part is how strongly people inside the company are impacted by listening to real customers giving honest feedback.

Barbara Fuchs: In the early stages of the innovation process, we focus on including many ideas and provide transparency regarding which ideas will be followed up internally and with external partners. We have introduced a process that allows every employee to submit ideas, which get evaluated and everyone receives constructive feedback, explaining why we are moving forward with the idea or not. We try to be transparent and have good reasoning on why certain ideas get funded and others don’t. We believe that trust, transparency and more informed decision making helps to gain the needed organizational support for both internal ideas and those that might have been introduced from the outside.

How do you mitigate the risks of rejecting innovation just because it comes from outside of the organization?

Barbara Liebich-Steiner: I have similar experiences with middle management being hostile to external ideas. Actually middle management is frightened the most because any change makes them look like the biggest losers. As they have organized their field to their liking, they are the ones with something to lose. So when you challenge the way things work, they stand up to defend it.

In every transition, one of the key factors in making it successful is getting the middle management on board, and there are several ways to do it. One of the ways we do it at UNIQA is the “Garage” initiative which I mentioned earlier, where people from all structures within the company meet and work together.

Then they go back to their units and share the outcomes with their teams. Over time, as more people get to like to work in a new way and build up innovation, the middle management has to decide whether to accept this change and make it their own or reject it. And if they reject it, then the company has to decide if that’s the kind of middle management it wants to have.

Is it necessary to engage the C-level executives? Do you need to have their support behind innovation?

Barbara Liebich-Steiner: I think you do need C-level support if you really want to change something.

To go back to the virus analogy, if you let the virus into the organism — here the company — usually the “immune system” of the company is strong enough to kill it, unless the virus has C-level protection and can thrive to make the whole organism stronger and healthier.

At UNIQA, the CEO publicly announced that the group was going to spend €500 million on digitalization. It was all over the media. Everyone in Vienna knew about it, and that understanding was crucial to getting everyone within the company on board and making sure the change really happened.

Barbara Fuchs: I like this approach as well, although it doesn’t work for everything. For example, our Research Technology team is more isolated since they are working on emerging technologies that are not ready to be introduced to the market on a large scale yet, such as augmented reality. Business model innovations often include introducing digital services and smart solutions. Such innovations are at the forefront of cross-departmental collaborations and need to be organizational spread across global processes rather than isolated to achieve digital transformation and market success. The biggest challenge is to find the right balance!

Working in isolation also bears the risk to not perceive what is happening in relevant industries and markets. There is another very important aspect.

To screen for new technologies and understand their relevance for our own competitive advantages, a concept often called absorptive capacity.

It means being able to detect what is relevant and how to transform this from the outside to the inside to maintain and foster competitive advantages.

For example, among our biggest assets are our clinical and technical dental knowledge, but not necessarily the development of software. Nonetheless, digitalization is of utmost importance to us and we have to decide how to acquire this relevant knowledge and in which form. Investment or collaboration can be rewarding strategies depending on the market goal. We are open to external knowledge, but at the same time filter and check what value it can bring us.

Many companies isolate their innovation teams and give them a high degree of autonomy. Do you believe that’s the way to go, or should these teams work as closely as possible with other units, such as business and technology?

Barbara Liebich-Steiner: If the innovation team is given a high level of autonomy, the resulting products and services will probably come faster and be better.

To truly achieve digital transformation, the innovation team should be in the middle of everything, working closely with other departments.

That’s UNIQA’s approach. And in order for it to work, the team needs C-level protection, because it is not easy to survive there.

Barbara Fuchs: I like this approach as well, although it doesn’t work for everything. For example, our Research Technology team is more isolated since they are working on emerging technologies that are not ready to be introduced to the market on a large scale yet, such as augmented reality.

Business model innovation includes introducing digital touchpoints, digital services and smart solutions.

Such innovations are at the forefront of cross-departmental collaborations and need to be organizational spread across global processes rather than isolated to achieve digital transformation and market success.

The biggest challenge is to find the right balance!

The biggest challenge is to find the right balance. Our biggest asset is our clinical and technical knowledge, but not necessarily the software, and we get approached by software startups offering us to collaborate. We try to stay open to their knowledge and external point of view, but at the same time filter and check what value it can bring us - this is known as absorptive capacity.

I asked about isolation because part of the challenge for corporate innovation is the silo mentality. What are your tips for breaking up the silos?

Barbara Liebich-Steiner: The company needs to have a sense of urgency and, as Barbara Fuchs mentioned, it’s hard to have it if the company is well-established. When things are not going well, everyone joins forces because there is a common goal: To survive. Once that danger is gone, teams naturally go back to working in their silos.

Thus, the way to break silos up is to generate a common sense of urgency in the company.

The impact of the rapidly-changing corporate environment and consumer behavior, aka the VUCA (volatility, uncertainty, complexity and ambiguity) world, gives enough reason to be anxious.

This has the additional benefit of making everyone rethink the way they work and consider how they might work better in the future. It’s not easy, it needs C-level support and good communication so everyone in the company knows what’s happening. It’s not a quick process. It can take years.

Barbara Fuchs: One very important thing is to have someone in the company whose job is to make sure that each silo, each department contributes to deliver the solution. These positions are referred to as “orchestrators” or “change managers.” The person needs to have sufficient understanding of the skills and competences of every silo, and they have to be able to listen to people, understand how they talk and what they need, and make sure that everyone is on the same page. It’s a challenging but crucial role in every organisation.

Our innovation team delivers solutions, builds up new portals, and tries to implement new ways of working. We work closely with all our subsidiaries because the diversity makes us strong, and working cross-functionally helps us break up silos.

Something I found helpful is focusing on the minimum viable product. This creates a success story for everyone involved.

Once you have the MVP, then you can focus on just improving it.

Tips for breaking up silos:

1. Involve people

Make people from both inside and outside the company part of the disruption.

“We show [employees] how their workflow can improve if they do cross-functional work, if they communicate and keep people informed, if they work together and use certain methods that can help get new ideas tested earlier.”

Barbara Liebich-Steiner

2. Evaluate each idea

“We have redesigned the way we manage ideas. We have introduced a process that allows everyone to submit ideas which go through an evaluation process and everyone receives feedback, explaining why we are moving forward with the idea or not. We try to be transparent, and at the same time have arguments that we can present across all departments for why certain ideas get funding and others don’t.”

Barbara Fuchs

3. Get C-Level support for change

“If the innovation team is given a high level of autonomy, the resulting products and services will probably come faster and be better. However, to truly achieve digital transformation, the innovation team should be in the middle of everything, working closely with the other departments. For this to work, the innovation team needs C-level protection, because it is not easy to survive there.”

Barbara Liebich-Steiner

4. Generate a sense of urgency

“When things are not going well, everyone comes together because there is just one goal: To survive. Once that danger is gone, teams naturally go back to working in their silos. Thus, the way to break them up is to generate a sense of urgency again. This has the additional benefit of making everyone rethink the way they work and consider how they might work better in the future.”

Barbara Fuchs