Internal and external investments are equally crucial for an innovation ecosystem

Rather than a linear, top-down approach in which leaders choose projects for teams to carry out, innovation has become more of an "ecosystem" activity, in which leaders build an environment that fosters innovation, then sit back and let it happen.

Despite giving up some control in the ecosystem model, leaders still play a significant role in ensuring the success of their organization's innovation initiatives, based on how they construct the ecosystem itself. Perhaps the most important steps they can take, according to the Harvard Business Review, are to implement workflows for both internal and external innovation.

Building a strong internal innovation team is the first step. In this realm, the team should be given permission to take risks by spreading out investments across less-established ideas and projects. Per HBR, "for this process to work, leaders have to accept that not all projects will work — some will fail."

While internal projects typically make up the bulk of an organization's innovation initiatives, external investments are still crucial, since they allow an organization to capitalize on the best ideas being generated outside their walls. The best way to identify and accelerate those ideas, according to HBR, "is to work with these startups by providing a collaborative platform that allows the best ideas to gain traction."

This dual approach to innovation "is the best way to respond to a competitive, ever-changing environment," the HBR analysis concluded. "If leaders want to build a sustainable growth engine for the company, they need to create the right conditions for the best ideas to get picked up."

More articles on innovation:
New healthcare-focused blockchain company seeks to merge innovation, AI
How Apple helped inspire Stanford's new hospital
'I find myself in the Twilight Zone': How Saad Chaudhry balances tech integration with quality care

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