Nice article that I came across recently:

Barriers to Innovation

There are no easy answers or formulae for creating a creative or innovative organizational climate. There are two ways to approach innovation. One is to understand the 'barriers' to innovation and to look for solutions.

'Fear'
Fear is the number one enemy identified by most CEOs and managers. Fear of failure. Fear of ridicule. Fear of decision-making. Fear of making mistakes. Fear of taking risks. Fear about job security. Fear of change. As one CEO said, "Fear freezes." Interestingly, in many cases 'fear' may not be real and it could be the employee's lack ownership and courage that is the barrier.

'Bureaucracy'
Needless 'red tape' stifles new thinking and fresh approaches. Even in the best of companies 'red tape' lurks about in some form or shape.

'Silos and Turfs'
Individual fiefdoms prevent collaboration and experimentation. This is especially true if it involves new ways of working, unwillingness to share power or responsibility, and rewards.
In this environment empowerment is a mere lip service and there is no intellectual acceptance of the benefits of innovation. Inherently, the CEO does not believe that it will help the company or if it is really needed. In these cases, the CEO says all the right things about need for innovation, but he doesn't do anything about it.

'Unrelenting Pressure to Produce Results'
This type of environment often leads to the tyranny of the 'either or.' Either you can be innovative or you produce results. Here innovation is not relevant unless you can summon it on demand and produce short-term results.

'Right Hand / Left Hand'
In the 'right hand doesn’t know what the left had is doing' environment an idea that works in one area is seldom replicated across the company. The NIH - Not Invented Here - Syndrome is another tough enemy. Size breeds distance. As companies grow they lose touch with customers, employees and people who can give them ideas. They lose the ability to listen.

'Poor Leadership and Commitment to Innovation'
If the CEO does not have time for innovation, you can be sure that nothing will happen. Much depends on how the CEO demonstrates his commitment to innovation. What he says and does in this context will be more powerful than the speeches he makes. How does he respond to new ideas? How does react to ideas that may not have occurred to him? Is he willing to let other people get the recognition and reward for innovation? Is he really passionate about it? Is he willing to change personally to make this happen? Is he willing to put his neck on the block, or put his money where his mouth is to support innovation?

'Breaking the Barriers to Innovation'
Breaking the barriers to innovation is really about changing "what we believe and how we behave." It is not about a few fancy creativity workshops or employee suggestion systems.
It requires a band of believers and evangelists who are determined to make the shift - no matter what happens. It requires people who are willing to challenge old ways and break a few rules in the bargain. Instituting an innovation culture can be senior management's greatest challenge - but it can be done. Unilever's successful approach to creating an innovation culture has been recorded in the book 'To the Desert and Back.'

(Extract of an article by R. Sridhar in 'The Hindu Business Line,' April 1, 2004.