A lot has been written about companies attempting to develop cultures that stimulate innovation.  After all, the more innovative a company is, the more diverse their future streams of revenue, the better able they are to serve their customers, etc.

But how do you institutionalize innovation?  How do you put the genie IN the bottle?  A lot's been written on the topic, but few companies have figured it out.  I'd venture to guess that if you want a culture that's innovative on a day-in, day-out basis, you probably need to start with the hiring process.  Making sure your talent has the ability to innovate on the front end isn't perfect, but it sure beats trying to make the donkey fly after you hire the donkey.

If you think about the companies in America that are doing the best job at stimulating innovation, Google would come to mind, the primary reason being the oft-referenced "20%" rule that allows engineers to spend 20% of their time working on ideas and concepts that might pay off in the future.

Of course, if you allow that type of unfocused spend to occur and don't do a good job indexing what's being created, you risk the idea of products, services and future competititors walking out the door with IP that you funded.  With that reason in mind, Google is attemping to get better at evaluating the fruits of the 20% rule.

More on innovation at the Googlenator from the Wall Street Journal:

"Google Inc. is revamping how it develops and prioritizes new products, giving employees a pipeline to the company's top brass amid worries about losing its best people and promising ideas to start-ups.

The Mountain View, Calif., company famously lets its engineers spend one day a week on projects that aren't part of their jobs. But Google has lacked a formal process for senior executives to review those efforts, and some ideas have languished. Others have slipped away when employees left the company.

"We were concerned that some of the biggest ideas were getting squashed," said Google Chief Executive Eric Schmidt in an interview.

Google can no longer afford to let promising ideas fall by the wayside. The Internet search giant's once-torrid growth has slowed. At the same time, it faces fresh competition from Microsoft Corp.'s new search engine, Bing, and start-ups such as Twitter Inc., which was founded by former Google employees.

In response, Google has recently started internal "innovation reviews," formal meetings where executives present product ideas bubbling up through their divisions to Mr. Schmidt, Google founders Larry Page and Sergey Brin, and other top executives."

Interesting development at Google.  It's natural that the processes come in behind the period of astronomical growth and once growth has slowed.  Just ask Microsoft.