Note: this was originally posted on Harvard Business Review Blogs, with terrific editing by Sarah Green Carmichael.

Sometimes, the problem that we think we’re solving isn’t the real problem that we face.

I was running a workshop with a multinational engineering firm when I ran into a perfect example of an air sandwich, which illustrates this point.  This dangerous obstacle to innovation is described by Nilofer Merchant in The New How as “the empty void in an organization between the high-level strategy conjured up in the stratosphere and the realization of that vision down on the ground.”

The firm is facing some challenges.  Much of the work in their industry is becoming commoditized, and their margins have been shrinking.  Furthermore, the amount of work they were winning dropped off significantly during and after the global financial crisis.

They have responded to these changes in their competitive environment and have started to position themselves as the most innovative firm in their market. But because the industry’s margins are so low, this strategy carries real risk. Backing up this claim will take significant investment to build the skills they need.

And yet the potential rewards are also significant.   If they do become the most innovative firm in their market, they will be able to build long-term relationships with clients instead of transactional ones, charge a premium because they deliver better work, and possibly even start winning work outside of the bidding process.

I’ve been teaching innovation courses to groups of their both their senior and future leaders for a couple of years now to try to help them build this innovation capability.

The chart below shows the responses to a questionnaire I administered called the Innovation Value Chain survey, and it demonstrates what an air sandwich looks like in practice. The bars reflect how two teams of managers, a senior team and a junior team, rank this firm on the five stages in the innovation process – idea generation, selection, and implementation, as well as sustaining innovations and diffusing them.  Higher scores on the scale of 1-3 mean that they believe they are stronger in those areas.

This is a fairly typical profile of innovation capability within a large firm.  They are very strong at generating ideas.  Their weakest areas are idea selection and implementation, and they are adequate at sustaining ideas (keeping internal people engaged throughout the process of making the idea real) and diffusing the new ideas more widely.  (One good sign: if you rank the five skills from the strongest to the weakest, the two teams have identical lists despite the gap between the two teams’ scores.)

So why does the senior team rank the firm a lot higher than the junior team in all five areas?

I’ve gotten a few different suggestions in response to this question, including:

• The senior team is delusional.  They believe that they have great innovation capabilities, but this is not true on the ground.
• The junior team is ignorant.  It might be that they simply don’t know what’s going on inside the firm.
• The scores reflect differences in autonomy.  The senior team might be more optimistic because they have more control over the process.

In this case, I think all three answers are partly true.  The junior team didn’t know about a major R&D initiative that the firm was undertaking.  And there are clear differences in autonomy:  When the junior team gave presentations to some of the senior team outlining their ideas for improving innovation, the results were not good – the senior bunch shredded the ideas.  This tells me that their perception that the senior team is out of touch with front-line realities is probably pretty close to accurate.

The problem with an air sandwich like this that it can kill an innovation initiative before it even gets started.  Gaps like this between those that formulate strategy and those that execute it will make it incredibly hard to implement new ideas.  This is one of the reasons that it is almost impossible to just add some innovation into an organization, without changing the culture.

Merchant’s argument is that the best way around this is to develop systems that allow strategy to be created collaboratively.  She writes:

“The same few problems crop up, over and over again. We limit participation in strategy creation based on title and rank rather than relevant insight. We insist on lobbing strategy over the wall to the execution team without creating a shared understanding of what matters and why. And we reward individual accomplishment because it is easier than rewarding co-ownership of the ultimate outcomes.”

There are three key points to this story:

1. Top-down strategy is dangerous.  When one group creates the strategy and expect another bunch to implement it, the result will be an air sandwich.  The consequences of this are that strategies that may be great on paper die on the ground. Expanding the number of people that contribute to strategy creation is one good way to avoid this problem.
2. Innovation and strategy are tightly linked.  Merchant is focused on strategy creation, but the same issues are true for innovation.  Innovation works best when everyone in the firm is involved with creating and executing the ideas that will drive the firm to success.
3. Our problem isn’t always obvious.  The firm right now thinks that they have an innovation process problem, but they’re really facing a strategy problem.  If they change the way they make strategy, they will start to get different innovation outcomes.  And that will make it easier to realize their strategy.

Making changes like this is never easy. The firm faces significant challenges. And their ambition is to re-make their industry – a bold, yet risky goal.  They can improve their chances of reaching it not just by improving their innovation skills, but also by getting more people involved in creating their strategies and plans.

First, they need to get rid of that air sandwich.