Anybody remember "Home Run Derby" from the '60s? Big-name sluggers paired off in a made-for-TV competition and competed for cash by seeing who could hit more home runs. In business—which, these days, is largely about trying to hit balls out of the park—the widely held assumption is that the up-and-comers are going to walk off with all the cash. In "Home Run Derby," though, established star Hank Aaron won just about every competition. And I, for one, don’t see why established companies can’t do just as well in business today.

Now, Motorola has had its share of whiffs. But we’ve batted close to .400 in the past decade in attempts at major innovations, and some of those hits have been tape-measure home runs.

We’ve succeeded by establishing a thorough series of processes that let us find ideas, test a wide range of them, and incubate them properly. These processes aren’t easy, but they can be translated to just about any large organization. So, to stand up for the older stars of the business world, I’ll lay out our approach:

CULTURE: We foster a culture of innovation at all levels, beginning with new-employee orientation and continuing through training for senior management. New employees are taught, for instance, about Dan Noble, who pioneered the shift from AM to FM radio (making possible the two-way radios that Motorola developed in the 1940s and ’50s). Technologists are encouraged to aspire to become one of our Dan Noble Fellows, positions that carry substantial perks. All employees are told that, to become an officer of the company, they have to create a legacy by producing an important innovation.

New officers attend our Vice President Institute, a one-week seminar that emphasizes innovation and legacy. Executives hear of Homer Mars, who in the 1950s tried to move Motorola from car radios to car heaters. His electronically controlled gasoline heaters were a bad idea—recirculating engine heat turned out to be far more economical. In fact, his heaters never really worked. Worse, many caught fire. Yet Mars went on to become president of the company. The story is taught so officers know they are to reward good tries, even if they fail.

Bob Galvin, the retired chief executive, who is still chairman of the board’s executive committee, tirelessly emphasizes that every idea should get some financing and be explored.

FINDING IDEAS: Inside the company, we encourage minority reports (we should be doing X, but aren’t). Outside the company, we maintain relations with numerous universities and have active venture-capital operations. We also have substantial business-intelligence activities, which tell us when other companies invest in new opportunities that we should be considering.

We encourage cross-fertilization of ideas by having the venture-investment scouting and business-intelligence activities report up through the same management structure.

DEVELOPING IDEAS: We prefer not to finance ideas as presented. Instead, we use them as starting points for systematically exploring a series of related technical, market, and business-model options. This process, which we call business engineering, can take from months to years. At each iteration, we reject the poor choices and pass the remainder on for further refinement.

This is different from our normal planning process for existing operations. First, developing new ideas is an uncertain process. Rather than seeking the best solution at each stage, we "satisfice"—meaning, we seek a good enough solution and move on. Second, we develop a somewhat vague range of options and continually reformulate our thinking about them, rather than elaborating in great (but imaginary) detail on a single scenario. Our process tends to cause acute discomfort among mainstream middle management, newly minted MBAs, and controllers, but we insist on it.

Eventually, with ideas that we’re going to turn into businesses, we should arrive at three things: The first is a simple, one-paragraph statement of the proposition and why our company is positioned best to develop it. We need this paragraph to explain the idea to management and to Wall Street, and to recruit people for the project internally. Second is a simple and robust economic case that shows a range of acceptable returns over a range of likely scenarios. Third is a list of what the proposal is not. This is an indispensable guide during the start-up phase. To paraphrase the Army Corp of Engineers slogan, "It is hard to remember the mission was to drain the swamp when you are up to your neck in alligators."

INCUBATING NEW BUSINESSES: Even the strongest new plan is likely to fail if entrusted to an existing business operation, where managers are just too caught up in their day-to-day business. So we’re developing "greenhouses," where a new business spends its first few years until it’s mature enough to stand on its own. By being kept separate, a new business can focus on its own plan rather than be squeezed by corporate financial concerns. The business can also build its own subculture. Senior managers are put on advisory boards and participate in milestone meetings, letting them see the greenhouse business directly, rather than through intervening levels of management.

There are some drawbacks. Greenhouse businesses can’t automatically draw on other corporate resources. And the new organization may develop "spoiled child" syndrome, given its access to senior management and generally high profile. The corporate parent must monitor the new business through hard operating reviews.

In the past decade, we have turned ideas into 11 new lines of business. Four have been unequivocal successes. They have produced hundreds of millions of dollars of profitable revenue and currently have several billions of dollars of orders. You have likely heard of one of those successes because it provides the technology for the GM Onstar, Ford Rescu, and Mercedes Telaid navigation/communication systems. Four are clear failures. The remaining three may or may not succeed. (I put the Iridium satellite telecommunications network in this category because it could still work, even though many people have written it off as a failure.)

We’ve drawn a few hard lessons from the failures. An effort to read utility meters remotely failed, for instance, partly because our partner viewed it merely as something to have if a customer requested it but not something to market aggressively. So, we’re going to be more careful about any partner’s intent.

Our first attempt in telematics—the combination of telecommunications and computing technologies in automobiles—failed because the federal government put forward a flawed technical vision for the system, and we simply didn’t question that vision. We should have known better. So, we’re going to apply more common sense in our business-engineering phase.

Despite the failures, our batting average is better than the best in major league baseball and far superior to success ratios in venture-capital portfolios. Like Aaron, we plan to keep the home runs coming.

Istvan is a senior vice president and general manager of future businesses for Motorola. He can be reached at rudyard.istvan@motorola.com.