Small Companies, Big Ideas

3. Do rapid prototyping. McDonald's puts ideas through rapid prototyping that can last as little as one day. "What we try to do is to get from the blackboard to 3-D as fast as we can," says Koziol.

4. Create an internal incubation fund. Xerox sets aside funds that encourage employees to network and chase ideas that otherwise wouldn't have a budget. "We're interested in thinking of new ideas that are different from ones we're currently funding," Kavassalis says.

5. Take it online. Idea management software is automating the innovation process. "Everybody can contribute all the time," says Anthony Warren, director of the Farrell Center for Corporate Innovation and Entrepreneurship at Penn State.

Most of all, focus on innovation from Day One. "Then," Warren says, "you'll have more ideas than you can deal with."