From the March 2007 issue of Entrepreneur

Inside a 24,000-square-foot warehouse in Romeoville, Illinois, a team of 70 McDonald's employees is hard at work testing new equipment ideas and procedures that could be implemented in McDonald's locations around the world.

The Romeoville facility is the company's Innovation Center and includes three McDonald's restaurants that can mimic the menu, volume patterns and operating systems of stores worldwide. A few thousand ideas were tested last year, and about 15 made the cut for deployment throughout the chain. "For a company like ours to remain appealing to customers around the world, we can't afford to relax and play it safe," says Ken Koziol, McDonald's senior vice president of worldwide restaurant innovation at the Romeoville facility.

Most entrepreneurial companies can't afford an innovation center, but they can apply some of the principles. Here are five strategies that can work for you.

  1. Combine ideas. Xerox Corporation looks for intersections between ideas and how they might merge. "Several ideas could get combined in a next-generation offering," says Tom Kavassalis, vice president of strategy and alliances for the Xerox Innovation Group, which drives Xerox's R&D-based innovation.
  2. Think backwards. McDonald's innovation team thinks in terms of "backcasting"-starting with an end product in mind and working back toward the basic idea in a way that's practical from a cost and technology perspective.
  3. Do rapidprototyping. 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 proc-ess. "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."

Chris Penttila is Entrepreneur's "Smart Moves" columnist.