Knowing what innovation strategy is right for your organisation is important because it defines the purpose of an innovation effort. Getting a definition of innovation to which everyone will agree is equally important, as doing so sets the tactical boundaries innovators will stay within whilst they try to deliver the strategic goals that have been set.
But there’s another thing you have to work out before you start innovating, and that’s the kind of role you want the innovators to play. Are they active participants in the process of creating new things? Or are they, instead, the stewards of an “innovation culture” in which things happen without much central intervention. Indeed, is there really any need to have a formal group of innovators at all?
It is to these questions that we’ll now direct our attention.
Firstly, let us examine the idea of an “innovation culture”. The “culture” discussion is another of those thorny innovation issues which will probably engender significant argument in any organisation.
The question really boils down to this: is innovation part of everyone’s day job, or is it something which should be handled by a central team?
Some argue a truly innovative company has a culture of support that ensures new things happen by themselves. In such organisations, the argument goes, you don’t need a central innovation team at all, because individual employees are empowered and motivated to make the kinds of changes their firm needs to stay competitive.
To be honest, I am yet to see any organisation with a culture that does this.
Many companies who say they want an “innovation culture” fail to take active steps to make things happen. They imagine that, with creative enough employees, they will get innovation for free.
It’s important to remember people have day jobs, and quite likely it is day-job activity on which they are measured. Unless you can couple innovation to these core activities, you’ll probably get little more than lots of ideas that go nowhere fast.
This is very common. Managers expect innovation and encourage it via employee engagement events, or internal suggestion boxes, or other mechanisms. With their new innovation “initiative” launched, they fail to take the next step: the provision of a framework to support execution. Then, everyone wonders why their innovation efforts don’t deliver.
Almost anyone can dream up great ideas, but there are far fewer people who actually have the skills to take those ideas and turn them into something useful to their organisations. By failing to address this fact, proponents of “culture” as the solution to “innovation” are making the suggestion that it’s possible to get measurable and predictable results through what amounts, essentially, to doing nothing.
If you are going to have an “innovation culture”, you must find ways to encourage employees as they pursue activities which are probably outside their formal performance management regime.
One role the innovation team can take on, then, is as the arbiters of the framework that supports an innovation culture. In this scenario, the innovation team fosters and manages an environment that supports other people in the firm who wish to be innovative.
Innovation teams taking the role of arbiters generally perform certain activities. They will likely provide skills training for employee, coaching them in methods they can use to attract funding for new propositions. They may deliver mentoring and guidance to managers who need to foster the innovations of their employees. And, most importantly, they’ll probably provide insight for senior executives, who, busy with day to day operations, must be prompted to continually give their employees permission to do things out of the ordinary.
Such innovation teams have a considerable challenge in front of them, because although they do not directly control the outputs of the innovation process, they will certainly be measured on them. In most cases, if the role of the innovation team is to be an arbiter of culture, results will take quite a bit longer than when they participate in the process directly.
At the other end of the spectrum is a scenario where the innovation team is centrally involved in the generation of innovations themselves.
Central innovation teams are a model well adopted in many industries, from pharmaceuticals, where research and development budgets tends to be held by large business units dedicated to the purpose, to banking, where there are likely to be a few smaller new product development teams. Even in Government, there’s increasing reliance on central innovation teams to drive efficiencies and cost savings.
It’s easy to understand why. Central teams are easy to set up and much less difficult to measure than diffuse arrangements that rely on an “innovation culture. It is easy to point at them and say “that’s how we’re doing innovation”. They make executives feel good about their innovation efforts, because when you can nominate specific individuals and assign accountability for actions, you know things are likely to get done.
Now, in this model, the innovation team is the group that decides how and when to innovate. They ordinarily control an investment budget of some kind, and are accountable for making investments that drive forward the innovation agenda. If they are any good at all, they will sign up to some big return numbers that can justify the money they’re given.
But there’s a problem with a central innovation team that does everything: in order to get more innovation, you have to add more people. This doesn’t scale, and here is why.
For most new things, the difference in effort required to get an organisation to do something radical versus something a little more incremental isn’t all that great. You still have to do all the influencing, the management of politics, and of course, the finding of the money.
Incremental innovations, though they tend to be relatively risk free compared to their radical cousins, don’t generally make big returns individually. You need to be doing a lot of them before you make a sizable difference to any metrics which are material to the larger business as a whole. With a central team, you often find the individual incremental innovations don’t pay for the time of the innovators.
By contrast, doing things which are more radical provides better returns, but at a much greater risk level. This makes it seem sensible for innovators to select radical innovations for their portfolio. Given the choice of almost certainly not breaking even, and at least the chance of a big payoff, most teams will select the latter.
Obviously, longer term, both choices lead to cancellation of an innovation programme, because the moment Innovation Euphoria wears off, stakeholders examine the opportunity costs of the innovation investment. In light of relatively paltry returns from an incrementally focused team, and potentially sizeable failure costs from a radically focused one, the business case for innovation may not stack up.
Innovation groups which have lasted the test of time have worked out they need the continuity that comes with making predictable returns for their firms. To do so, they generally create a portfolio at scale: large numbers of incremental innovations which pay the bills for a small number of radical ones.
Once teams recognise scale is the key to predictability, it is only a small step further to understanding that for most organisations, a central team responsible for everything to do with innovation probably isn’t the best idea.
One answer advanced innovation teams generally arrive at is participative innovation. This is a model where much of the day to day work of getting an innovation from idea to production is done by the employees who came up with the idea in the first place.
The innovation team contributes by providing a framework for execution, usually embodied in some kind of self-service infrastructure that reduces their hands-on time to the lowest possible level. The team will tend to ramp up its involvement in the latter stages of progress, once it looks like the idea will go somewhere and just needs that final kick to be turned into something real.
By running innovation in this participative way, the central team is able to have involvement in far more projects simultaneously. Furthermore, the investment they must make in each innovation – certainly at the beginning at least – is much reduced. This gives them liberty to be involved in a significant percentage of the incremental ideas, as well as the big, game changing radical ones.
Leveraging participation in this way means the overall scope of control for a central innovation team increases geometrically – not linearly – with each new innovator added. This is a result of network effects. One new innovator can influence many more participative employees, who in turn influence their own workgroups to participate as well. In the end, you get far more done.
So much for the role innovators will play in the overall innovation process. The next question needing resolution is the choice of an individual to lead the team.
This is particularly important, because whether you are running a central innovation team with a participative agenda, or a distributed innovation function with a mandate to shepherd an innovation culture, everything that happens next will devolve from the particular mentality the innovation leader brings to the table.
One option is putting an entrepreneur in charge, someone with proven capability to start and run new ventures. Such an individual knows everything about working on a shoestring and matching limited resources to big problems. He or she has proof they can turn an idea into something that works, because they’ve done it before.
An alternative is hiring someone with lots of experience managing portfolios of projects but not much depth in the intricacies of making individual projects successful. Someone who’s more like an investor than a project manager.
Most people, given this choice, would hire the entrepreneur before the investor, reasoning the former will at least drive successful outcomes in the few things they choose to focus on. It seems an easy, low risk choice.
But the easy choice is not always the best choice.
Entrepreneurial innovation leaders are always highly motivated to make a few pet projects successful. That is how they’ve made a name for themselves in the first place, generally. They’ve taken a good idea, and through personal heroics, made it into something worthwhile. Usually, their whole careers have been built on a few lucky breaks, backed up with solid, long term effort.
Individual heroics are all very well, but most things innovators try will not work no matter how much effort is invested. The entrepreneur accepts this, and knows they should quit at an appropriate moment in order to start working on their next big thing. They live in the hope that this time they will have a big success.
For an innovation leader in a corporate organisation, though, this is potentially the worst strategy possible. Because innovation programmes last about 18 months, driving a small number of projects sequentially means you run out of time way before you have decent results.
I once worked with an innovation team where everyone was working on only three big ideas. Now, individually, each of these ideas was fantastic, potentially disruptive, even. There was every chance they’d succeed with a little bit of luck. Great ideas, good execution and a little bit of luck is all that any innovation really needs to be successful, actually.
But it is the luck part which is the problem. Whilst you can control – to a degree anyway – the ideas and the execution, luck is entirely random.
Unfortunately, despite everything (including massive individual heroics), the three ideas didn’t turn out so well. One didn’t scale to decent revenue quickly enough, so it was cancelled. The second, though it started to create good returns, was terminated because it became obvious it was cannibalising existing business. The third, sadly, got cut because the innovators stepped on the toes of someone important by accident.
All these cancellations made the team look like they weren’t creating value. It was an easy choice for the firm to cancel the whole programme the next time it was necessary to find cost savings.
This story illustrates why hiring someone with an investment mentality is a good idea. Such individuals have an intuitive understanding of the fact that the real game in innovation is avoiding concentrations of risk. Three big ideas are much more risky than 30 small ones, especially when you consider most innovation teams average 1 success for every ten things they try.
Case Study
At the Department for Work and Pensions in the United Kingdom the innovation team is building a participative innovation framework. The idea is connecting employee ideas with systems that permit those same employees be innovative themselves.
This approach is relatively recent. Previously, the innovation team adopted a very centralised model, where it was accountable in its own right for developing unique propositions, without much in the way of interaction with anyone else. As is usually the case for teams working this way, the innovators suffered scale issues: they were only able to work on a few new things at once, proportionate directly to the number of people assigned to the team.
In 2009, however, the landscape changed. It was increasingly clear that traditional approaches to cost cutting and efficiency generation would not, in themselves, result in the kinds of savings the Department needed in the wake of the global financial crisis.
The innovation team were asked to ramp up their efforts to find radical ways of doing things. Some additional resources were provided to them, but it was obvious the old approach wasn’t going to scale up to big enough returns to meet the challenge on the table.
Moving as much of the innovation process to the employees with the best ideas seemed an obvious way to get more to happen, more quickly. One of the main tools employed is a web site the team calls “Idea Street”.
Idea Street is a web site on which employees can leave their ideas, vote on the ideas of others, and communicate in a very interactive way with everyone else in the Department who has something positive to add.
Those ideas voted highly by the community are usually the ones the innovation team spends its time working on. By the time they’re doing so, an employee led team will generally have formed around the idea, and the input from the innovators is more in the way of guidance and support, rather than direct interventions.
Early results from this approach have been overwhelmingly positive. Employees have responded in a highly engaged way, going so far as to work on their projects outside their normal hours of work.
The biggest advantage of participative innovation at the Department, however, has proven to be the breadth of ideas captured, which range from minor operational changes to wholesale reform of core business. This diversity has provided the innovation team with fertile ground from which to construct a portfolio of activity.
Dr. James Gardner is a career innovator and is part of the management team at
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