In this article we consider the formal, tactical domains within the innovation framework. These are actions that the executive team can implement quickly, and have long lasting impact. These formal actions include designing and forming an innovation team and process, and defining specific innovation governance criteria. Defining an innovation team or process is often done quickly, without deep consideration to longer term objectives. Many firms fail to create any innovation governance whatsoever, and so struggle to evaluate innovation outcomes and fund or resource innovation activities.
Well-defined processes and functions allow innovation to function
Businesses are organized around well-defined processes or functions to improve efficiency and to define work-flow. Traditional processes such as “order to cash” define how the business receives customer orders, provides a product or service and receives payment. Business functions, such as legal, marketing, or information technology, provide supporting services to key business processes. These processes or functions exist to define work-flow and increase productivity. Yet innovation is often conducted in an ad-hoc manner or at best is poorly defined and articulated. As the ability to innovate consistently grows in importance and becomes vital for business success, it must become a well-defined function or process with trusted tools and methods. Sustained innovation requires the development of a defined structure and the definition of an innovation function.
Deciding the form of your innovation structure
As there are many different innovation strategies and needs, there are many different forms of innovation structure, ranging from a corporate center of excellence to distributed teams of innovators working in business functions, product groups and geographies. Executives must define the scope and reach of innovation, and determine the best structures and processes to promote and sustain innovation. Further, they must welcome new tools and methods to accelerate innovation within the newly defined innovation function.
Executives tasked with innovation must define a clear innovation structure or team which answers the questions:
- Who is responsible for innovation within the organization?
- What techniques, tools and methods will they use to sustain innovation?
- What innovation workflow or processes must be developed and defined?
- How do innovation team members gain skills?
- What are the expected outcomes or results of an innovation team or function?
Defining the innovation framework
Linking strategic goals to innovation goals, and then linking both to defined innovation frameworks creates more context, reduces risk and ensures a much greater likelihood of achieving innovation without distracting the organization or disrupting operations. Every important business function has a team that sustains the activity – a purchasing team sustains purchasing activities, an accounts receivable team defines and manages inbound receivables. What team defines and sustains innovation?
As the team is defined, it must quickly establish the work flow to sustain innovation. Innovation is process, not simply an activity that begins and ends with idea generation. Defining the entire “end to end” process for innovation, the work flow and associated roles, is critical in this step.
Configuring needs thinking through well
The size, shape and reporting location of an innovation function is dependent on a number of strategic needs and situational factors. There is no one “right answer”. The configuration of the function must be determined based on existing capabilities and needs, and may shift over time from more centralized to more decentralized as the organization gains innovation skills.
A well designed innovation function increases transparency and consistency and increases the chance of success. Establishing “how” and “where” innovation will be accomplished, and how it will be sustained and supported provides continuity. A defined function enables a team to build skills that can be sustained and improved over time. Designing for explicit innovation and having in place effective structures is crucial.
The crucial role of Governance
The Capgemini report referred to previously in our articles opens a section on innovation governance with the following statement:
Given the strategic importance companies allocate to innovation it is remarkable that few companies have organized innovation in the mature fashion it deserves. …may innovation bottlenecks can be solved by establishing a formal innovation governance structure that deals with issues such as internal alignment, prioritization, funding and the balancing of long- and short-term objectives.
Considering how closely most organizations monitor, measure and define most business activities it is often astounding to see how little governance is applied to innovation activities. Again, quoting the Capgemini study, less than 20% of the executives surveyed felt they had an effective set of KPIs for innovation, while 54% have no formal innovation indicators or measurements. If we believe the old adage that “what gets measured gets managed” then clearly innovation isn’t being managed effectively.
In brief, what makes up Governance?
Innovation governance is a system of mechanisms to align goals, allocate resources and assign decision-making authority for innovation, across the organization and with external parties. Senior executives must establish frameworks for prioritizing innovation activities as well as develop appropriate funding mechanisms for innovation activities and finally, establish a balance between short term demands and long term needs. Executives must establish clear innovation objectives, goals, milestones and metrics and create a formal reporting and evaluation process. Further, executives must allocate the necessary resources and delegate the decision making authority to the right individuals to ensure innovation success. Finally, innovation governance must indicate the appropriate amount of risk, uncertainty and organizational change that is acceptable in any innovation effort. Defining innovation governance is a top management responsibility. Innovation governance must define both content and process of all innovation activities taking place within the organization.
Governance is essential to any innovation initiatives
Any significant initiative that lacks appropriate governance is difficult to measure and manage, and is unlikely to be sustained over time. Lacking a strong governance framework, managing innovation activities is difficult and measuring innovation outcomes is almost impossible. Establishing a formal governance process, similar to the manner in which product or service portfolios are managed, helps resolve conflicts, allocate resources and measure results more effectively.
The Executive Innovation Work Mat series
This article is within a series of seven articles that discusses the Executive Innovation Work Mat approach and the seven domains for innovation alignment.
In this set of articles we will be discussing specifically each of the seven domains for innovation alignment, our thinking in the rationale and benefits for this combined framework.
Here we looked at the need for having the appropriate Structure, Processes and Functional design (domain three) and the importance of Governance (domain four). Previously we had looked at domains one and two: how innovation has to have Strategic Alignment (domain one) as well as develop the context, the communication techniques and encourage an emerging common language (domain two).
The next two domains are Culture (domain 5) and the Environment (domain 6) and why these need to be worked through. Finally we discuss the final domain where People align with the motivations and measures (domain 7) for relating to innovation. As a final article we will summarize the benefits of an integrated framework delivered through the Executive work mat and draw some conclusions.
We provided an introduction to “the seven domains for innovation alignment” as the overarching piece in these seven articles, and then we provided our justification in the last article “the role senior leaders must fill for innovation success”
We would encourage you to read all seven articles to fully relate to this
The above link contains all seven articles on one page, as listed below:
Paul Hobcraft runs Agility Innovation, an advisory business that stimulates sound innovation practice, researches topics that relate to innovation for the future, as well as aligning innovation to organizations core capabilities.
Jeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation teams, processes and capabilities. Jeffrey is the author of “Make us more Innovative”, and innovateonpurpose.blogspot.com.