Companies don’t fail at innovation due to lack of ideas. They often don’t create the right innovation structure to implement their opportunities.
Most organizations struggle with innovation.
That’s because they try to apply processes and structures that don’t fit their business strategies and cultures. They partner with Silicon Valley startups who have breakthrough technology when they really just want incremental innovation that delivers quarterly results. They force crowdsourcing into their top-down decision-making cultures. They invest in disruptive technologies but ask existing business units to cannibalize their current products and services using them.
I had the chance to take a look at the new book “Built to Innovate” by INSEAD professor Ben Bensaou. It reminded me how important it is to highlight the ultimate organizational design principle: Structure follows strategy. It’s the foundation of organizational design.
One of Bensaou’s examples highlights the network inside most traditional hierarchical organizations and how innovation really works across these networks:
These figures are a great reminder that innovation happens through lots of collaboration across disciplines and boundaries – in this case with an I-Committee (innovation committee), trainers, coordinators and coaches.
Successful innovation requires aligning your innovation model to your business strategy. Here are different models you can use:
New Ventures & Skunkworks (Ambidextrous Models)
With lean budgets for innovation a reality at many large organizations, managers are often reluctant to allocate funding and staff to projects they perceive as risky, or that don’t help them achieve their short-term performance metrics. Ambidextrous organization designs create distinct units that have their own unique processes, structures and cultures that are specifically intended to support early-stage innovation. Sometimes these are structured as skunkworks or new ventures groups. These units, often comprised of one or more innovation teams, reside within the larger parent organization but have been set up with fully independent resources and structures to support the unique approaches, activities and business models required when launching a new business.
Organizations such as Procter & Gamble, Johnson & Johnson, and Kimberly-Clark have used formal venture advisory boards focused on bringing external perspectives inside, which ultimately drive innovation and guide strategic investments. Unlike a traditional advisory panel that provides industry and market-related advice, Venture Boards pull together the best thinking from both inside and outside the firm, all within a flexible structure that focuses on a single goal – to discover, evaluate and fund enterprise growth opportunities.
An Innovation Council is a small, cross-functional governance body of senior managers that enables cross-business / function / geography decision-making and coordination. Innovation Councils ensure that innovation-related activities in various parts of the organization are strategically aligned and coordinated, and are supported by appropriate processes and resources. From a leadership standpoint, council members’ roles involve removing internal roadblocks so that enterprise innovation can be effectively managed.
Solutions Teams are self-directed teams of individuals chosen from selected business units, who work together for a period of time and have a specific charter, often looking to identify new opportunities that combine the competencies of discrete businesses. These individuals, (technologists, consumer insights experts, marketers, manufacturing specialists, etc.) are assembled to help identify or pursue white space opportunities for which no single business group has formal accountability. In some cases, the individuals relocate and reside within a single physical location for the duration of the project.
Key Opinion Leader Networks
A Key Opinion Leader Network is an external network of expert practitioners and thinkers that can tapped at any time. Opinion Leaders within the network come from companies, universities, consulting firms, research institutions, contract manufacturers, think tanks, and other organizations. Often under a non-disclosure agreement or as-needed consulting contract, at a moment’s notice they provide specific knowledge, foresight or recommendations to specific issues, challenges and opportunities. Because they are all connected to their own knowledge networks, they can also become the doorway to additional strategic resources and relationships.
Open Innovation Networks
Proctor & Gamble has leveraged an Open Innovation strategy with great success in the past few years. While many companies have historically looked to their own R&D efforts to drive innovation and growth, Open Innovation proponents argue that today’s business logic has changed and that companies today must embrace new strategies for systematically tapping into ideas, resources and technology from the outside. Relationships with external partners such as universities, academic research institutions, government or private labs and individual entrepreneurs can bring emerging technologies onto the radar screen or spur fresh insights that can be combined with internal competencies to create novel technology combinations that drive new products.
Internal Innovation Networks
To create value for the organization’s internal and external stakeholders, companies must rely on their collective intelligence and shared knowledge to generate best practices. Innovation Networks are groups of key stakeholders inside the organization who share a passion for a custom problem and want to innovate to address it. Sometimes these networks include facilitators or “catalysts” who help manage and lead design thinking processes using innovation toolkits.
Different models approach innovation differently. What works in one organization might not work in the next. Mix and match models to fit your unique culture. It’s usually an ongoing iterative process. That’s what’s needed for resilience in today’s disruptive world.
About the Author
Soren Kaplan is the bestselling and award winning author of Leapfrogging and The Invisible Advantage, an Affiliate at the Center for Effective Organizations at USC’s Marshall School of Business, a columnist for Inc. Magazine, a globally recognized keynote speaker, and the Founder of Praxie. Business Insider and the Thinkers50 have named him one of the world’s top management thought leaders and consultants.