Innovation Organization Alignment

In larger companies, it is common and beneficial to have more than one innovation program. In fact, I have seen situations where there are close to 100 different programs or teams looking for ideas in large companies. The challenge comes with how you stop each one doing the same thing and defining the boundaries of the day to day operational groups. This post will look at one way you can try to bring some harmony to all the possible activities within your company.

A critical factor in a strong innovation program is creating a blended approach to innovation, ensuring that you look at a range of ideas big and small. One approach to doing this is by using the Innovation Pyramid as designed by Professor Rosabeth Moss Kanter below:

Innovation Pyramid

In this model there are discreet levels of innovation, each level defines both the size and type of innovation idea that you might expect to produce. The Three levels are:

  • Large Bets – These are strategic innovation ideas that potentially create whole new business units and direction for the company. They can take a significant amount of time and resources to develop.
  • Medium Bets – These are typically ideas for your existing customers but focused on new products or solutions and therefore normally seen as part of the development of your product portfolio. Investment and time are in the 12-24 month range with some capital investment but mainly reinvesting from your existing business.
  • Small Bets – These are more incremental improvements to your existing offerings to your customers, either better ways for your product to work (x.3 releases) or new solutions that enable new customers to use an existing product. Investment is normally short-term and returned as part of the first few deployments/sales.

The challenge is if you have more than one innovation program they can’t all be looking at the same part of the pyramid, nor can then all be looking to create the same mix of innovation across it. Typically larger organizations will automatically look to focus on the layers of the pyramid that align with their position within the organization.

For example, the CTO or Strategy team at a corporate level will focus only at the top of the Pyramid. They are looking for the next pivot for the whole company. The Business Units that are responsible for creating products and offers to the customers focus more on the Medium Bets to ensure that they have a strong and complete portfolio and are replacing products that are end-of-life to ensure they maintain or grow revenue. The customer delivery teams and regional operational teams will more likely try to find short-term wins that have an immediate impact and drive in-year or quarter targets.  These might be directly linked to a single customer or a specific product delivered to many customers.

Based on this it would seem that the most logical way to align the various groups would be as shown below with each layer of the company responsible for each part of the pyramid with small overlaps at the boundaries:

Program Focus 1A

The challenge with this approach is that maintaining the momentum of the Large Bets is very hard, as it takes many years to get traction. Management can decide that after 2 years with little results to stop the strategic program altogether. Also, this structure makes it very hard for ideas to move between programs, which means if you find the next big thing within a single customer it is much less likely that you will create a new business unit and fully exploit it as the people managing the idea stop after getting the short term benefit. This is less likely than the other case which is thinking you have the next big idea only to find it if will not drive revenue so you kill it without seeing if it would be applicable for a single customer or region to get a more modest return from the initial investment.

One way to address these limitations Is to try and increase the mix of ideas at each level of your organization’s innovation program by having staged focus areas as shown below.

Staged Focus

This approach means that you look to identify a range of ideas of different sizes in each of your programs with clear methods to handing them off between groups if they get too small or large for the existing program. For example, the Business Unit program might look for 10% Big bets (that aim to generate more than $50M in 5 years), 70% Medium bets (generating $10-20M over 5 years) and 20% smaller bets (<$5M over 3 years). This in combination with clear topics within each program should reduce the number of duplicate activities but still allow for a reasonable flow of ideas across the organization.

From taking this slightly different way of managing idea you would also benefit from common tools that further simplify the process of idea ownership changes. A single platform for managing ideas across the various parts of the organisation can make sense, however try not to fall into the single tool to fit all issues challenge, it might be you use different tools in different regions to support better language and customer collection, so focus on only getting a common platform for the internal management and reporting to start with, this will also allow others in the company to contribute and hopefully increase idea propagation.

Summary

There is no easy way to run multiple innovation programs within a single organization, however, there are benefits in having more than one monolithic innovation program – and that is speed. To ensure that each program has a balance of success you need to have a blend of ideas in each program, so they have quicker wins and can protect longer-term idea development. If you get the blend and boundaries right ideas have a greater probability of getting funding and finding the right skills to support them.

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© Peter Briscoe 2018

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