Who is responsible for innovation within your organization?
We all know that successful innovation isn’t just about coming up with an idea for the next big thing. True innovation requires ownership and agile execution in order to succeed. Companies that aren’t aligned on who should “own” innovation shouldn’t be surprised when a specific project doesn’t turn out as planned.
But how can you be sure you’re assigning responsibility for innovation to the right people or groups within your organization?
I recently had the chance to talk with Scott Kirsner, Co-Founder & CEO of Innovation Leader, about some of the new research he and his team had recently published in partnership with KPMG on emerging trends in innovation as part of their 2018 Benchmarking Innovation Report.
According to the study, 73% of innovation, strategy, and R&D executives say that leadership support is the biggest enabler of innovation. Over 55% of executives report that politics, turf wars, and a lack of alignment are the biggest barriers to innovation. Strikingly, the biggest enablers to (and barriers of) innovation are related to who takes responsibility over a project rather than more concrete things like lack of budget, strategy or vision.
Responsibility for innovation is typically spread out across an organization. Champions are tapped from individual business units, innovation teams, R&D teams, skunkworks teams, corporate VC groups, challenge winners, and even outside resources. This is for good reason. Different parts of the business tend to be responsible for different types of innovation because of their background and expertise.
A large proportion of respondents (82%) said that business units “owned” incremental innovation, innovation designed to serve existing customers. This type of innovation involves improving currently existing products, services and processes, so having a specific business unit manage this process makes sense.
Execution of adjacent innovation, the creation of new value in an adjacent category, market or customer segment, tends to be dealt with differently. While 59% of executives said that business units were responsible for innovation in this area, 58% of executives said that innovation teams were made responsible. R&D teams are also more important at this stage, jumping from 35% to 41% for execution of adjacent innovation.
Less than one quarter of respondents (24%) said their business units were involved in transformational innovation, the type of innovation that creates an entirely new business in a new market. The majority of transformational activity was owned by central innovation (65%) and R&D teams (33%).
Here are three tips on ways you can a sponsor wider ownership of innovation initiatives so the right groups are working on the right things:
Most companies do incremental innovation pretty well. But in order to tackle transformational innovation, you need to look at a market with a wide angle lens. This often requires looking outside of an organization for ideas and collaboration. “For transformational innovation, we work with third parties all the time. We have a three-pronged approach: build, buy, or partner,” said Brent Stutz, Chief Technology Office of Cardinal Health, “We actually track how many of the new ideas that come through our pipeline are C&D, connect and deliver, instead of R&D. Connect and deliver [means we get it from outside], versus thinking we have to do it all ourselves…” Be open to considering all options for doling out responsibility, especially when it comes to transformational innovation.
Be honest about your organization’s strengths and weaknesses. Understanding where you have capacity to manage a specific innovation task, or where you may lack the resources or skills necessary to complete a project is integral to successfully assigning responsibility. “Companies may be using outside resources to be a bridge to figuring out what their model should be when they grow up, and when they bring in additional full-timers,” said Sean Belka, SVP and Head of Fidelity Labs at Fidelity Investments, “We’ve tried to use outside parties to help us get smart about markets, and we’ve used some design consultancies to help us with capacity. Our approach has been trying to plug capacity, skill, or domain knowledge gaps.” By looking to plug gaps with outside resource, companies can speed up the innovation process while planning how to bring on full-time staff.
Be open to innovation from all parts of the business. Employees often have a unique perspective when it comes to identifying new opportunities for innovation. In fact, they often have the best view of a problem when it comes to developing cost saving ideas and products that will better serve existing customers. “The NRG approach has been that we don’t innovate in a box. It’s really a grassroots effort,” said Stacey Butler, Director of Innovation at NRG, “If we say that only these special innovators that sit over here are the ones coming up with the ideas, then we’re going to miss the boat.” Continually look for ways to bring in other perspectives from within the company and make it the responsibility of people at every level to think about innovation within the business.
Large corporations have many stakeholders. Dividing up innovation responsibilities is essential for wowing today’s customers while creating new market opportunities that don’t yet exist. Innovation isn’t one-size-fits-all. Who should own innovation depends on what type of innovation you’re going for. If you’d like to learn more about innovation best practices, you can check out our library full of resources here.