Setting up a corporate innovation unit

A recent study by The European Academic Network for Open Innovation highlighted the open innovation skills shortages that exist across industry, and the impact this is having on the ability of organizations to innovate successfully. Given this kind of situation, it’s tempting to go down the path of establishing an innovation department, which you can ensure has all of the skills and resources required for it to thrive.

Tempting though this approach is, it’s debatable whether it’s a wise strategy to follow, or as Creative England’s CEO Caroline Norbury famously said last year, “as soon as you have an innovation department, you’re buggered”. Her rationale is that innovation is something that should be everyone’s responsibility, and indeed innovation only really thrives when you have both the diversity of opinions that a broad range of participants provides, and also the diversity of information that only really comes from the front line.

The difficulties in both creating new ways of working whilst efficiently producing business as usual is one that has vexed many of the brightest names in the leadership world, from John Kotter to Vijay Govindarajan. Indeed, the challenges in being ‘ambidextrous’ are at the very heart of the innovator’s dilemma so famously identified by Clayton Christensen.

Organizing for innovation

So what should you do? While it is not advisable to create a permanent innovation department, it is eminently sensible to create temporary, flexible innovation teams that come together to work on specific projects. For these units to succeed they will need to consider a number of factors.

Foremost among these is to do with power. It’s common in the majority of organizations for a particular department to have an outsized influence on the workings of the company. As so many directors come from financial backgrounds, it’s often the financial department that holds sway, but it could equally be a particular product or geographic team who deliver the bulk of the company’s profits. These departments often suck in the best talents and the most resources.

Innovation is the essential act of doing things differently. How fundamental this shift is will depend upon your innovation, but it’s possible that to innovate will put you in direct opposition to the power center of your organization. Being able to work effectively with this power center is crucial therefore.

Forming the innovation team

Creating a successful innovation team will require you to overcome this core challenge. It’s a topic that Tuck Business School’s Vijay Govindarajan leads the world on. He recommends a range of steps you can take to insure your innovation team works effectively alongside what he refers to as ‘the performance engine’ of your company.

  • Build on strengths – The performance engine have achieved their status by being exceptional at various things. Whilst innovation might be a break from the status quo, it’s inevitable that you will need the execution skills they have to scale up your innovation, so make sure you tap into their expertise.
  • Build your team – You must overcome the temptation to replicate the performance engine. A better approach is to think of it like building a startup from the ground up. You might give people unique job titles or locate the team in a new building.
  • Build the partnership – To succeed with your innovation unit will require an ongoing partnership. This is arguably the hardest part of the process, especially as you will probably share resources, attention and motivations, and this process can often disrupt the effective running of the unit.
  • Build your network – As well as forging great relationships internally, you will also need a broad network of external partners to ensure you have the best knowledge and technology available. The formation of this network will depend on the kind of innovation you desire. For instance, a recent Wharton paper argued that for incremental innovation, you can construct a domestic partner network, but for radical innovation you need to look overseas. With an estimated 300 million startups around the world, this is a full time job, and it’s vital you have an online repository of innovation to support you.

As you can see, the innovation unit plays a key ‘bridging’ function, both between the present and the future within your organization, but also with the startups and innovators externally who are showing what the future will look like. Successful innovation requires this bridge to be robust and well maintained.

We all know that innovation is a process that most organizations struggle with, and whilst the above tips are no panacea for success, they will hopefully raise awareness of some of the main reasons why attempts to establish innovation units flounder.

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