Knoll: Innovation doesn’t naturally occur in organizations

The executive team was searching for solutions.  Its industry was changing, technology was shifting rapidly, clients sought its guidance and employees and staff were searching for leadership.  During the annual strategic review process a declaration was made — innovation would become an important component of the organization in the future.  However, there was a critical concern — the skills required to move the innovation agenda forward were noticeably missing.

Sound familiar? Unfortunately, this is a common dilemma in medium to large organizations.  We’re inundated with how technologically advanced, well adapted and innovative organizations have become.  It’s evident in the slick marketing and high-priced public relations campaigns that occupy our news sources and social media feeds.  But the reality of innovation — and more specifically, corporate innovation — is different from the stories. 

Our concerns have changed, rapidly, because we all live and work in a globalized, fast-paced, computer-driven marketplace.  What was once relevant and profitable has no guarantee of producing the same results later this month, next quarter or further in the future.  The pace to market of new business models, products and services has radically changed since the computer was introduced and the beginning of the Fourth Industrial Revolution began.  Nothing represents this reality more than this oft-cited statistic: 90 percent of the companies that earned Fortune 500 status in 1955 are no longer in existence today.

Organizations are turning to corporate innovation to address these new and unfolding situations.  CEOs, boards and senior leaders are creating and building an entirely new function to consolidate growth and “growth management,” corporate strategy and venturing efforts.  Through the corporate innovation function new products, services, business models and entirely new markets can be researched, vetted and incubated and when ready introduced to the various business units of the broader organization.  Increasingly, these practices and tools are being adopted by many of the largest and best-known organizations in the world.

The senior executives from the annual strategic planning are taking prudent first steps to creating a corporate innovation function.  Their humility in declaring a new direction is a key attribute of the character makeup of a highly functioning corporate innovation team, especially at the highest leadership levels.  While their intentions were pure and the direction opportunistic, without a fundamental strategy underpinning their vision they would quickly, statistically speaking, fail in their efforts.  In fact, the majority of corporate innovation teams rarely last beyond 36 months, primarily because their frameworks for effectively managing innovation are missing or flawed.

Successful corporate innovation

The most consequential and impactful steps senior innovation leaders can take as they build a new corporate innovation function — or rebuild a current function — is to define and socialize their definitions of innovation.  Consider this initial step as building the cornerstone for the foundation of innovation efforts.  Regardless of the final design for the corporate innovation function, taking these initial and important first steps will ensure consistency, clarity, focus and accountability.  This foundation can be interpreted as a risk reduction exercise in the future of your organization that increases the probability of the innovation function existing beyond the 36-month statistical norm. Think of it this way: It doesn’t matter how many rooms the house has or how beautiful and carefully selected the furnishings are. If the foundation is weak or flawed, it’s just a matter of time before disaster strikes.

What success looks like in an innovation program can literally be different with every person involved. To get past this possible pitfall, the first step that executive team earlier in our story needs to do is build the first cornerstone — creating definitions.  There are a number of useful frameworks and examples of innovation definitions from very reputable sources.  Taking into account that the definitions will be shared among a wide range of constituents — the board of directors, the executive team, management, staff, vendors, investors, external sources and more — it’s crucial to keep them simple and understandable.  Visualizing innovation along a spectrum from incremental through minor and major innovations, and bookmarked at the other end with radical, breakthrough innovations is a widely used methodology.    

Defining innovations along this spectrum allows for a full framework of corporate innovation management practices to be built upon.  This includes creating outcomes, obtaining funding, building a team and using processes to bring new innovations to life.  In this way innovation becomes a useful practice for organizations to create their futures, instead of it being a punchline in a marketing campaign. And it will outlive the average three-year-old experiment.

In this column, we’ll both discuss best practices for the development of a solid and useful corporate innovation strategy as well as feature case studies of successful program implementation from a variety of companies. If there’s a topic you’d like to suggest, please feel free to contact me directly.

Thomas Knoll is the founder and CEO of Innovators CoLab (www.innovatorsco.com). He can be reached at thomas@innovatorsco.com