Managing Innovation Effectively

We all want the benefits of new technology, new market opportunities, or better, faster, cheaper ways of doing things.  However, nearly all ‘innovations’ are the product of risk taking and investment: the two things that cause most senior executives squirm.   Innovation also disrupts the status quo, which often makes the people within an organisation uncomfortable.  My own experience is that organisational discomfort and risk quickly trump any enthusiasm for some very promising initiatives.

This short article provides some thoughts on how to manage innovation effectively.  It brings together a few sage insights from some well-known commentators and keen observers of innovation and entrepreneurship.

Good ideas can come from anywhere in an organisation.  Bringing them to light and to life requires good internal communications combined with passion, risk taking, resources, patience and discipline.  Generally, the ideas that offer the most benefit require the greatest investment and amount of entrepreneurship.  However, for many senior executives entrepreneurship spells risk.  Harvard Business School Professor Howard Stevenson famously wrote ‘Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled.’  That’s enough to frighten most Chief Operating Officers and Chief Finance Officers, but not necessarily all of the company’s board members – especially those with start-up experience.  It is worth reading Jay Deragon’s The Relationship Economy article Why Corporations Won’t Hire An Entrepreneur.

So, how to manage innovation effectively? 

Innovation takes Time.  ‘Time’ is money: both the application of resources and the opportunity cost of investing in a new initiative at the expense of other priorities.  Companies and their shareholders need confidence that things are under control.  Innovation teams need freedom to act, to fail and to learn without sending the organisation ‘to the wall’.

In his 30 July 2013 HBR Blog Network post Five Ways to Innovate Faster, Scott Anthony offers five ways to accelerate innovation or ‘the search for a viable new-growth model’ that should bring some comfort to senior executives.  Anthony’s five ways and my interpretations are:

1. Form small, focused teams – keep the team lean and agile – Amazon’s Jeff Bezos has a ‘two pizza rule’.
2. Push to learn in the market – don’t be constrained by what exists – innovation requires new thinking; so, ‘learn hard’ as it is likely to pay dividends for the organisation’s other activities as well as the new venture.
3. Measuring learning, not results – don’t weigh the team down with officialdom but focus on validating the team’s assumptions and what they are learning.
   
4. Tie funding to risk reduction, not the calendar – maintain investment confidence by removing uncertainty.
5. Ensure decision makers have the right experience to guide the team before the data are clear – the team and the organisation’s senior managers should seek the counsel of people with real start-up experience.

In essence, the key to speeding up innovation comes down to picking the right people, assigning them the appropriate levels of responsibility and support, and focusing on strategically managing risk.  Above all else, successful innovation requires discipline as well as a healthy degree of entrepreneurship.

To take a RACI view:

• Responsible – a dedicated, entrepreneurial Innovation Team leader must be responsible for ‘the project’.  The Team Leader is responsible for:
  • building relationships,
  • creating an environment that enables each of members of the team to maximise their contribution,
  • driving the project forward,
  • garnering and husbanding resources, and
  • ensuring that the team operates within its mandate.
• Accountable – there must be a senior executive who is the ‘champion’ for the initiative and accountable to the CEO and board of directors for the outcome.  The Accountable Executive mentors and guides the Team Leader and insulates the Innovation Team from day-to-day pressures and distraction and demands for unnecessary red tape.
• Consulted – the Innovation Team needs access to and must communicate with internal and external subject matter experts.  These could include a few of the members of the board who have built their careers on the back of successful innovation.  The Accountable Executive will be key to facilitating Innovation Team access to board members and ensuring the CEO is not blind-sided.
• Informed – ongoing support for ‘the project’ requires great two-way communication between the Innovation Team, decision makers and other members of the organisation.  Senior executives are responsible for managing risk and must be kept in the loop about what is working, what is not working and where the team is heading.  Keeping other members of the organisation informed about ‘the project’ is also important because their cooperation and material support can often mean the difference between success and failure as well as rapid implementation once the innovation reaches maturity.

A disciplined approach to innovation is key to managing innovation effectively: from conception to birth through development to eventual implementation as part of an organisation’s core business.