In the effort to drive innovation, a number of companies have taken aim at the challenge with tactics that involve placing innovation at the center of their organizations. A well-respected CEO of a Fortune 25 company says, in his book, that his role is "focused on integrating innovation into everything we do."
But if you put something inherently disruptive at the center of your value-generating business, what do you think is the likely outcome?
Disrupt the Category, Not Your Business
Part of the challenge of being an innovation leader within an existing company or organization is how you go about disrupting an entire business model without disrupting your own business. Incentivizing staff to focus on running their existing work while simultaneously being an innovation engine is unrealistic, and potentially detrimental to the stability and profitability of the core business.
While organizations strive to put innovation at the center of their work, it makes more sense to place innovation efforts in their own area where they are shielded from organizational politics, traditional evaluation metrics, and allowed to grow and create value independently. When your innovation factory is not beholden to your traditional architecture and process, it will deliver the most transformative opportunities.
Developing and incentivizing innovation in isolation brings about a whole other set of risks (like creating a category killer that damages your most profitable category). There is a lot to be said about the kinds of connectivity you have to build between existing business units and an innovation factory in order to maximize value.
Future Ownership: Innovation engines that identify, research, test, and prove that innovative concepts are viable potential lines of business, are not management centers. Therefore, being in contact with existing departments as projects move through the stages is a great way to ensure a smooth handoff.
Strategic Alignment: Innovation engines should be independent - within reason. If an idea making its way through the development framework is financially dependent on using specific pieces of capital equipment, and that equipment is being decommissioned, that innovation team needs to know. This is a great opportunity to either reevaluate the innovation plan or make a business case for delaying the decommissioning of the asset.
Product Road-Mapping: Great ideas do not happen to only one person. Sometimes the same people see the same opportunities and through connectivity you can prevent duplicative work. In some cases, you may find that the business unit prefers the Innovation Center to take on research and validation based on development speed, track record, and bandwidth.
Dodge Your Own Arrows: As we mentioned above, there is always the risk that your own innovations may impact your current businesses. At least with connectivity, you can take control of the future outcome and plan to maximize the legacy business as you grow the new one. Kudos to you for creating the newest widget that solves the problem and will make us millions - and just made three of our billion-dollar businesses obsolete.
Randal Moss and David J. Neff are co-authors of Ignite: Setting Your Organization's Culture on Fire With Innovation. It is a field guide on how to start up an innovation center within your organization. Learn more at theignitebook.com.