This blog has recently been enhanced and published as a Capgemini Point of View but I thought it would be fun to publish it in its original format for the regular readers of the blog. So here it is in its unillustrated, raw state. Hope you find it useful.
If Innovation occurred as a natural
reaction to the expressed wishes and exhortations of the CEO on the subject of
Innovation then this would be a very short blog.
However, those of us that are practitioners
and advisors on the topic know that it does not. In fact those of us who carry any kind of
Innovation related title should take a good hard look at ourselves and admit
we’ve let our industries down by colluding with the idea that somehow all we
need, in order to generate Innovation in our businesses, are some verbal signs
of support from the senior executives.
This is nonsense. Think it
through.
If I meet up with a CEO and
ask him/her to describe to me their financial management process they will have
no problem in outlining the process, the systems underpinning it, its
governance rules and the roles of the people who manage it. The same will be true if I ask about the
people management process and as of relatively recently, they’ll even be able to
walk me through the risk management process.
But ask about the Innovation process and
they’ll almost immediately flip their responses to start telling me about the
specific “innovations” that have occurred in their businesses in the last 2 years
or so. Not the process, just the
outcomes. When really pressed they might
be able to point to a Head of Innovation who reports into the Head of Product
development somewhere and they may be able to point out that they have a more
or less sophisticated employee suggestion scheme but almost none will be able
to talk me through their Innovation process. The simple reason for this is, that on a corporate scale, they are
highly unlikely to have one. No clear
operating model, no end-2-end process, no underpinning systems and technology,
no real investment or resources and no real chance of delivering a regular flow
of innovation. Ouch!
NB – before pharmaceutical and
technology clients start feeling smug about themselves as they start casually
pointing to their tried and tested R&D process for creating new products –
can you tell me the process for corporate innovation in any area other than new
product development e.g. service innovation, cost reduction innovation,
business model innovation, distribution process innovation etc? Thought not.
So rather than rant on about how sad a
state of affairs it all is and that someone, somewhere should do something
about it I thought I’d grab the bull by the horns and outline four different
operating models that an executive who wants to remedy the situation can think about
implementing.
First off, some basics. For any innovation operating model to work it
needs to have a clearly defined end-2-end process, good funding and resourcing,
clear governance, effective technology and systems and executive support. Without these you can design what you like it
just won’t work very well. Now to the
models, all be it at a very high level.
Model 1 – The Culture of Innovation.
This works great for companies that live
or die by their ability to innovate and can be seen in action in companies such
as Google and 3M. In this model
Innovation is the responsibility of all the members of the company and each
individual is expected to contribute. To
support this employees are recruited for their creativity/entrepreneurial
tendencies and are given a proportion of their week to work on developing new
cool ideas. To support this model
recruitment needs to be targeted and very effective and the reward system for
developing innovative concepts needs to be clear and generous. In addition individuals need easy access to
prototype developers and concept testers to support their efforts.
The strengths of the model are that it is
rarely short on ideas and as long as collaboration is encouraged and facilitated
the flow of new innovation is relatively constant. The weaknesses are that this is a hopeless
model for those businesses that recruit people for their ability to comply with
process and follow the rules e.g. Insurers, Accountants etc. There can also be an over focus on the
development of new product rather than other forms of innovation and a tendency
for innovation to peter out after the prototype has been developed and given an
initial testing.
Model 2 – The Golden Thread of
Innovation
This works well for those companies that
are in a growth cycle and are looking to expand. In this model Innovation professionals are
deployed across the business to develop and manage the innovation process on
behalf of the business units. They work
to an agreed process and are supported by the Business Unit executives who have
the overall accountability for (and are bonused on) the Innovation
delivered. The Innovation professionals
working in the Business Units are supported by an Innovation CoE that sits in
the corporate centre to provide coordination and support (access to prototyping
and testing capability etc). Companies
that have previously used this type of model include GE and RBS (pre credit
crisis). The key to making this model
work is to ensure that the business unit executives are absolutely on the hook
for driving innovation and that the capability is properly funded. It cannot be seen as a nice to have by the
business units. Careful recruitment is
also required to select the right individuals.
The key roles in this model are those liaising with the business unit
executives to drive Innovation. This
requires both innovation skills and great sensitivity to business realities.
Model 3 – The Innovation Hub
This is a model suited to those corporate
businesses that have limited investment resources and are in a cost
reduction/contraction phase. They know
they need to drive innovation in order to survive but need the attention of
their executive team focused on resolving the current challenges. An Innovation hub or hubs concentrates the
organisations innovation resources into units that sit outside the day to day
running of the business. The
capabilities in the hubs are supplemented by external providers that enable the
hubs to ramp up and ramp down in line with investment capability. The external providers also provide access
to specific skills or infrastructures that the business cannot afford to build
or maintain at the current time on a permanent basis. Innovation hubs can often be constructed as
joint ventures with the corporate trading off some of the future profits from
the innovation ideas in return for a reduced cost of the support from the
external provider. The strengths of this
model are its flexibility and ability to leverage wider innovation
ecosystems. The challenge lies with
finding the internal innovation experts who have the skills and capabilities
and aptitude to work in this kind of environment. A lot will be expected of them as they will
need to manage both the Innovation process and the day to day management of the
Innovation hub plus have an ability to work with stressed out, under pressure
executives.
Model 4 – Innovation as a Service
Much as you can outsource a Finance and
Accounting process or an HR process you can also outsource the innovation
process. This is a model suited to those
businesses who know they are not innovative in their nature and who do not employ
innovative people. In this model an
external provider takes over all or the vast majority of the Innovation process
delivering an agreed level of implementation ready innovation concepts back to
the business on a regular basis. The
corporate does not need to worry about ideation, prototyping, testing, piloting
or the building and testing of business cases.
As long as the corporate is capable of implementing the innovation
concepts then the Innovation process can be outsourced. The strengths of this model are that the
Innovation process is managed by professional innovators and should therefore
provide reliable outcomes at a reasonable price point. The challenges are to overcome the cynicism
and inertia that can be injected into the process by corporate executives who
have an aversion to anything “not invented here”.
That’s it for the high level canter
through the models – more details are available on request. Happy Innovating.
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