In a pair of recent posts (URLs below), I laid out the case for a robust innovation function that exists as a standalone department.
Click here to read the first post
Click here to read the second post
Click here to go to the website of one of the greatest beer bars ever (because why not?)
My cousin Gil commented (on my Facebook wall) that standalone innovation departments can really serve as excuses for companies to not innovate, by isolating the innovation in one corner of the organization as opposed to infusing innovation throughout. Gil makes an excellent point. However, I still strongly believe that standalone innovation departments are the way to go. I will explain my thinking below, but first a few prefatory comments.
1) In my recent string of posts I assume that a company wants to innovate. When I say that they want to innovate I mean that they really want to innovate, not that they want to say that they want to innovate. There’s a big difference. Because if you’re not serious about innovation (or anything else for that matter), there are many ways to kill it. Yes, creating a standalone innovation department can be one way to kill innovation by separating it from the core revenue-generating functions and, in effect, turning it into the corporate equivalent of the circus freak. The standalone department can be the weird spectacle that people gawk at as opposed to a true driver of innovation results if it is not meaningfully plugged into the critical operations of the organization. I totally agree. But you can also kill innovation by not having a standalone innovation function and declaring that innovation is simply everyone’s job. As I said above, if you want to kill innovation then you will. I’m not talking to those people in these posts.
2) I also agree with Gil that innovation is everyone’s job. But let me talk a bit about some different kinds of innovation. No matter what you do, there is an opportunity to do it better, smarter, faster. So there’s innovation used to drive improvement in the day to day performance of everyone’s job. Clearly, this responsibility belongs to each person in the organization. Each team will also have its own innovation responsibility – to make sure that they operate better, smarter, faster in whatever they do. Looking specifically at revenue growth, I agree that much of that must come from within existing business units. This is mostly incremental innovation – keeping the product lines fresh. [See here for my take on the different kinds of innovation.] But when it comes to significant breakthrough innovation (what I call expansive or disruptive innovation), I strongly believe this must come from standalone departments.
Why?
Simple. Most of what a successful organization does is designed to maintain the status quo. And it should be that way. Existing in-market products are responsible for keeping the lights on. They must be maintained. Existing channels are driving revenue. They must be maintained. Existing customers are the ones paying the bills. They must be satisfied. Most of the activity of an organization needs to focus on maintaining the status quo. Incremental innovation is also designed to maintain the status quo. If your products get stale then they will be ignored.
However, expansive and disruptive innovation are designed to overthrow the status quo (or, at least, to sidestep it). And here’s the problem: Human nature compels most people to focus on the the more immediate need or challenge at the expense of the more distant one. This kind of thinking is wrong as I argue in an old post. But, nonetheless, it is the way nature has wired us.
Because most people cannot truly balance short-term and long-term needs, it is critical that the function responsible for maintaining the status quo is kept away from the function responsible for overthrowing the status quo. Partly because those functions inherently pull against each other and really do not belong together as one entity. And partly because of the people that will populate those functions. Some people are more comfortable maintaining and executing. And others are more comfortable envisioning and strategizing. Those people can often annoy each other. The status-quo maintainers often look at the overthrowers as a bunch of wild-eyed dreamers who don’t know how to get anything done. And the status-quo overthrowers often look at the maintainers as dullards who cannot see beyond the micro-details of their tactics.
In the end, it is the breakthrough innovation and not the short-term needs that will suffer. So if you want breakthrough innovation (expansive or disruptive), I believe it is critical to create a standalone department with the mission, authority and independence to create such innovations. Oh, and the funding. The funding for breakthrough innovation must be sacrosanct. At least as sacrosanct as any other funding. Because if that is the first thing you cut when cuts need to be made, you know exactly what will (or will not) happen.
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Couldn’t agree more — particularly your point that while it should be everyone’s responsibility to innovative, in a typical corporate culture, such innovative approaches are often at odds with tried and true approaches that have made that organization successful in the past — hence the natural resistance to change. A stand-alone innovation group, with dedicated financial and human resources AND that has the support of senior management can then seek out and interact with and push, disrupt and challenge others within the traditional organization to encourage them to adapt innovative approaches. The trick, though is to ensure that such a group really has the autonomy and authority to move within the organization at will to find projects and iniatiives that it can take on to put the theories to the test.