Who should be thinking about innovation in your organization?

I am often asked whether one person or function in an organization is sufficient to coordinate and manage innovation. The answer is “no”. While I agree that it is very hard to get whole organizations to think about innovation, it certainly is a distributed capability.

Let me just recap. Back in 2015 I wrote that most innovation gurus identify four functions of innovation and technology management:

1. Searching and scanning for new ideas and technologies, both within and beyond the organization. This includes looking at technologies that could affect the clients of the organization, and technologies that could disrupt markets and industries.
2. Comparing, selecting and imagining how different technologies could impact the organization, its markets and its own innovation agenda.
3. Next comes integrating or deploying the technology or innovation into the organization. This includes adjusting processes and systems, scaling up implementation, and project managing the whole change process.
4. The last step is often overlooked, but new technology and innovation often makes new ideas, innovations and improvements possible. I call this last step exploiting the benefits of a new technology or idea. This could involve leveraging some of the additional benefits or features of a technology, perhaps by creating a new business unit focused on an adjacent market or particular offering.

Now these four functions could obviously be coordinated at a central or top management level, but at that level it would probably look at broader innovations in terms of high level product positioning, reforming key business processes, or considering different business models. Some would call this strategic innovation management. However, this function depends on many other decision makers, technicians, business unit managers and experts distributed throughout the organization to be repeating these four functions within their own context. Perhaps some individuals or units are more focused on certain technological capabilities, while others may be more focused on specific markets, territories and client types. Within each of these focus areas, individuals or teams responsible for the coordination of innovation would have to make sure they tap into the knowledge and understanding of their internal experts and staff, their external networks and even beyond. So the four functions are repeated at lower levels, each time more granular or domain specific (or context sensitive) than levels higher up.

Perhaps innovation coordinators at higher levels would be more focused on trends beyond the organization and even beyond their clients or markets, and most certainly the higher up you go the longer the planning time horizons would be. A great example of this kind of structure is explained in a forthcoming article by Jeffrey Immelt of GE in the Harvard Business Review. In GE they had both the top down functions, but then they also paid great attention to creating from the bottom up similar functions. During this process Jeffrey explains that they realized they needed to create these structures within sub regions, with more autonomy to make context specific decisions.

Within a larger organization, good ideas (a.k.a innovations) from one unit is not immediately copied elsewhere. This is the wrong approach to scaling. Instead it goes in at the first function (Scanning) of other units, where the suitability of the idea and its effect on the business unit or technological capability is assessed. This means that top management can detect good ideas in how rapidly they are taken up within the organization. Perhaps they need to play a role in making innovations that seem to be working in one area known to others. This reduces the dependence on “strategic bets” by top management. Also this means that scanning is not only about looking beyond the organization, it could also mean scanning internally in other units or over the whole organization to try and detect ideas that are being tried out, taken up or discarded.

You cannot centralize innovation at the levels of product, process and business models only at the top of an organization, even in a small company. So you have to find ways to distribute this capability throughout the organization. It is not smart if only higher levels of management are scanning the horizon, trying to wrap their minds around emerging trends like the impact of Amazon on an industry, Industry 4.0, the internet of things or additive manufacturing. Perhaps at higher levels there should be a push to get more people elsewhere in the organizations empowered and mobilized to make sure that the four functions of innovation are distributed, that more people are scanning, more people are thinking about the future, trends and change.

In the image included in this post, the arrows are flowing down, because I believe that leaders need to push the push functions down in their organization. As these functions are distributed through the organization, it would become more important to figure out how to feed the ideas, insights and innovation from the distributed organizational system to improve organization wide strategic insight. Also, the up arrows would make it possible for cross pollination, where ideas that works in one area are fed into the scanning functions of another business unit.

A final point is that learning is not only about what works (down arrows and up arrows). Learning is also about remembering what did not work, but also, what was not tried (arrows ending in space). Organizations that maintain up a repertoire of (failed or half-baked) ideas have a better stock of concepts that they can consider, recombine and re-imagine as they go forward.

A final word to technological institutions, industry associations and programs aimed at improving industry or regional innovation and competitiveness. These four functions are not only for inside a firm, they are also relevant to your organization. But these four functions typically play out a the level of the innovation system, the network or industry. Somebody somewhere better be scanning the horizon for what is coming, what is being tried and what seems to be working, and so on. If your industry is not scanning, then the long term viability of the industry you are trying to promote is under threat. This is where think tanks, academic research centers and strong industry associations (meso organizations) that can promote industrial change, collaboration and modernization become very important.

Contact me if I can help your organization improve the four functions of innovation within your organization and between your organization and others.