A majority of leaders now view innovation as one of the top drivers of growth for their company. This means that company leaders can no longer treat innovation as a side show. To ensure that innovation succeeds in driving growth, it has to be accorded equal status to the core business. This is the perennial challenge that company leaders face.
In most companies, the core business typically dominates. This is a natural consequence of the fact that the core business is the engine currently driving revenue and profits. To drive new growth, leaders have to deliberately allocate resources, bandwidth and budget to the company’s innovation portfolio.
The resources allocated to innovation have to be protected and institutionalized. The only way that this works is if innovation leaders have power and influence in the organization. Having power and legitimacy, not only gives innovation access to protected resources, but it also provides some leverage when negotiating with other key functions.
Does innovation have power and legitimacy in your organization? Or is it still treated like a sideshow? Below are three ways you can know whether innovation has power and legitimacy in your company:
Organizational Chart
Where does innovation sit on the organizational chart in your company? In some organizations innovation is not explicitly called out on the organizational chart. It is considered part of some other function (e.g. technology, marketing or research and development). In these contexts, leaders often argue that innovation is everyone’s job. While this might sound cool and even democratic, if something is everyone’s job, then in reality it is no one's job. Every company needs a group of people who have innovation in their job title and part of their role is creating and managing the processes that others use to innovate.
In other organizations, innovation is on the organizational chart but it is not featured at the top. There are quite a few companies where the Head of Innovation sits two or three levels down on the organizational chart. To have impact, innovation leadership needs to sit at the executive management level in a company (e.g. the C-Level). When this happens, it sends a clear message to employees within the company about the importance of innovation. Furthermore, a C-Level innovation leader can negotiate for protected resources with their peers at the executive level.
Bridge To The Core
How well does innovation collaborate with other key functions within your company? It is virtually impossible to launch a successful innovation within a large company without other key functions getting involved (e.g. sales, marketing, operations legal and compliance). The problem is that most of these functions are focused on delivering results for the core business. When innovation has no power or legitimacy, it can find it difficult to get support from these key functions.
Even when support is provided, some key functions have policies and ways of working that are not aligned with innovation best practice. A typical example is legal and compliance. Innovators often find themselves jumping through so many legal hoops, just to get the permission to show customers a prototype. This slows down testing and becomes a blocker to rapid prototyping.
When innovation has power and legitimacy, there are clear policies that guide how innovators can collaborate with key functions. Indeed, supporting innovation becomes part of those key functions’ job descriptions and KPIs. In some organizations, innovation leaders have worked with key functions to create ‘fast tracks’ for innovation teams to avoid some of the unnecessary bureaucracy that blocks their progress.
Rewards And Incentives
Does your company have dedicated rewards and incentives for innovation? In a lot of companies, there are only incentives and bonuses for hitting your targets within the core business. It's no wonder, most employees avoid working on innovation projects and instead focus their efforts on supporting the core business. Some middle managers are even disincentivized from investing in innovation because it shows up as a cost on their income statements (i.e. P&L).
The best way to empower innovators is to have dedicated rewards and incentives for innovation. These rewards and incentives should be designed to recognize that failure is part of the innovation process. Teams that kill their innovation projects should be rewarded and celebrated for doing that. Providing dedicated resources for innovation, that are separate from the middle managers’ P&L, can also make it easier for them to invest in innovation.
Middle managers and their teams can also be incentivised using stretch goals that require a certain percentage of revenue to come from new value propositions that have been launched over the last 3-5 years. If bonuses are calculated with these stretch goals in mind, these leaders will be more motivated to support their innovation teams. Finally, innovators can also get a percentage ownership stake in their ideas, in exchange for a reduction in salary while they work on the project.
Lessons Learned
The legitimacy and power of innovation within an organization is indicated by the number of dedicated structures and processes that are in place to support it. When innovators are disempowered, they are expected to navigate their projects through the same processes that are used to run the core business. With dedicated leadership that sits high on the organizational chart, innovators can collaborate well with other key functions and have dedicated rewards and incentives.
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Three Signs That Innovation Has Power And Legitimacy In Your Company - Forbes
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