Will A Central Innovation Team Work for You?
Central innovation teams are a model which have been well adopted in many industries. Pharma, for example, is typified by large development budgets which tend to be centralised in teams set up for the purpose of innovating drugs. In banking, as another example, there will regularly prescription medicine be many New Product Development teams who dream up new things for specific business lines. Even in Government, there is an increasing focus on central innovation in the never-ending pursuit of efficiency and cost savings.
Its easy to understand why. Central teams are easy to set up, and much less difficult to measure than diffuse arrangements that rely on an “innovation culture”. It is easy to point at them and say “that’s how we’re doing innovation”. They make executives feel good about their innovation efforts, because when you can nominate specific individuals and assign accountability for actions, you know things are likely to get done.
In the central team model, it is usually the innovation team that decides what and when innovations will be progressed. They will have an investment budget of some kind, and will be accountable for driving forward the innovation agenda. If they are any good at all, they will agree to a big financial return number which will justify the investments they have decided to make.
But there’s a problem with a central innovation team that does everything: in order to get more innovation happening, you have to add more people. This doesn’t scale, and here is why.
Generally, for most innovations, the amount of effort required to get an organisation to do radical versus incremental innovation is really not all that great. You still have to manage the politics, you still pharmacy online have to do all the influencing to get stakeholders on board, and of course, you still have to find the money to make things progress.
Though incremental innovation tends to be relatively risk free, it usually will not make sizeable returns on case by case basis. This means that innovation teams are forced to do a significant number of things in parallel if they want to make a difference with incremental innovation. Unfortunately, it is a fact of life that with incremental innovations, a single success will be unlikely to pay for the time of the innovators.
By contrast, doing things which are more radical provide better returns, but at a much greater risk level. This makes it seem sensible for innovators to select radical innovations for their portfolio. Given the choice of almost certainly not breaking even, and at least the chance of a big payoff, most teams will select the latter.
What is really needed to make innovation work in large organisations is a balanced approach which combines a portfolio with inputs from customers and employees. Participatory innovation, as this is known, helps the central innovation team reduce its costs per innovation, and is usually the best way to make an innovation programme work in large organisations.
Are you considering an innovation effort? If so, you’ll want to review the notes from James Gardner’s free online innovation book when structuring your innovation team.