Would you like a garage with that?
Innovation is easy right? You throw a few super smart, socially awkward people into a garage and wait until they emerge with some new technology that will change the world. And, of course, that’ll take their earthly belongings from a stash of Led Zeppelin vinyls, a collection of well-worn t-shirts, and no doubt one or two student loans (for degrees they never actually finished) to billions of dollars. This worked for Apple, Amazon, Google, HP and Microsoft, so surely it’ll work for everyone right?
Proximity to Business
But what if you’re not a new kid on the block, but rather, are one of the incumbents of the industry? How feasible is it to confine a portion of your company to a dingy garage, and keep them running on a diet of stale pizza and a steady stream of lofty ideals? There is a school of thought that advocates a very similar approach to this, albeit more grown-up. Whereby a portion of the company is carved out, or formed, and given autonomy to experiment, invent and innovate to their heart’s content- unencumbered by the drudgery of meetings about meetings, and without any expectation of immediate results or potentially any results at all. The hope being that, in time, the gamble will pay-off sling-shotting the company to the forefront of a bold new wave within the industry.
At the other end of the potential scale, and it should be viewed as a scale (see below), is an internal entity that is clearly part of the organization, and targets the short time-to-value, incremental, mildly-disruptive types of innovation. This is sometimes appropriate, especially for innovation that focuses on links within an existing value chain. To use a simplistic example, from the automotive industry, it is exceptionally hard to invent a new type of indicator stalk without having a steering wheel, or steering wheel column, to attach any prototypes to, nor any actual indicator lights and electrical system to test whether it even works. And as your value chain gets more complex, it gets exponentially more difficult.
So perhaps the most critical element in choosing an approach should be dictated by what you’re wanting to innovate. Too often people are given the broad directive to innovate, without any specific focus, and with no appreciation of the independence of the portion they need to innovate. Big corporates got big because of a certain set of competencies, so often, to avoid throwing the baby out with the bath water, they’d opt to innovate portions of an existing value chain and that would then require closer collaboration (left edge of the scale above). One caveat though, is that you may need to rely on the parts of the value chain, and by implication the people running those parts, to test your innovation. An innovation, that may very well be trying to disrupt another portion for which they are also accountable, so they may actually prove to be obstacles to innovation. It is the corporate equivalent of attempting to get turkeys to vote for Christmas.
Reputation of Innovation Arm
The reputation of your innovation arm also dictates the most appropriate innovation portfolio. If your innovation arm is yet to win over the skeptics in the mothership company, then you may need some quick, incremental wins before you’ve earned your freedom to go after the long-shots. Obviously there are ways to circumvent this, such as ensuring that Innovation teams report directly into the CEO, and using the subsequent hierarchical power to build their reputation, and its associated freedom to innovate. However, innovation teams’ reporting lines would need a blog of its own to fully explore.
Harvard Business Review, published a seminal article that divided innovation up into Core, Adjacent and Transformational (see right, with some additions to the original HBR diagram). They found that different industries, and companies with different levels of maturity, would find a different mix between these 3 types appropriate. However, if an innovation arm still needs to build its reputation then it may well be advised to more heavily weight core innovation, and then, as their reputation for delivering value grows, they can move towards a higher proportion of adjacent and transformational innovation types.
- Garage style innovation may not be appropriate for corporates.
- Clearly define what you’re wanting to innovate (part of a value-chain or long-shot), and choose the appropriate proximity based on your intentions. Take note of corporate culture here too- turkeys won’t vote for Christmas.
- Consider your innovation arm’s internal reputation in selecting your innovation portfolio.
by Brad Carter