by Nicholas D. Evans

The 5 critical pillars of innovation management capability

Oct 13, 2015
Digital TransformationEmerging TechnologyInnovation

Every three to five years the map of the world in terms of innovation is redrawn as organizations change strategic direction, bring in new leaders and/or respond to market threats and opportunities. Three important considerations when repositioning or reevaluating a corporate innovation program include its mission, goals and objectives, where it’s located within the organization and the key capabilities it provides to the organization and its extended set of employees, partners, customers and stakeholders.

In prior articles, I’ve addressed how to think about where innovation programs reside within the business, and about fine-tuning an existing corporate innovation program for digital transformation in order to readjust the sights squarely on digital business. In this article, I’ll cover the third consideration in terms of the key capabilities a corporate innovation program should provide.

Just like any other corporate program, the key elements need to include strategy and intent, people, process and technology. Your innovation program should also address the highly interrelated internal and external aspects of managing innovation and extend across employees, partners and customers.

Here’s five critical pillars of innovation management capability that I believe need to be a part of any large-scale initiative:

Innovation Management & Measurement

This is the strategy and intent portion of your innovation management approach that includes overall leadership and governance, as well as core processes such as innovation frameworks. According to David Sanders, founder of Dallas Advisory Partners, the top three ingredients for success which need to be in place from the beginning are executive leadership, enterprise program management and change management. These are essential elements not just for corporate innovation programs, but for any kind of transformational initiative.

Core processes should include innovation frameworks (i.e. process methodologies) for identifying, prioritizing, incubating and commercializing innovative solutions and offerings, as well as measuring, monitoring and reporting on innovation metrics.

In terms of metrics, there are literally hundreds of innovation metrics that can be measured. By performing factor analysis on these metrics, it has been recognized by groups such as the Corporate Executive Board that they all come down to three basic areas of measurement: innovation input and mix (what’s going into your innovation pipeline in terms of the types of innovations in the queue), innovation health and efficiency (the flow-rate through your pipeline and the amount of funding being applied), and innovation outcomes (the measure of your return on innovation in terms of the number of innovations that have made it through to commercialization and have captured revenues or other strategic or financial objectives).

The innovation process methodology should support multi-modal ideation in terms of both event-based (e.g. innovation events, contests and workshops) and ongoing innovation vehicles (e.g. corporate-wide innovation databases all the way to more focused ideation processes typically aligned with corporate strategic communities). This way, your organization will be well-poised to maximize the innovation potential across your diverse ecosystem of employees, customers, suppliers and partners in a systematic manner and equally able to mobilize ideation sessions as, where and when opportunities arise.

Innovation Infrastructure

This is the physical infrastructure and technology portion of your innovation management approach that may include centers of excellence and innovation labs as well as tools such as innovation portals, to support communication and collaboration among your various communities, together with innovation databases (repositories) to support your process methodology for innovation. An innovation database can serve as the centralized repository to support the innovation framework process and from which to draw reports and metrics which can be further analyzed via an innovation dashboard.

One of the key upfront requirements for any innovation database is to define the scope of what’s included very carefully and to educate employees on the range of usage scenarios. An innovation database is typically the view of future solutions for the organization. This may include emerging trends and technologies that are on the radar; future solutions, offerings and ideas that constitute the next wave of solutions; and finally, existing assets and capabilities that have the potential for leverage and reuse across the organization.

A key consideration within this pillar is to continually innovate around the use of the technologies themselves and incorporate newer elements such as gamification and advanced analytics to further fuel innovation activities and lend additional insights.

Internal Innovation Community

This is the employee-facing portion of your innovation management approach that includes elements such as innovation councils, innovation communities of practice, scouts and brokers, award and recognition schemes, employee communications and training and employee feedback mechanisms.

Basically, scouts and brokers are formally assigned resources who search for opportunities and then direct them to the appropriate parts of the organization. To get everyone on the same page across your organization, since “innovation” typically means different things to different people, it’s important to come up with precise terminology for innovation and to clearly spell out initiatives, roles and responsibilities to avoid duplication of effort or competition among internal groups.

This program area is vital to achieving corporate goals of institutionalizing innovation within the organization and making innovation part of corporate DNA. As such, it requires continual care and feeding in order to engage employees and build success in step with the innovation maturity of the organization.

Open Innovation Community

This is the external-facing portion of your innovation management approach that includes industry-recognized approaches such as open innovation and crowd-sourcing for bringing in ideas from the outside, together with collaboration in various innovation consortia for best practice sharing.

Depending on your particular industry and organization, this collaboration with customers and partners may constitute a large percentage of your sources of innovation and may be a central part of your innovation strategy.

Other activities within this program area may include alliance partner R&D programs where organizations collaborate and work with alliance partners further upstream so they can gain insights into the innovations that are on the radars of their partners and/or to co-create future solutions.

Customer Innovation Community

This is the customer-facing portion of your innovation management approach that includes all program elements and activities that you make available to your customers. This may include co-innovation with customers on a continual basis, via mechanisms such as innovation councils, innovation briefings and innovation workshops, as well as innovation research via customer focus groups and feedback mechanisms.

Continual and collaborative innovation with customers can help infuse innovation in two fundamental areas. The first is innovation within the current scope of your companies’ products and services, and the second is in helping them with innovation above and beyond the current scope of your relationship.

If your customers are a major source of much of your product or service innovation, then this pillar may well be closely aligned with, or even an integral part of, the open innovation community pillar. If your external sources of innovation come mostly from partners, then you may find that two distinct pillars are beneficial so that you can manage and fine-tune each program area specifically for those constituents. However you organize, it’s likely that open innovation will be a common approach across all three “people” pillars.

Bringing it all Together

Overall, it’s important to manage across all five of these critical pillars of innovation management capability and to ensure they all connect into the appropriate corporate strategy, investment and product and service development processes.

According to Steve Hill, global head of innovation and investments at KPMG, the three people-oriented pillars are the most challenging yet most important part of driving an innovation management capability. It takes leadership to make innovation a necessity, enforce behaviors, and to keep programs chartered and aligned with the external perspective in mind.

In organizing for innovation, Ralph Welborn, CEO at Imaginatik, believes it is also important to ask what he believes is the “new strategic question” of today – namely, where value is being created and destroyed within your ecosystem and consequently how to orchestrate your capabilities to respond.

By taking a programmatic and holistic approach you can ensure that your innovation program covers all strategic angles and can support and sustain innovation and contribute to both your top and bottom lines. You’ll be able to engage in continual and collaborative innovation with customers, expand your sources of innovation, and accelerate their commercialization into new products and services or differentiators for existing offerings.