Brain Trust: Three experts on innovation and how it fits into organisational structures
Marketing asked three experts the same question about innovation management:
“What are the pros and cons of operating a separate ‘innovation team’ compared to trying to embed innovation across the whole organisation? (And is it necessary to choose?)”
Here are their three different answers:
As the marketing and innovation director of Diageo, I find this to be a question I get asked a lot.
I love that the two functions are combined within the one team – because I have people with deep empathy for their brands being fused together with an innovation team that come from a completely different angle and thought process of creation and development.
While the brand teams and the innovation teams are separate
within my team – as in separate pods, because they all report up to the directors role – there is always fantastic interaction and interventions that ensure they are joined at the hip.
I would have to think deeply if the innovation team was rolled up into each of the brand teams, but I think I would l lean towards keeping them separate for now, due to planning timelines and the fact that the innovation team can stay more objective and liberated from the deep connection on brand. Brands teams have shorter timelines and horizons in today’s world, whereas I can create longer thinking with the innovation pipeline.
Diageo Australia is with no doubt an idea-generating machine. We are lucky in Australia with Bundaberg being a local brand and with RTDs being a significant part of our portfolio, so, we are seen as a ‘create’ market for Diageo in the global network. This year alone we have created breakthrough RTDs and at the same time sold a limited edition bottle of Bundaberg that was celebrating the 125th of the rum for close to $2000.
This means we need to continually foster and encourage idea generation and breakthrough thinking and leadership to ensure we keep moving at pace with the ever-changing face of the spirits and total beverage alcohol market.
We work with clients from most industry sectors and we’ve yet to see an innovation team flourish without the foundations of innovation embedded in company culture, but we’ve also never seen the perfect innovation culture.
The short answer is that separate innovation teams get stuff done – they can dedicate time and energy to critical projects. Research from Doblin established that innovation platforms have a ten-fold chance of success compared to singular innovations. In order to marshal platform or category innovations, you
need a team that can operate above traditional functional restrictions, like the Nike Innovation Kitchen. Profits have risen 60 percent at Nike since it was established.
A separate team is an efficient coaching and education force within the business: training core skills and role-modelling behaviours. It can also build relationships with deep-sector knowledge experts outside its core business to help accelerate learning.
But separate innovation teams should not preclude a company-wide responsibility to think innovatively. The worst case scenario is that you bottleneck problem-solving by limiting the skills to a choice few, or restrict the voice of the customer from reaching every ear. Organisations with a culture of innovation outperform rivals because they can operate at a level of sustained innovation.
The nature of the organisation – the category, leadership style, endemic culture and position in growth cycle – will all affect the balance between separate teams and embedded innovation. But it shouldn’t be an ‘either/or’ choice – you need both. As Jay Rao wrote to me this week: “It is still very hard
to find firms that are training internal innovation experts. The discipline of innovation is where the discipline of quality was 25 years ago because very few firms believe that innovation can be managed like other management disciplines.”
The pros of an innovation team are that the people within it are completely focused on coming up with new ideas and are 100 percent accountable.
An innovation team will utilise a consistent approach for every creative task and involve the right experts at the most appropriate time for each project.
In addition, they will align more easily with company strategy and objectives and have the ability to identify good innovation and filter out what is essentially ‘noise’. Unfortunately, the cons are that they may not have all the
right people because some of the best ideas may not come from the team.
Another issue with innovation teams is that their success is hard to measure and often the lack of visibility of the direction of their innovation and a clear decision-making process means they attract criticism and suspicion from colleagues.
On the other hand, the good thing about embedding innovation inside an organisation is that everyone has a voice and a chance to raise their own profile, right from the bottom up. These contributions are therefore based on real life experiences in the field.
A creative-thinking organisation encourages all employees to think outside the square, which drives employee engagement and these motivating work environments offer more scope for real innovation.
Unfortunately, it can mean that innovation is more difficult to manage and tracking its success can be challenging. It will often distract people from their day-to-day job and time can be wasted on ‘dumb’ ideas. Employees are sometimes disappointed if their idea isn’t given a proper hearing.
In summary, a combination of the two approaches may work best. Create an innovation culture where anyone can innovate, but there is a governance process across it.
A small amount of governance can go a very long way.