Where innovation management must be structurally hung in the company to be successful
Innovation needs structure. Read here about a novel approach to the structural anchoring of innovation management in companies.
Successful innovation management requires effective methods at every stage of the innovation process and an effective structure that determines who systematically drives the development of new products, services or business models in the company and ensures their implementation.
In large companies, innovation management is usually the responsibility of CEOs. While they lead the company excellently within the existing business model, innovations are often neglected. Of course, there are exceptions, such as Steve Jobs or Jeff Bozos, who were able to combine both as visionary CEOs and innovators. But if the CEO is often not the one who can innovate, how could innovation management be hung up differently in order to be successful?
In this blog post, we are presenting a visionary thought experiment for discussion, which breaks down common innovation structures and completely repositions innovation management in the company. In a second step, we will look at how this approach can be adapted to the prevailing practice and transformed into practicable solutions.
Vision: The "Chief Entrepreneur" as a partner of the CEO
Assuming CEOs have a partner who is solely responsible for innovation within the company. A person at the same hierarchical level, who creates framework conditions for radical ideas, opens up new areas of growth and "reinvents" large companies. This "Chief Entrepreneur" could steer the future of the company while the CEO looks after the existing business.
The Chief Entrepreneur should be a person willing to take calculated risks. This does not correspond to the role profile of a CTO (Chief Technical Manager) or a position reporting to the CEO. The Chief Entrepreneur is an executive who has the same powers as the CEO, with clear leadership responsibility for radical innovation within the company.
His team ideally includes a number of entrepreneurs who are experimenting with new business models and value propositions. The Chief Risk Officer manages the risk of these experiments and the Chief Portfolio Manager ensures diversity in the experiments. Further functions are conceivable here, such as a "Chief Learning Manager" or "Chief Design Manager".
Of course, an innovation structure of this kind turns upside down the traditional understanding of leadership roles, but it would give the Chief Entrepreneur a positional power to ensure that the company innovates.
Transfer of the "vision" into traditional structures
As effective as the implementation of this vision in terms of innovation management might be, in business practice it will usually be difficult to convert the structure from zero to one hundred and install a "Chief Entrepreneur" in addition to the CEO at the same hierarchy level. Nevertheless, the visionary chart's approaches can be adapted and practicable solutions for innovation management can be derived from it. We would like to highlight three points in particular:
#1 Healthy distance to the line
If innovation management cannot be located at the "chief level", then it should at least be found at the next level - and not too close to the line. As long as it is structurally anchored in the line, the company will have to struggle with innovation barriers: it will always work with the existing R&D core competencies and portfolios and it will be difficult to leave this portfolio and the existing customer segments - i. e. the closer the innovation management is to the line, the more difficult it will be to develop a breakthrough innovation.
#2 Direct report to a C-level
If it is not possible to anchor innovation management at the C-level, innovation projects should at least be covered by the CEO's or a CEO's direct mandate (on the market side). This ensures that the necessary resources for the innovation project are provided by the lines. Once the CEO is behind the innovation manager, concerns cannot be easily rejected.
#3 Fast acting task force
Ideally, the innovation manager or organizational unit that deals with innovation has a kind of intervention force: a concept team or business development team that is on hand when there are ideas in the company that have a high degree of innovation. This does not mean merely providing methods, but rather an active cooperation. However, it is not a question of helping to develop the innovation to market maturity, but of providing efficient support in the initial phase, which puts the innovation project on track professionally and quickly.
Ideally, this concept team is also endowed with the appropriate human and financial resources. For example, two to three "entrepreneurs" could join the early phase of an innovation project and develop a first concept together with the departments involved, or support market research and testing hypotheses. In the best case scenario, the concept team also has financial resources at its disposal to support projects in the initial phase in a quick and unbureaucratic manner.
Conclusion: Structure in innovation management
The dynamics of today's business world increasingly call for new concepts that allow a company to successfully manage its existing business while at the same time developing future-oriented innovations. Chief entrepreneurship, on an equal footing with CEOs, will not be feasible in most companies - especially because of the immense power that has been established in the role of CEO for decades. However, some of the principles of this vision can also be transferred into common structures, e. g. distance to the line, backing from the C-level or a fast acting concept team. Nevertheless, in the future, large companies will have to deal increasingly with the reality and the need for continuous innovation and disruption alongside ongoing business - or risk becoming obsolete and losing the connection.
Born in Graz, Austria. After positions as project manager & head of innovation of the project management at LEAD Innovation, Daniel Zapfl has been responsible for the success of the innovation projects of our innovation partners since January 2018.