Three signs that innovation has power and legitimacy in your company
A majority of executives now see innovation as one of their company’s main growth drivers. This means business leaders can no longer treat innovation as a sideshow. For innovation to succeed in stimulating growth, it must be given the same status as the core business. This is the eternal challenge facing business leaders.
In most companies, the core business usually dominates. This is a natural consequence of the fact that the core business is the engine that currently generates revenue and profit. To generate new growth, leaders must deliberately allocate resources, bandwidth, and budget to the company’s innovation portfolio.
Resources allocated to innovation must be protected and institutionalized. The only way this works is for innovation leaders to have power and influence in the organization. Having power and legitimacy not only gives innovation access to protected resources, but also provides some leverage when negotiating with other key functions.
Does innovation have power and legitimacy in your organization? Or is it still treated as a side show? Here are three ways to know if innovation has power and legitimacy in your business:
Where does innovation fit in your organization chart? In some organizations, innovation is not explicitly mentioned in the organization chart. It is considered part of another function (for example, technology, marketing or research and development). In these contexts, leaders often assert that innovation is everyone’s business. While this may sound cool and even democratic, if something is everyone’s job, then in reality it’s nobody’s job. Every business needs a group of people who have innovation in their job title and part of their role is to create and manage the processes others use to innovate.
In other organizations, innovation is on the organizational chart, but not at the top. There are quite a few companies where the head of innovation sits two or three levels lower on the organizational chart. To have an impact, innovation leadership must sit at the executive level of a company (eg, the C-Level). When this happens, it sends a clear message to company employees about the importance of innovation. In addition, a C-level innovation leader can negotiate protected resources with their executive-level peers.
Bridge to the core
To what extent does innovation collaborate with other key functions within your company? It is virtually impossible to launch a successful innovation within a large company without other key functions being involved (eg, sales, marketing, legal operations and compliance). The problem is that most of these functions are focused on delivering results for the core business. When innovation lacks power and legitimacy, it can struggle to build on these key functions.
Even where support is provided, some key functions have policies and ways of working that are not aligned with innovation best practices. A typical example is legislation and compliance. Innovators often find themselves jumping through so many legal hoops just to get permission to show customers a prototype. This slows down testing and becomes an obstacle to rapid prototyping.
When innovation has power and legitimacy, there are clear policies that guide how innovators can collaborate with key functions. Indeed, support for innovation is now part of the job descriptions and KPIs of these key functions. In some organizations, innovation leaders have worked with key functions to create “fast lanes” for innovation teams to avoid some of the unnecessary bureaucracy that blocks their progress.
Rewards and incentives
Does your company have awards and incentives dedicated to innovation? In many companies, there are only incentives and bonuses for achieving your goals within the core business. It’s no wonder that most employees avoid working on innovation projects and instead focus their efforts on supporting the core business. Some middle managers are even discouraged from investing in innovation because it appears as a cost in their income statement (i.e. P&L).
The best way to empower innovators is to have dedicated innovation awards and incentives. These rewards and incentives should be designed to recognize that failure is part of the innovation process. Teams that kill their innovation projects should be rewarded and celebrated for it. The provision of resources dedicated to innovation, separate from the P&L of middle managers, can also facilitate their investment in innovation.
Middle managers and their teams can also be incentivized using stretch goals that require a certain percentage of revenue to come from new value propositions launched in the past 3-5 years. If bonuses are calculated with these ambitious goals in mind, these leaders will be more motivated to support their innovation teams. Finally, innovators can also get a percentage stake in their ideas, in exchange for a pay cut while they work on the project.
The legitimacy and power of innovation within an organization is indicated by the number of dedicated structures and processes that are in place to support it. When innovators are disempowered, they are expected to lead their projects through the same processes used to manage the core business. With dedicated leadership prominently featured in the organizational chart, innovators can collaborate well with other key functions and benefit from dedicated rewards and incentives.