Do You Need A Central Innovation Team?
March 10th, 2010Central innovation teams are a model which have been well adopted in many industries. Pharma, for example, is typified by large development budgets which tend to be centralised in teams set up for the purpose of innovating drugs. In banking, as another example, there will regularly be many New Product Development teams who dream up new things for specific business lines. Even in Government, there is an increasing focus on central innovation in the never-ending pursuit of efficiency and cost savings.
Understanding the reason is not difficult. Central teams are simple to establish, and very easy to measure compared to alternatives which rely on an “innovation culture”. It is easy to point to such teams and say “here is how we do innovation“. These are teams which make executives feel good about their innovation efforts, because when you can nominate specific individuals and assign accountability, you know things are being done.
In the central team model, it is usually the innovation team that decides what and when innovations will be progressed. They will have an investment budget of some kind, and will be accountable for driving forward the innovation agenda. If they are any good at all, they will agree to a big financial return number which will justify the investments they have decided to make.
But there’s a problem with a central innovation team that does everything: in order to get more innovation happening, you have to add more people. This doesn’t scale, and here is why.
Frankly, for most innovations, the difference in effort required to get an organisation to do something radical, versus the easier incremental kind of innovation, is not all that great. You still have to do the influencing, the management of politics, and of course, find the money in order to get things progressed.
Though incremental innovation tends to be relatively risk free, it usually will not make sizeable returns on case by case basis. This means that innovation teams are forced to do a significant number of things in parallel if they want to make a difference with incremental innovation. Unfortunately, it is a fact of life that with incremental innovations, a single success will be unlikely to pay for the time of the innovators.
On the other hand, doing things which are more radical can provide much better returns, though the risk level is much higher. For innovators, this makes it seem sensible to select more radical innovation for progression. The rationale is clear: do incremental and never break even, or do radical and at least have the chance to do so.
What is really needed, though, is a balanced portfolio approach to innovation coupled with significant inputs from customers and employees. Participatory innovation, as this approach is known when supported by a central team, is usually the best approach to making innovation work in large organisations.
Are you deciding on an innovation programme? If so, you’ll want to access the data from James Gardner’s free online innovation book when structuring your innovation team.
