4 important ways to set your innovation team up for success

Corporate innovation teams dedicated to disruptive or transformational innovation have different remits compared to core innovation and R&D teams. So how do you set up a transformational innovation group for success?

From experience working with corporate innovation leaders, some of the most important factors to setting up a successful innovation team are:

1. Report to the top (NOT to brand, divisional, or R&D leadership)

The most important single factor for successful transformational innovation groups is a dedicated leader who reports to the CEO (or even better the Chairperson). Not only does this hotline to the top bring access to funding and resources for the team but more importantly it provides the CEO an ability to deliver on the parts of their long-term strategic vision which require change to the organisation as it is today such as new brands, new markets and new business models. Without this mutually beneficial link to align strategic goals with action, innovating outside an organisation’s current business will always run into the corporate immunity protecting what it is doing today.

2. Build outside-in (DON’T just re-organise and rename internal teams)

By its nature the transformational innovation team will focus on exploring and developing new opportunities outside of the company’s core innovation pipeline – it needs to be built the same way too. Team members from outside the current corporate culture and ideally even outside your industry can provide an independent perspective, challenge corporate assumptions and will bring external connections that allow you to break from corporate norms and create breakthrough. Of course, it is not about separation entirely – as Safi Bahcall describes most eloquently in his book Loonshots, you need to ensure this team is also connected enough that new ideas and projects can be transferred to core R&D when the time is right.

3. Adopt data driven innovation metrics (DON’T measure the team in the same way as core R&D)

A common theme for disruptive innovation teams is their systematic use of data for guiding decisions and reporting results. Because you’ll be working in areas that are inherently unfamiliar to your company’s core business, investment decisions need to be driven by evidence-based market tests, and not just revenue. Metrics are never easy to get right, and they should evolve over time. Early on measuring teams for action and engagement (ideas, connections, IP) can be helpful to stimulate the right behaviours. As the function matures measures should change to reflect how activities are prioritised and their impact on the wider organisation, and ultimately, you’d like to see metrics that relate to business impact – although these should still be different to your core R&D teams (e.g. longer term, more speculative). Some companies even use “investment lost” as a measure of the size of experiments and learning they want to drive.

Don’t limit yourself with incremental annual budgeting, beyond a working discretionary budget you should need to earn significant innovation investments. The funding should be available and protected but only provided when you meet key data driven goals. By linking the metrics with data and funding it drives discipline in innovation management and can help avoid those zombie projects.

Incidentally, many teams are increasingly using OKRs (Objectives and Key Results) as opposed to traditional KPIs. More information about OKRs is available at www.whatmatters.com.

4. Explore other routes to market (DON’T constrain yourself by today’s supply chain)

One of the most limiting factors for innovation teams is sometimes the assumption that an innovation must be delivered internally (and often using the same business model). Unlike a sustaining innovation approach, the route to market used for each type of transformational innovation opportunity might be different. For example, some might be rapidly handed over for development and launch within the company’s existing R&D pipeline. Whilst others might be developed externally and brought to market with partners. Partners might be other divisions, technology vendors, ecosystem makers, other brands, potentially even competitors. However, while partnerships are often the key to success, don’t forget to also assess whether outsourcing is your only option. Instead, consider whether sometimes it might be better to invest in adapting or building up internal structure, processes or team capabilities to either minimise upfront costs or position yourselves better for future developments. But if you’re not initially open to new business and execution models… you really are limiting your innovation inside the box.

Perfect for you

While there is no “one size fits all”, what your team looks like will depend on your market, objectives, existing structure and products, etc. Look to others for inspiration. But create a set-up that works just for you.

Is your innovation team fit for purpose?