Innovation Teams - Central Or Not?

Central innovation teams are a model well adopted in many industries, from Pharmaceuticals, where research and development budgets tends to be held by large business units dedicated to the purpose, to Banking, where there are likely to be a few smaller New Product Development teams. Even in Government, there's increasing reliance on central innovation teams to drive efficiencies and cost savings.

It is not hard to understand the reason. Central teams are simple to set up, and very easy to measure in comparison to diffuse arrangements that rely on an "innovation culture". It is easy to point at such teams and say "this is how we do innovation". The team makes executives feel good that their innovation efforts are actually progressing, because when you can nominate specific individuals and assign accountability, you know things are likely to get done.

Now, in this model, the innovation team is the group that decides how and when to innovate. They ordinarily control an investment budget of some kind, and are accountable for making investments that drive forward the innovation agenda. If they are any good at all, they will sign up to some big return numbers that can justify the investments they're making.

There is, however, a problem with a central innovation team that does everything. The problem is that in order to get more innovation, you are forced to add more people. In other words, central innovation teams do not scale well.

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.

Incremental innovation, though it tends to be relatively risk free, doesn't really make big returns on a case by case basis. This means that innovation teams have to do a lot of simultaneous innovation before they can make a sizable difference. With a central team, the fact is that a single incremental innovation will likely not 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 considering an innovation programme? If so, you'll need the information from this free online innovation book when structuring your innovation team [http://www.littleinnovationbook.com/rulethree16.html].