Innovation Governance and Best Practices

This piece serves as an introduction to the concept of innovation governance in organizations, a series of follow up posts will be published to carry out a deeper dive into the subject.

Effective governance can be a key enabler of innovation at every level of society, and this is evident in government, local communities and organizations that have been able to deploy working solutions in tackling their most pressing problems.

One example of effective innovation governance that can be highlighted is in the handling of the COVID-19 pandemic where public service authorities across both local and international jurisdictions swiftly managed the conceptualization to delivery of solutions and vaccines to ensure the spread and effects of the pandemic was mitigated as quickly as possible. A remarkable aspect of this was seeing non-governmental players deploying resources to ensure that government plans came to fruition; individuals started small companies to ensure enough masks and shields were available to the people and they complied with laws that supported the plans put in place. However, it is also notable to mention that even with the delicate planning and concentrated efforts towards execution, there were areas of failure where targets were not met.

Moving on to less traumatic scenarios, another example of innovation governance driving outcomes can also be seen in companies adopting a four-day week working schedule, software as a service (SaaS) technology, big data for customer insights, paper-based straws instead of plastic straws, whistleblowers for product management etc. and now we are going to be going a little deeper to look at the framework required in innovation governance.

Looking at Jean-Philippe Deschamps’s explanation of Innovation Governance, he defines it as a system of mechanisms integrated to align goals, allocate resources, and assign decision-making authority for innovation. And to help us understand the importance and scope of the term, it is important to ask ourselves the following questions; Why innovate? Where do I look to innovate? How much innovation do I want? How can I innovate more efficiently? Who do I innovate with? And who is going to be responsible for what during this process?

It starts with defining and building a vision and strategy for innovation, this is done to understand and resolve the differences in perception to the solution being offered, communicate implementation plans, set priorities, and determine the level of expertise & resources required to execute the plan.

Once there’s a plan, determining the next course of action is executing it within the boundaries set by the planning framework — here result frameworks and leadership must be aligned to ensure optimal innovation capability and performance.

Illustration 1: The Innovation Governance Triangle

Innovation Governance Models

Let’s look at a few approaches’ companies have implemented to govern the flow of the innovation process.

Model 1: Dedicated Team Innovation Governance

This is the most widespread form of innovation governance. This model comes in different forms but primarily, the responsibility of driving innovation falls to those within a designated organizational unit or team. This is often structured in one of the two ways below:

a. The Top Management Team

In this model, the top management team exercises the overall responsibility for innovation. Each member of the top management team contributes based on their specific area of expertise.

Most companies that adopt this model limit the membership of this group to those senior leaders most directly involved with innovation activities e.g., technical, and commercial or business leaders and depending on the organization, the CEO.

This form tends to put a stronger emphasis on the content of innovation, i.e., on projects and new ventures, rather than on the process. Process improvement issues tend to be delegated to various other supporting models.

b. The High-Level, Cross-Functional Team

This form involves the selection of managers from various functions, sometimes across different hierarchical levels to govern innovation as a team.

This model, typically referred to as the “innovation committee,” “innovation steering group” or even “innovation governance board” is different from format A because not all its members are part of the top management team. The chair of such a group is almost always part of the executive committee. Members of the team in addition to being for functional responsibilities are also selected for their drive and commitment to innovation.

The focus of the group depends on the vision of the company they are in.

Model 2: Single Driver Innovation Governance

As the name suggests, in this model the responsibility of governing innovation lies with a single individual. The model can be adopted in the following ways:

a. The CEO or Unit/Division Head Governance

The CEO acts as the innovation driver in the second most frequently adopted model of innovation governance. It is promoted by several charismatic personalities, more often founders of companies. The model works in a way that the CEO determines the direction of innovation in a company and several senior executives under the CEO, work as a group to actualize the vision.

In large, decentralized companies with several divisions or business groups, the heads of these divisions take the task on as the CEOs of their units and can exercise ultimate responsibility for innovation in their unit.

The message is typically clear and concise in this governance model for the rest of the organization because all information is being communicated from one source.

b. The Chief Technology Officer, Chief Information Officer or Chief Risk Officer Governance

This model is probably one of the most traditional forms of innovation governance, particularly for technology-, science- and engineering-based companies.

The appointed officers execute their innovation governance with the help of supporting mechanisms like dedicated staff under them. CTOs, CIOs or CROs naturally focus on the content of innovation e.g., on the development of technology and new products.

For more modern organizations, an innovation team under the lead of a Chief Innovation Officer is created to handle the company’s innovation acceleration mechanism e.g., new business incubators or hubs, the team works on the planning and execution of innovative solutions in the organization. They help idea submitters prepare and defend their proposals in front of top management. This form is usually adopted in conglomerates.

c. The Innovation Manager/Officer Governance

This form is not as frequently adopted as the others but is as important because it highlights the fact that overall responsibility for innovation can be entrusted to a single dedicated manager.

The manager acts as the innovation driver and as the official supporter of the organization in its efforts to promote an innovation agenda. Innovation managers are usually selected from highly motivated middle to upper-middle executives from a variety of functions, typically marketing or R&D. They frequently report to a member of the top management team and operate mostly by themselves, occasionally with a couple of staff assistants. They deal with the process side of innovation e.g., monitoring and tracking progress.

Model 3: No one in charge innovation governance

Including this in our list of models might be odd but it reflects the reality of some organizations. This “lack” of dedicated governance might be because of the following: active innovative culture throughout a company, frequent restructuring of the organization or perceived unimportance of innovation within a sector.

As you can see, innovation governance can be brought about in many ways but before adapting any model, it is important to carry out a systemic breakdown of the models to select which best fits your organization.

Is your current innovation governance bringing about optimal innovation capability and performance?

In the next article, we’ll be looking at navigating managerial and policy changes as part of the wider conversation of ensuring buy-in and (re)allocation of resources towards the success of innovation programs.

References and Further Reading

Business Design | Innovation | People

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