Structures and Cultures to Drive Innovation
Organisations that are structured and culturally aligned to encourage, enforce and enable innovation are more likely to succeed.
“Innovation is not an art. It’s a capability – a repeatable process that can be studied, learned and practiced.”
This is the opening paragraph of ‘Masters of Innovation’, a book from business advisory group, AT Kearney, written as a manual for creating a permanently innovative business.
While we don’t agree with everything included within this book, we are of the same opinion that innovation is not an art. Neither is it exclusive. And therefore, any business can take inspiration from another’s approach to innovation as stimulus for overcoming their own business challenge.
Having been fortunate enough to work with some of the world’s most innovative businesses, we know who gets it right, and who doesn’t. Here, we showcase three organisations who have created structures and cultures that drive innovation:
Manufacturing business, 3M, has come a long way from its mining roots and is now a billion-dollar global organisation. Since the 1940’s, individual innovation has been at the heart of the business; incubating it through culture, management and structures.
3M actively encourages ‘intrapreneurial’ activity. All employees are empowered to use 15% of their paid time to develop ideas. Executive champions are in place to commit funding, sponsor products and shoulder some of the risks of new innovations. People have a freedom to fail, backed up by the behaviours demonstrated by those at the top of the organisation.
Without this structure, it’s highly likely the humble post-it note would never have been created. A sticky piece of paper which now generates more than $1 billion annually for the company.
American consumer goods organisation, P&G, made a bold strategic move in the way they innovated. They recognised that to maintain growth, they needed to move away from a mindset of innovation should only reside within their own walls.
And so, they set themselves a goal of acquiring 50% of innovations from outside their business. Connect and Develop, a collaborative innovation model, was born.
The platform enabled innovators from around the world to submit ideas to P&G for potential partnership. It brought vast success to P&G, with more than 35% of new products formed of elements which originated from outside of the company. Over 45% of products in their development portfolio have key elements which were discovered externally. It’s since been evolved into the New-Growth Factory, an idea incubator and training programme which has helped to double the innovation success rate, reduced the cost of innovating within the business and taken the business into new markets.
Clayton Christensen, in his seminal work ‘The Innovator’s Dilemma‘ suggests that big companies fail to innovate because the business of management is not geared towards the new, but maintaining the status quo. He suggests that companies need to set their innovation teams apart from the rest of their organisation. They need high levels of autonomy, separate reporting structures and a distinct culture.
Lockheed Martin’s ‘Skunkworks’ was set over 70 years ago to work on new technology for the aerospace sector. This innovation team operates with a unique approach created by founder Kelly Johnson. ‘Kelly’s Rules’ are still in use today as evidenced by the small empowered teams, streamlined processes and the culture that emphasises learning from failure. Kelly’s Rules are outlined in this post from Lockheed Martin. Most notable amongst them, in our view, is the first rule:
The Skunk Works manager must be delegated practically complete control of his program in all aspects. He should report to a division president or higher.
This is exactly the structure that Clayton Christensen has identified as required for successful disruptive innovation. High reporting and maximum autonomy give innovators the ability to fail and recover, to explore and experiment.
Three approaches to drive innovation
These three case studies show that there is no one, perfect way to innovate. What is needed is an awareness of your market position, overarching strategy and, most importantly of all, your organisation’s culture. Deciding on an innovation structure for your business is the first step towards becoming an innovative organisation.
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