Central Innovation Teams: Yes or No?
Central 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.
Its easy to understand why. Central teams are easy to set up, and much less difficult to measure than diffuse arrangements that rely on an “innovation culture”. It is easy to point at them and say “that’s how we’re doing innovation”. They make executives feel good about their innovation efforts, because when you can nominate specific individuals and assign accountability for actions, you know things are likely to get 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.
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 innovations, though they tend to be relatively risk free compared to their radical cousins, don’t generally make big returns individually. You need to be doing a lot of them before you can make a sizeable difference. With a central team, you often find the individual incremental innovations don’t pay for the time of the innovators.
By contrast, doing things which are more radical provide better returns, but at a much greater risk level. This makes it seem sensible for innovators to select radical innovations for their portfolio. Given the choice of almost certainly not breaking even, and at least the chance of a big payoff, most teams will select the latter.
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 system? If so, you’ll want to access the data from James Gardner’s free online innovation book when implementing your innovation team.
