| |
Innovation Structures and Keys
To Their Success
Most organization use multiple
structural models to drive
innovation efforts.
Innovation Functions
Companies that chose creation of
new products and services as
their primary focus usually use
separate innovation functions.
Modern innovation functions take
responsibility for new ideas
through to prototyping while
reporting in-market successes
and profits as well.
Innovation incubators are used
to develop new products and
technologies.
An innovation function that
focuses on new business
opportunities is colocated at
company headquarters and reports
directly to the CEO.
Financial objectives of an
innovation function are
optional.
Some innovation functions exist
to turn a profit, some functions
have no financial targets at
all. According to a McKinsey
Global Survey results,
new-business development
functions,
emerging-business-opportunities
groups, and
emerging-technologies groups are
usually guided by profit, while
innovation incubators,
innovation centers, and
advanced-technologies institutes
tend to have no financial
targets. Innovation functions
with profit targets are likelier
to carry their innovations
through market launch and
scaling. Those without profit
targets have less responsibility
across the innovation value
chain and tend to focus on idea
generation through proof of
concept or prototype.
Innovation-specific performance
metrics is also optional. while
32 percent report the use of
innovation-specific metrics.
Corporate and Divisional
Innovation Structures
Corporate Structure
Dominant core organizational
entities are divisions, which
are aggregated into strategic
business units. Divisions are
defined as units having a clear
set of customers and
competitors.
Divisional Structures
Divisions have profit and loss
responsibility. They may be (a)
organized as a stand-alone
divisions that have effective
control over every function
required to compete; or (b)
focused on a subset of tasks,
such as development or
marketing.
***
Challenges
The most significant challenges
innovation functions face are
competition with the business’
short-term priorities and
integrating strategic objectives
with those of the core business.
Keys To Success of an Innovation
Function
❶ Clear strategic focus is
highly important to success of
an innovation functions. The new
product vision and innovation
strategy must be aligned with
the strategic intent of the
company, well developed,
integrated into the broad
corporate strategy, and clearly
articulated. Companies with
integrated strategies share
organizational elements across
the innovation portfolio.
❷ Enthusiastic and effective
C-level and leadership support
is a critical key driver of
success of an innovation
function. The Top Management
Team must lead innovation in an
inspiring, entrepreneurial and
supporting way.
❸ Innovation functions that have
more responsibility for their
value chains ‒ ideas, proof of
concept, beta-testing, launch,
and scaling ‒ are more effective
at meeting objectives and
achieving in-market successes.
❹ Innovation functions located
near talent hubs and/or target
markets have more market success
and meet their objectives more
effectively.
|
|
Innovation
Management Policies of Leading
Large Companies
Hot Studio
System at IDEO |
|
