Organizing for Agile Innovation
We see it in the questions clients ask us at the moment:
- How do we design and implement an innovation unit?
- What is the future of content?
- What is the best response to the unbundling of banks?
And more specifically:
- Should we sell B2C in addition to B2B or transition completely to B2C?
- Do we need to move from selling products to enabling peer-2-peer marketplaces?
- How can we leverage AI and IoT to deliver data-driven subscription models?
Since technology is cheap and digitalization have democratised access to new markets and financial resources, most organisations have responded by heavily investing in digitalization - unfortunately digitalization does not necessarily lead to innovation.
In this short article we propose 5 different ways innovation efforts can be organised today, ranging from Bricolage to Outpost Labs. But in order to present these 5 different ways, we first need to establish what innovation is and how it can be measured.
Innovation is highly relative on an individual level, but innovation in an organisation, as opposed to business-as-usual, means: “Putting into use ideas that create value to users.”
Innovation may require new technology by addressing new user groups in radically different-from-before ways, but at its core lies value creation. To measure value from innovation efforts in organisations, we should focus on the work we choose to undertake, as well as the projects we reject or abandon. Efforts can be further subdivided into two categories: successful and unsuccessful projects (as measured by value creation and/or learning to organisation). Below is an approximative equation describing how to measure the value of innovation:
Very often, we tend to forget to account for the unsuccessful projects we successfully reject and the ones we did not reject or abandon in due time.
As with species in Nature, organisations need to adapt to changes in their environment, e.g. new technologies, business models, competitors, legislation etc. Some species of organisations are better at this than others. In the wake of the financial crisis, most organisations chose or were forced to lessen the type and amount of innovation projects in exchange for fewer low-risk but big-budget projects. The illustration below visualizes two very different reproduction or innovation strategies from Nature:
1) Oysters: 500M offspring/year, low survival rate, no parental care, short gestation and time-to-reproduce
2) Gorillas: 1 infant every 5th year, high survival rate, extensive parental care, long gestation and time-to-reproduce
All industries feel greater uncertainty regarding the future, so a need to build organisational capacity to answer questions fast arises. Using nature as analogy we should thus increase the oyster-to-gorilla-ratio. How do you do that? By organizing for agile innovation.
Below we have generalised our research and experience into 5 different organisational models. There are no right or wrong models as long as they reflect internal and external conditions 12 months ahead. In general, though, organisations will evolve from left to right with mounting pressure and often end up combining elements from different models to stay relevant.
Bricolage is what happens in start ups, maker spaces and garages around the world. Resources are limited so you make-do with what’s at hand and care less for processes.
R&D Department-style innovation efforts perform basic research in core business domains to achieve long term innovation advantages. Less focus on applications and business models.
Intrapreneurs across divisions will seek to collaborate to push ideas into use by bundling resources and skills around common business problems.
The Strategic Innovation Unit is funded by C-level management to run strategic innovation projects, build innovation capabilities and deliver insights from across industries.
Outpost Labs aim to provide self-sustainable and radically new business abiding by very few rules - sometimes detaching itself completely… much in the same way Inspector Clouseau of the Pink Panther movies hired Chinese manservant Cato to attack him when he least expected it to keep him alert.
The most important building blocks of any innovation effort are great people and ad hoc resource allocation but secondly you need formats for producing solutions. We have developed a catalogue of innovation formats that you can download here:
Determining how to design the innovation efforts in a large organisation would benefit greatly by assessing which agile innovation must-win-battles are important and to which degree you want to change them in the next 3 years.
If you are considering organizing or re-organzing your innovation efforts, feel free to contact us for an informal meeting. If you already have a killer innovation (or the other way around) program, we would also love to hear from you as we are constantly looking for new cases and best practice.
For further reading on Agile Innovation Management, we have compiled a list of short articles on the subject:
For Agile Innovation Mapping, click here:
https://ilab.dk/product/design-your-innovation-strategy-aim (AIM introduction)
https://ilab.dk/blog/den-integrerede-innovationsstrategi (How to integrate innovation into your strategy, in Danish)
More specifically on sprints and hackathons:
https://ilab.dk/blog/ilab-sprint (Sprint introduction)
https://innovationlab.net/blog/sprint-upgrading-formula (More on corporate sprint programs)
https://ilab.dk/blog/hackathons-en-innovativ-game-changer-i-virksomheder (Hackathon introduction in Danish)
https://www.slideshare.net/mschorling/2017-innovation-lab-hackathon-guide-public-v1-76724469 (Hackathon how-to guide)