Innovation Must Pay
When an innovation team is created by an organisation, everything is exciting and rosy at the start. Filled with hope for the future, sponsors attach themselves to their new silver bullet which will solve all their problems and wait for exciting results to arrive. In the first few months after they are created, the team can get away with practically anything.
Quite quickly, however, the innovation team will get called to account for their results or (more likely) the lack of them. All those excited stakeholders will begin to wonder if they might have gotten better returns on their money by investing in something different, such as, for example, a Lean initiative. Most of the time, this happens inside 18 months, and the team’s budget gets scrutinised very carefully.
While everyone will probably agree the team has done “valuable work”, the only justification they really care about is financial returns that the innovation team may have generated. Ultimately, if all the other available investment opportunities can justify themselves financially, and the innovators can’t, it is obvious where a rational business manager will direct future funding. This is especially true during a downturn, or any other time an organisation is under stress. So innovators need to pay their own way, if their programmes are to exist in the long term. Now, it is always the case that some innovations don’t actually have financial returns. For example, productivity improvements driven by information technology are often key candidates for an innovation team. These will often add significant new capabilities which make employees work better or more quickly, but may not result in a direct financial benefit.
Clearly, there’s value in doing such things, and a sophisticated innovation team will certainly pursue them, regardless of the chance they’ll pay. How then, does an innovation team reconcile non-financial projects with its (necessary) core drive to make real money? The answer is the team must adopt a portfolio approach to innovation. In doing so, they will start a range or projects, some of which pay well, and others which don’t. It is a natural consequence of this that the team will spend much more time on the former, and de-prioritise the latter, at least until they have met their financial objectives.