There are very few companies that lack innovation programs. Innovation programs are often bigger than innovation projects and will house more than one innovation project. There are many different examples of corporate innovation programs including idea competitions, corporate incubators, innovation boards and corporate venture capital.
The main challenge with corporate innovation programs is ensuring that they do not end up becoming innovation theater; a set of activities that look like innovation but ultimately produce no results. So how do we know that our corporate innovation programs are producing results? What are the right questions to ask to find out?
A Tale Of Two Theories
In their research on organizational change, Nitin Nohria and Michael Beer identified two main archetypes of change. They named these two archetypes Theory E and Theory O. According to Nohria and Beer:
- Theory E focuses on creating economic value for the company and its shareholders. This type of change is most driven by financial goals.
- Theory O focuses on organizational capabilities. The goal is to change corporate culture, employees behaviors, learning and attitudes.
Both theories are valid approaches to organizational change. Each approach has its benefits and weaknesses. This is why most organizations studied by Nohria and Beer tend to use some mix of both.
A Tale of Two Programs
When evaluating the results that are being produced by our corporate innovation programs, we can borrow from Nohria and Beer’s theory of change. We can use this framework to help our companies avoid the trap of innovation theater. World class innovation programs should focus on either or both of the following outcomes:
Value Creation: Creating new products, services, value propositions and business models. These programs invest in and manage innovation projects that create value by producing new growth or cost savings (i.e. Theory E).
Culture Change: Transforming the company to establish an innovation culture. This may include new processes, metrics, incentive systems, or changing organizational structures. These transformations help the company innovate in a consistent and repeatable way (i.e. Theory O).
There are real world examples of companies using innovation programs for value creation. The Bosch Accelerator program invested in 200 teams over three years. Each team got an initial investment of $120,000. This produced 15 successful teams with projects that were taken to scale with follow-on funding. The Sony Startup Accelerator Program (SSAP) has ideated over 750 business ideas, incubated 34 of which 14 businesses have been successfully created. The innovators at steam iron maker Laurastar initially developed 14 ideas of which three teams went into an innovation sprint and one idea was successfully executed.
A great example of a company using innovation programs to drive culture change is Intuit, the large financial software company. Since 2007, Intuit has managed to transform its culture to drive innovation as a repeatable process. They created a framework of tools and methods called Design for Delight (D4D). To scale the impact of the D4D toolbox, Intuit recruited and trained a group of coaches that were then embedded across the company. The cultural role of these Innovation Catalysts was to support internal innovation teams as they did their work.
While the examples above show how innovation programs can be used for value creation versus cultural change, neither of these types of programs can succeed on their own. This is why it is important that our innovation programs are connected in a strategic way. Most innovation programs need other programs within the company to support them.
One question that is discussed among innovators is whether hackathons or idea competitions are a form of innovation theater. To answer this question, we need to know what happens to the ideas after the winners are selected from the hackathons and idea competitions. If nothing official happens with those winners afterwards, then the hackathons or competitions were innovation theater. There is a need for other programs that support taking those winning ideas towards success.
Most research and development programs (i.e. R&D), can be viewed as Theory E. They focus on creating technologies that should ultimately deliver some sort of value for the company. But if they focus exclusively on just developing cool new technologies, R&D programs are less likely to succeed. The best way to produce economic value is if those technologies are transformed into value propositions that resonate with customers and business models that are profitable and scalable.
This is where support from other parts of the organization becomes critical. No one department in a company can create a successful innovation by itself. For example, the technologies from the R&D teams can be taken through a corporate incubator program that supports the development of the right business models for successful commercialization.
Most innovation training programs can be viewed as Theory O. These programs are usually driven by the Human Resources department to help develop innovation skills and capabilities within the company. However, this training is pointless if there are no innovation projects for people to work on. In fact, the best way to develop world class innovation skills is practice and experience. So the training programs are only effective if they are supported by other programs within the company that allow people to practice what they learned (e.g. an accelerator program).
Can corporate innovation programs produce results? Yes, they can! Leaders just need to have clarity on what they are trying to accomplish with the programs. Are they focused on creating new products, services, value propositions and business models, or are they focused on transforming the company to establish the right innovation culture? Furthermore, our innovation programs need to be connected to other programs in a strategic way. If leaders can accomplish these things, then they are likely to see results from their innovation programs.