Innovators Must Pay Their Way
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.
Sooner or later, though, they will be called to account for their results (or the lack of them). All those excited stakeholders will start to ask what they are getting in return for all the money they invested. They will start to wonder if they might have gotten better outcomes by investing in other things, for example, a Lean initiative.
Invariably, this will happen within the first 18 months, and budgets will be called into question. Whilst everyone will likely agree that the team has done “valuable work”, the only justification which anyone really considers valid will be any financial returns the team has 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.
Innovators need to pay their own way if they want to continue having a mandate 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 that it must have a portfolio of innovations, some of which pay, and some which don’t. Generally speaking, there will need to be more of the former, of course, and the obvious implication is the innovation team would naturally de-prioritise those innovations without decent financial returns until it has paid the bills.
For more information on building an innovation portfolio review James Gardner’s free online innovation book.
