How Should enterprises approach innovation?
The Study
Researchers
Natalie Salk
Bemi Akande G
Date
Winter 2024
The Topic
Enterprise Innovation adopts various forms, with organizations exploring internal and external strategies to prepare for the future. The goal across all models is to position large organizations for future uncertainties through product development and strategic investments. Our research seeks to identify effective innovation models, their successes, failures, and reasons behind their outcomes.
methodology
Interviews with Professionals Embedded in Corporate Innovation Organizations.
24
Interviews
&
Companies Represented
15
Industries Represented
92%
Companies Based in USA
1 hour
One Hour Long Interviews
Results
Here, you'll find the most critical insights from our study.
This is just the tip of the iceberg—there's much more we couldn't include here.
For more detailed information chat with the bot, or reach out to the authors.
Types of
Teams & ROles
Enterprise innovation teams often use confusing titles, such as Centers of Excellence, Innovation Labs, and Digital Transformation units, creating uncertainty about their roles. Our research identifies four clear types of organizations.
Connectors
These entities connect startups and resources with internal teams, breaking down silos and promoting collaboration and transparency. They encourage cross-functional partnerships and knowledge sharing.
Team Size: 1 - 7
Must be embedded into every type of team
Can be a stand alone team
High Cross Functional Collaboration
Low Decision Making Power
Corporate Venture Capital
Corporate Venture Capital units make strategic, long-term investments (5-10 years) in companies at various maturity stages. This allows them to focus on opportunities that match the corporation's strategic goals without short-term pressure and securing positions in emerging markets or technologies for future growth and diversification.
Team Size: 3 - 9
Low Cross Functional Collaboration
High Decision Making Power
Product Development
There are two successful strategies: Embedded Innovation, for short-term, rapid market launches by integrating development teams into business units; and Research & Development (R&D), focusing on long-term, groundbreaking advancements without immediate revenue focus. These approaches combined, address both current market demands and future technological progress.
*Team Size: 4 - 8 *For a single feature
Some Cross Functional Collaboration
Low Decision Making Power
Corporate Development
Corporate Development units drive company growth by executing strategic initiatives such as mergers and acquisitions. Integrated closely with senior management and the core corporate structure, they align these initiatives with strategic goals, leveraging internal resources for seamless expansion and improved market position.
Must Partner with an Integration Team
Low Cross Functional Collaboration
High Decision Making Power
Should you make a center of Excellence?
It depends, only when creating a new silo will dramatically improve performance.
YES
Corporate Venture Capital
Why?
CVCs perform best when they have complete independence and are focused strictly on financial returns. These teams must have total control of their process, only requiring input, not approval from business units.
Connectors
Connectors break down silos and interact with all business units.
NO
Why?
Product Development
Product Development dies in Centers of Excellence due to lack of accountability, inability to properly hand off the product to commercialization teams, and a lack of technical expertise. It is better to embed these teams into an existing revenue-generating business unit. You can also create a separate well-funded Research and Development business unit.
Corporate Development
These teams drive core internal strategy and need to move in lockstep with the rest of the business. It is important that these teams fund and work with integration teams to ensure the success of their acquisitions.
Best Practices
Fundamental Attributes Essential for the Success of Every Innovation Team
01
Naming / Branding Your Innovation Organization
Our research highlights a disconnect between innovation teams' branding and their actual operations, especially in Product Development teams. While a catchy name can attract talent, it's vital for leadership to adapt to the strategic needs of the parent organization to ensure long-term viability, even if it means deviating from the original branding.
02
Tie Activities to Revenue or Valued Metrics
Prior to forming the team, it is essential to link the team's objectives directly to the financial metrics you aim to impact. For the enduring success of the organization, this alignment must be unmistakably clear. In cases where a direct link to revenue growth is not feasible, ensure the team's metrics are connected to the key OKRs or KPIs that are pivotal to the organization's strategy and have the top management's endorsement.
03
Accountability
Establishing clear accountability is essential. It requires precise documentation of the individuals responsible for guiding projects through their lifecycle—whether these projects are developed internally or sourced externally. This life cycle includes three critical stages; creation, integration and scaling. The three individuals managing these stages should report directly to, but not necessarily be the direct report of, a single executive, who bears the ultimate responsibility for the overall success of the initiative. Identifying these four pivotal roles by name is a fundamental step toward ensuring meaningful and measurable results.
04
Protection
Safeguarding the innovation teams is fundamental to their success.
They require three key forms of support:
Dedicated Funding:
Securing specific, allocated budgets ensures the continuity and stability of innovation projects.
Senior Management / Executive Sponsorship:
High-level endorsement provides the teams with the authority and advocacy needed to navigate challenges, harness opportunities, and foster collaboration within the organization.
Adequate Resources:
The teams need an optimal blend of personnel, equipped with the necessary skills, to execute projects effectively. This includes sufficient numbers of team members to cover all required tasks and competencies.