This chapter addresses why breakthrough innovation is so hard for companies, and it establishes why it requires a distinctive management approach. The chapter reexamines the story of Kodak and explains that innovation must be managed as a function with formalized roles at multiple levels. The chapter continues by providing evidence of how broken the talent development aspect of management systems for innovation is. It shows how it can also be detrimental for those who engage in breakthrough innovation as they get penalized in many of the current systems. It reveals statistics about the percentage of innovation personnel that leave their company only to go on and work in innovation roles for other companies. The chapter concludes by setting the foundation for the book: if companies wish to improve at innovation beyond incremental new product development, they need to formalize and institutionalize their innovation function.
This chapter provides a foundation of innovation as a management system and shows how it is composed of the following elements: mandate and scope, organization structure, leadership and governance, skills and talent development, processes and tools, and, finally, metrics and reward systems. The chapter then explores the idea that breakthrough innovation is not a singular construct but made up of three competencies: discovery, incubation, and acceleration. The chapter weaves together stories from companies like DuPont, IBM, and others to demonstrate the need for the abilities to execute across all three dimensions of the DIA model. The skills and expertise needed for breakthrough innovation differ from those applied within traditional new product development and other parts of the mainstream core business. The chapter calls for a different kind of leadership, where top management teams or a designated CNO can evaluate innovation capacity and orchestrate the required investment for breakthrough innovation.
This chapter brings to life the disaffection that innovators experience in their careers, and the poor management practices associated with managing innovation talent. It delves into the five challenges that tend to derail an innovation expert's career: project failure, unpredictability, scale, career atrophy, and the recognition discount. The chapter shows why the most seemingly obvious innovation path does not work and then expands on other problems in the talent management systems for breakthrough innovation. The chapter continues by examining the need for role legitimacy and argues the need for innovation as a permanent function and mandatory for all high-performance employees. The chapter also begins a discussion of role clarity, selection, and the need for a systematic approach. The chapter sets up the next four chapters by stressing the need for specific roles at each level of the company across the functions of discovery, incubation, and acceleration.
This chapter explores the overarching framework and thesis. It justifies the need for the hierarchical roles across the three innovation competencies by showing the need for specific skills at the project, platform and portfolio levels of the company. The framework brings clarity to what many leaders already know and helps them design a more effective innovation function that fully capitalize on the investments in R&D they have made. It explores various risks that come from not fully identifying roles and responsibilities for innovation. The chapter is counterintuitive: most people move to flatter organizations, and this chapter advocates for a fair bit of hierarchy. The chapter then introduces the nine primary roles needed for breakthrough innovation along with a variety of support roles. It gives prescriptions for how people may span different roles and how the model can contract in different ways to fit each organization's needs.
Using examples from DuPont, Corning, and others, this chapter outlines the need for specific roles to generate, create, and articulate opportunities for breakthrough innovation. For each of the discovery roles, the chapter provides specific responsibilities and the activities these individual engage in, along with metrics for success. The chapter outlines selection criteria in terms of the personal characteristics, background, and critical experiences that each candidate should ideally have. The chapter provides data so readers can see the explicit difference between performing the discovery role at the product, platform, and portfolio levels. The chapter ends by summarizing the role that discovery personnel need to play in the strategic innovation of the company. Discovery is necessary to flesh out new business possibilities before a firm invests too heavily in one direction. Only by articulating the clear precise roles at each level can a firm begin to capitalize on their innovation talent.
Incubation mitigates risk, incorporates learning, enlarges opportunities, and confirms strategic commitment. Difficult decisions and smart actions about technology, market, and business strategy are made in a haze of ambiguity and markets that may not yet exist. The midlevel new business program owner is the key link in the identified matrix of roles. These individuals are the quintessential corporate entrepreneurs who take opportunities and build them into business platforms. They need to be recognized and treated like gold. They do not ask for a lot . . . mostly recognition and promotion. Nevertheless, incubation is the "long and winding road," and there is a lot of risk and uncertainty associated with it. Individuals in incubation roles must be able to "chart a course in the fog." Evidence accumulated in incubation provides currency leaders need to develop the courage to commit substantial investments required for acceleration.
Acceleration is the capability to scale a business that appears to have great promise and a demonstrated path to profitability, but may not conform to the culture and operating routines of the company. The project now becomes a full-fledged business and needs functional leads (i.e., heads of engineering, marketing, sales, purchasing, etc.) and a general manager or CEO. Functional as well as general managers must be adept at solving problems creatively and positioning for long-term growth. The chapter cautions senior leaders of companies against incorporating acceleration into the ongoing lines of business. Senior leaders need to take acceleration seriously as a capability within the innovation function that must be managed differently from traditional new product introductions. Nevertheless, preparation of an eventual landing zone is required, whether it be a home within the company's divisional structure, its own business unit, or spun out of the company.
Internal organizational consultants, who maintain expertise in all sorts of innovation practices but are not connected with a revenue generating business, are the "glue" that holds the innovation system together. Of particular importance are the leaders of the innovation function: the orchestrator and chief innovation officer (CNO) roles. These individuals ensure systems thinking and maintaining a robust portfolio of projects. The orchestrator bears the twin responsibilities of (a) ensuring the innovation function is working properly and (b) ensuring it is aligned with the company's capacity for innovation. The CNO's top priority is to define, cultivate, and maintain the proper linkage between the breakthrough innovation function and the mainstream organization. Second is to maintain the health of the breakthrough innovation management system itself so that it produces. The CNO's job is most directly related to the company's growth and renewal agenda.
The realities of creating new businesses inside large companies' conflict with typical metrics required to reward employees. Critical experiences gained can be different from those thought to be necessary for promotion to the next level. This results in placing individuals in positions that do not align with their innovation talent or circling them back into operations. The consequence is that companies often lose great innovation talent. Legitimizing innovation and associated career paths can stem this tide. This chapter discusses ways to address this. Apprenticeship programs that assign individuals to a project or series of projects at different stages of development provide expertise and help individuals develop strategies to cope with uncertainties. In some cases, participation in a consultancy role first primes individuals for the required job. The metrics and rewards must address challenges to success and the likelihood of failure. Critical innovation experiences must be clarified.
Companies are asked to endow their future through investing in long-term, value-creating innovation. One way to address this is to go beyond dependence on champions and mavericks and institutionalize an innovation function. This necessitates innovation talent. This chapter describes the many roles and responsibilities needed for a sustainable capability for innovation, which requires different kinds of expertise and prior knowledge. New roles exist and much hinges on their ability to connect different roles and expertise and respond to feedback quickly. For people to develop expertise in new business creation, they need to engage in it, stick with it, and practice it. Some need to make careers of it. Others need significant exposure so they can support those commitments of resources and support the outputs of the innovation portfolio. There is plenty of room to grow. Hierarchy is important for this but not bureaucracy.