Can corporate innovation champions survive?
A recent study of former corporate innovation champions has yielded valuable insights and knowledge that can be used to plan and execute innovation programs better in the future.
Much has been written about corporate innovation activities. Countless numbers of consultants and tools are available to improve employees creative ability and the organizational climate for innovation and inventiveness. Why? Because there is a persistent perception that people and organizations can be more creative and innovative than they appear to be. This is important because there is a natural link between an organizations ability to generate new ideas and business concepts and its long-term growth and economic viability.
Because corporations consider creative innovation so important, they have been willing to spend significant amounts of money on corporate innovation programs. Most of the ones discussed here started in the early to mid-1980s at a low in the chemical industry economic cycle when many commodity-based companies saw little growth opportunity within their existing business areas. New business development activities and acquisitions were seen as necessary for long-term survival.
Many of the efforts involved setting up and funding innovation centers with the specific charter of stimulating new business and product ideas. The individual programs typically lasted no more than 510 years, and most of the program leaders have left to establish their own consulting businesses or join smaller start-up companies. In a few cases, companies that terminated the programs restarted them after a period of dormancy.
Why were the efforts perceived to be unsuccessful? What is the future of this kind of program? Why were these individuals unable to maintain their positions? What can organizations do differently the second time around? In this article, we attempt to answer some of these questions.
The AMI study
This group, hosted and led by Stan Gryskiewicz, senior fellow at CCL, continued to meet twice yearly and eventually grew to about 50 members. It became known as the Association for Managers of Innovation (AMI) and has continued to meet twice a year since its formation. The focus of the group is the industrial practice of innovation. In 1982, the group established bylaws and membership requirements that included holding a corporate position related to leading or sponsoring innovation, or a consultancy in the same area.
In 1997 and 1998, the group observed that several of its members had lost their industrial positions, primarily through downsizings or early retirements. This was of some concern to the AMI group because the bylaws of the organization limited the number of consultants who were permitted membership. Over the next year and a half, the number of former innovation champions who made the transition to consulting, a start-up company, or retirement grew to 15, nearly one-third of the group.
At its late-1998 meeting, AMI formed a committee to investigate this phenomenon. The committee gave the 15 members and former members a questionnaire designed to provide insight that could be shared with corporations and individuals in the future. The authors of this article took responsibility for the project, reported its findings at an AMI meeting in 2000, and received permission to share the findings outside the group. All 15 former innovation champions responded to the questionnaire, and none has returned to the large corporate environment since the time of the study.
We developed the questionnaire in the context of our innovation experiences, without any preconceived views of what the important findings would be (see box, AMI special project survival questionnaire). In addition to general questions about the organization, functional activity, and operating structure of the programs, we asked the individuals for information about their MyersBriggs Type Inventories (MTBIs) and Kirton AdaptionInnovation (KAI) profiles. (See the boxes, MyersBriggs type indicator, and Kirton KAI inventory tool).
The experience of the AMI group led us to conclude that these metrics might provide some valuable insights. By agreement within the AMI group, all individual responses remained anonymous. However, we can say that all participants were innovation leaders at Fortune 500 companies and were spread across the chemical (8), pharmaceutical (2), consumer products (2), food (1), and pulp and paper (1) industries and the military (1). The individuals participated in innovative programs between 1982 and 1999, with the vast majority spanning 19871997.
The innovation experience
What was tried? A wide variety of organizational structures and approaches were tried. They ranged from individuals serving as organizational catalysts without significant financial support to formally funded programs that operated as internal venture capital funding mechanisms. One typical example of the latter structure was the assignment of a budget to the innovation champion, independent of the normal corporate budgeting process. These funds would then be used to support specific requests from within the various organizational groups. In another model, the innovation champions would have funding only for their personal activities and would provide counsel as well as internal and external connections for innovators. Nearly all of these positions were created by the organization itself to stimulate the innovation process. Occasionally, a position resulted from the efforts of an individual who pushed the organization in this direction.
Typically, the organizations need was ill defined, but it was usually in the context of
On occasion, these programs were aligned informally with acquisition or venture capital efforts. The 15 respondents reported that all of these creative initiatives were centered within the R&D organization and reported to one sponsoring senior manager. In cases in which direct funding was provided, these funds were sometimes allocated from corporate sources; otherwise, the funds were specifically deducted from normal business R&D budgets to encourage innovative ideas outside the business vision at the time.
Very seldom did the organizations have a specific idea of how or where to innovate. There was simply a perceived need to do something different that would significantly affect the future of the organization. It was not usually recognized that the workplace culture might also need to change. Although the group gained insight from these replies, there was no correlation between the type of structure or funding and the success or failure of the program.
What was positive about the programs? Without question, all of the programs generated new ideas, sometimes resulting in significant new businesses. The presence of the program also stimulated many kinds of activities varying from regular brainstorming sessions and technology fairs to a higher-than-normal level of interaction between R&D personnel and customers. Although the details of accomplishments and new products that resulted from these efforts cannot be shared, the ideas for many products now in the marketplace originated years ago with these innovative programs. Information gathered from the survey showed that the programs were intended to produce new businesses or products that would yield revenues above a certain level (e.g., $100 million in sales).
What didnt work?
The biggest barrier to success in the programs was their nearly exclusive focus on the R&D function. In many cases, the programs were funded at the expense of existing business technology budgets and had almost no involvement with the commercial or marketing functions of the corporations. This kind of sponsorship opens the door for subtle forms of sabotage if the established business units believe that the innovation funding is inhibiting their ability to accomplish short-term objectives and take care of current customers. Without involvement, the commercial arm of an organization can also claim no responsibility for success or be blamed for failure.
The financial and staffing commitments required to make a major impact on large corporations usually were significantly underestimated. The costs and ramifications of these programs were not clearly thought out in a way that could be communicated to senior management. As a result, senior management frequently underestimated the total cost of entering an entirely new business.
The sponsorship for these innovation programs was too narrow. The leadership base of only one or two senior managers, who frequently were near retirement, was too shallow to have staying power. The programs sometimes withered because a key senior person retired.
The time projections for bottom-line impact were usually seriously underestimated. Most of the companies involved in this study were not fast-to-market (e.g., software) companies, but materials and chemical companies with relatively long product introduction cycles. The desired new business impact and its associated time and cost were usually not communicated clearly and sometimes were not known at all, creating surprises down the road for the senior managers who paid the bills.
The consequences of these negative factors were loss of credibility, subtle forms of sabotage from the existing business units, and straightforward competition for funds. This last factor clearly got in the way of true corporate teamwork on innovation efforts. In some cases, competition for funds resulted in double budgeting, which made the innovation budget appear larger than it actually was and set up longer-term expectation problems.
The feedback from the survey invalidated two concepts:
Four concepts were proved valid:
Of the 15 innovation champions, 10 have left their organizations and become consultants, 4 have joined smaller or start-up companies, and 1 has retired. As indicated previously, none has returned to a Fortune 500 company. Most who have become consultants have as their clients Fortune 500 companies and, in some cases, their former employers.
All of the individuals shared their MyersBriggs and KAI scores with the team, and we reviewed the scores for clues relating to an innovation champions survivability in this type of position.
MBTI and KAI results
We were particularly interested in the large number of intuitives. Previous studies have shown that up to 95% of senior corporate managers are STJs (6). This difference between the innovation champions and managers sets up some potential conflicts. Intuitives and sensers view the world very differently. A change will always seem greater to an ST than an NT because STs are typically comfortable only with continuous change and very uncomfortable with discontinuous change. An NT, however, may actually enjoy discontinuous change. Because an innovation champion is trying to initiate change, differences about acceptable and desirable degrees of change can have significant effects on perceived performance.
The KAI profiles revealed something even more dramatic. The average KAI score, within industry and the general population, is between 90 and 95, with business and engineering managers typically scoring 95105 (5). The scores for the innovation champions ranged from ~95 to 155; one-third of the group scored ~135, and the average score was ~125. This result, along with the MBTI findings heavily weighted toward intuitives and especially NTs, paints a picture of a typical innovation champion in this group as someone who is very comfortable with substantive change, operates to a significant degree on intuition, and is not likely to check with authority before taking action that he or she believes is right. It reinforces several potential major conflict areas for people with these profiles in the following corporate innovation situations:
What would they have done differently?
What has changed?
These changes will have a significant impact on how centers of innovation could and should be run in the future and, more importantly, whether they should be reinstituted, and if so, in what form.
In conclusion, we suggest answers to two basic questions.
Are corporate innovation centers needed? We believe that the traditional physical innovation center format, by itself, is no longer sufficient to sustain a corporate innovation effort. However, the need for corporate innovation is as strong as ever, and new ways to produce innovation, organization-wide, are as critical as ever. A special physical facility with computer-based and helpful innovation tools and training can be an asset if it is integrated into a broader, comprehensive program.
How should corporations innovate? What does the corporate innovation center of the future look like? We suggest that a checklist for corporate innovation activities of the future include the following characteristics.
First, all functions must be involved in the effort. It is no less important to have field salespeople and accountants in an organization figuring out how to deliver and invoice more efficiently and calling on potential new clients than it is to have a researcher discovering a new molecule. It is important to have the manufacturing function involved early to ask the tough questions about production, safety, quality control, and the like.
Second, the attributes of hunting (developing and assessing new opportunities) and gathering (design, manufacturing, and marketing) must be present everywhere in the organization. Few people display both attributes, and both skills are required to discover and develop new ideas. There are many potential ways to structure innovation teams, but diversity of experience and knowledge is critical.
Third, broad-based leadership and support must exist at all corporate levels.
Fourth, there needs to be a process in place to identify not only long-term trends in the current business but also what future products and services might replace existing customers and businesses, even to the detriment of those businesses.
Fifth, whatever the innovation program is, it must be consistent or it will lose credibility in the long and short termsmemories and legends linger a long time.
Sixth, a serious effort must be made to broaden the base and value of intellectual property generated by innovation.
Seventh, some source of independent funding must be available that is not aligned with the existing business structure.
Lastly, it should be recognized that entire organizations can have MBTI and KAI profiles as well, reflecting long-standing hiring and business practices. These profiles can help shape the nature of the program design.
A successful innovation program produces the following:
In his book, Crisis and Renewal (7), David Hurst describes the long-term cycles that commercial organizations go through over time and illustrates the difficulty corporate management has in sustaining innovation throughout all phases of the corporate cycle. This cycle is illustrated in Figure 1. Unfortunately, when innovation as a systemic activity is turned on and off, it sends a strong message to the organization that innovation is not valued as a long-term, core business activity. People in organizations are learning more quickly than ever, and what they learn about an organizations values and rewards remains for a long time.
Whether an organization is going through a start-up phase, a maturing phase, or a crisis phase, innovation is always neededits the only type of innovation required that changes. Rather than turn off the program and displace the innovation champions, the innovation efforts can change from new product development to radical manufacturing cost savings or from licensing new technologies to investing in new ventures. The point is that innovation is always needed, and the loss of people who are motivated in this area is a tragedy that should not be repeated in the next business cycle.
Jack Hipple is principal in the consulting firm Innovation-TRIZ (18222 Collridge Dr., Tampa, FL 33647; 813-994-9999; email@example.com). He has a B.S. in chemical engineering from Carnegie Mellon University, Pittsburgh, and has 34 years of experience in the chemical and materials industries. He spent 26 years with Dow Chemical, where he was responsible for global chemical engineering research, as well as for the companys Discovery Research program. Before forming Innovation-TRIZ, he was program manager for foreign technology sourcing for the National Center for Manufacturing Sciences and a project manager for Ansell Edmont Corp. and Cabot Corp.
David Hardy is responsible for developing and implementing the center for creativity and innovation (known as BrainWaves) in BMO mbanx Direct, Bank of Montreal (416-927-4241; david. firstname.lastname@example.org). He has a B.A. in psychology and sociology from the University of Carleton, Ottawa, and is accredited in the use of the Kirton AdaptionInnovation Inventory. He was previously responsible for creativity, innovation, and teamwork within the Leadership & Change Faculty at Bank of Montreals Institute for Learning. He previously worked in a variety of organizations, including the Canadian armed forces, the Canadian federal government, in large and small private sector organizations, and in private consulting.
Steven A. Wilson is a research associate at Eastman Chemical Co. (PO Box 1972, Kingsport, TN 37662; 423-229-2239; email@example.com). He received his B.S. in chemistry from Kansas Wesleyan University, Salina, and his Ph.D. in analytical chemistry from Iowa State University, Ames. He has more than 20 years of R&D experience in the chemical industry and currently works on new products and process improvement projects for Eastmans fiber businesses. In addition, he serves as creativity champion with responsibilities as a creativity facilitator, and he coordinates the activities of Eastmans Creativity and Team Center, which provides the latest in computer tools for Eastmans employees.
James Michalski is a marketing communications manager for Eastman Chemical Co. (PO Box 431, Kingsport, TN 37662; 423-288-6312; firstname.lastname@example.org). He joined Eastman in 1992 and is responsible for the companys Performance Chemicals Business communications and market promotions. He received his B.S. in chemical engineering from Illinois Institute of Technology, Chicago.