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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.

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 5–10 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
In 1981, an informal discussion group was formed from a nucleus of individuals who had taken innovation and leadership courses at the Center for Creative Leadership (CCL), in Greensboro, NC, and who also had responsibility for innovation efforts inside their organizations. The group’s original focus was to discuss the industrial application of some of their findings, but it expanded rapidly to include innovation champions within corporations, many of which are in the chemical industry.

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 Myers–Briggs Type Inventories (MTBIs) and Kirton Adaption–Innovation (KAI) profiles. (See the boxes, “Myers–Briggs 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 1987–1997.

The innovation experience
In addition to the specific personal, organizational, and innovation program information from the questionnaire, general information on the participants was sought as well. All of the participants had either corporate or major divisional responsibility for innovation, “new to the corporation” business activities, or both. Five of these individuals also ran an innovation facility as part of their activities.

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 organization’s need was ill defined, but it was usually in the context of

• “we need some new and different business ideas”,
• “we just don’t seem to be getting enough new or innovative ideas from our people”, or
• “we aren’t getting enough growth from our current businesses”.

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 didn’t work?
The real question is: Why were these programs terminated? Even if they succeeded in producing new businesses and products, there were always the questions of the level and number of these successes versus expectations, the process used to achieve these results, and the changes in business climate over time.

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:

• A centralized “creativity” or “innovation” center (a unique physical room or location) can, by itself, significantly affect the bottom line of an organization.
• The R&D function, acting alone, can significantly affect an organization’s long-term bottom line or its new business development.

Four concepts were proved valid:

• People within an organization do have novel and unique ideas that are outside the normal realm of their responsibilities.
• Successful, knowledgeable people can learn new techniques that improve their innovation capabilities.
• There are new business opportunities that will not be discovered by normal marketing and business efforts.
• An independent funding mechanism, no matter what type, can stimulate innovative activities.

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 Myers–Briggs and KAI scores with the team, and we reviewed the scores for clues relating to an innovation champion’s survivability in this type of position.

MBTI and KAI results
The MBTI profiles of the 15 innovators varied greatly. Six of the individuals were INTP or ENTP, the two largest four-factor combinations. In all, 13 were intuitives and 12 were extroverts. The NT combination was present in 10 of the individuals, the largest two-attribute combination. The split between judging and perceptive was approximately 50:50.

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 95–105 (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:

• The original definition of what the innovation program was trying to accomplish may not have been clearly understood if it was not stated in very specific terms. For example, developing totally new businesses is quite different from developing new products that can be manufactured and sold within the current capabilities of the organization. Input from the survey clearly showed a lack of clear guidance prior to the start of these programs. This misunderstanding can partially be explained because business managers did not really know what to expect from innovation initiatives.
• The strong KAI innovator profile versus the more normal “mid-range” profile would cause significant differences in perceptions of the need for informational and organizational structure, the number of new ideas required for assessment, and the need for conformity to rules and procedures. When asked to change or improve something, the innovation champion will prefer to replace existing structures with something different, whereas managers are more likely to focus on improving existing structures or systems.
• Innovation champions will more likely see threats and opportunities outside the organization, and managers will focus on threats and opportunities inside the organization.
• Innovation champions will have a tendency to do something because they believe it is the right thing to do. This trait, when coupled with the tendency to minimize or ignore details, means that champions will often do something that managers could think is risky, and they may not keep management well enough informed.

What would they have done differently?
In the questionnaire, the innovation champions were asked what they would have done differently, and these needs summarize their responses:

• Needed broader support and involvement beyond one executive (especially one near retirement age!). Don’t depend on the energy and drive of one person.
• Needed more top-level support.
• Needed to better understand political and business cultures and recognize innovators may be a threat to someone.
• Needed more education on the role of innovation and its tools.
• Needed succession planning.
• Innovation needs to be treated as a business process.
• Needed to use the “coin of the realm” in discussions and planning.
• Innovation is a corporate, not a research process.
• Needed marketing or commercial involvement and support.
• Needed to share successes and failures.

What has changed?
In the time between the start of these formal innovation programs and centers and their demises, we have observed many changes in the business world. Some of the more significant changes are:

• Most organizational structures are now business- and customer-driven rather than functionally driven. This means that most technology and research programs have a stronger customer-driven component to them.
• Many corporations have a “core competency” model for their technological organizations, allowing a broader vision of opportunities.
• Alliances and partnerships, sometimes temporary, are far more common, allowing the sharing and trading of technology.
• Employee loyalty is at an all-time low after the loss and shuffling of millions of professional jobs within the Fortune 500. This turnover in people also facilitates and accelerates the loss of core competencies and knowledge.
• Intellectual property concerns and licensing are far more important than they were 10–20 years ago.
• The Internet has arrived as a potential collaboration tool, but it also may impede valuable face-to-face contact with collaborators, partners, and customers.

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 terms—memories 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:

• employees who volunteer to work on risky new business ventures;
• managers who welcome unsolicited new business plans from employees;
• ideas that come from unexpected places and meetings;
• a culture that promotes new ideas and innovations and encourages the desire to learn new innovation skills and techniques;
• people who tell managers about new tools and processes;
• managers who have a difficult time choosing from among novel ideas to improve manufacturing plants, build a new prototype plant, or make an acquisition to help enter a new business; and
• customers who rave about the company’s uncanny knack of anticipating their next-generation product needs

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 organization’s 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 needed—it’s 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.

Acknowledgments
Input and stimulus from Rolf Smith, Robert Rosenfeld, Charles Prather, and David Hurst are gratefully acknowledged. We are indebted to the entire AMI group, and especially the study participants, for their input and willingness to share these findings.

References

1. Keirsey, D.; Bates, M. Please Understand Me; Prometheus Nemesis Book Co.: Del Mar, CA, 1984.
2. Myers, I. B.; Myers, P. B. Gifts Differing; Consulting Psychologists Press: Palo Alto, CA, 1989.
3. Smith, R. The 7 Levels of Change; The Summit Publishing Group: Arlington, TX, 1997; pp 129–143.
4. Kirton, M. J. J. Appl. Psychol. 1980, 61, 622–629.
5. Kirton, M. J. Long Range Planning (U.K.) 1984, 17 (2), 137–143.
6. Kroeger, O.; Thuessen, J. Type Talk at Work; Dell Publishing: New York, 1992; pp 394–399.
7. Hurst, D. Crisis and Renewal; Harvard Business School Press: Boston, 1995; pp 72–73, 103–106.

Jack Hipple is principal in the consulting firm Innovation-TRIZ (18222 Collridge Dr., Tampa, FL 33647; 813-994-9999; jwhinnovator@earthlink.net). 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 company’s 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. hardy@bmo.com). He has a B.A. in psychology and sociology from the University of Carleton, Ottawa, and is accredited in the use of the Kirton Adaption–Innovation Inventory. He was previously responsible for creativity, innovation, and teamwork within the Leadership & Change Faculty at Bank of Montreal’s 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; sawilson@eastman.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 Eastman’s fiber businesses. In addition, he serves as creativity champion with responsibilities as a creativity facilitator, and he coordinates the activities of Eastman’s Creativity and Team Center, which provides the latest in computer tools for Eastman’s employees.

James Michalski is a marketing communications manager for Eastman Chemical Co. (PO Box 431, Kingsport, TN 37662; 423-288-6312; michalsk@eastman.com). He joined Eastman in 1992 and is responsible for the company’s Performance Chemicals Business communications and market promotions. He received his B.S. in chemical engineering from Illinois Institute of Technology, Chicago.