Situation
The Japan CEO of a multinational public company declared that innovation was a top priority for the firm and established a new function tasked with increasing innovation across the business. An Innovation Department was quickly formed, staffed, and allocated funding. However, after one year, it had not increased innovation levels and was instead executing low-risk projects that resulted in only modest incremental improvements to existing business.
Intervention
We conducted an innovation audit to quickly assess relative strengths and weaknesses across key innovation attributes. Our findings informed a series of workshops with the leadership team to raise their understanding of innovation, set expectations regarding expected behaviours, and secure their support.
Performance goals, measures, and incentives for leadership, the Innovation Department, and other relevant personnel, were developed to reward innovation-enabling behaviours, including prudent risk-taking, experimentation, and cross-department collaboration.
The Innovation Department Head became a direct report to the CEO.
Finally, we established a new Executive Innovation Board responsible for setting key innovation objectives, allocating funding for testing new ideas, and monitoring progress. The Board was separate from the regular project budgeting process and used a tailored set of innovation-focused metrics and governance processes.
Outcome
Visibility of the CEO’s innovation agenda dramatically increased, and leadership and their teams now clearly understand the organisation’s top innovation priorities and how they can support them. The Innovation Department has more legitimacy and is executing projects faster. Other departments actively support them and help clear roadblocks, such as conflicting rules and policies.
New ideas receive funding in less than a third of the time it historically took. Large up-front investments in unproven ideas that under-deliver are replaced by smaller incremental investments. Ongoing funding is contingent on teams demonstrating learning and increased certainty about key assumptions, which ultimately reduces risk. Consequently, the organisation is much faster and more comfortable stopping projects that fail to progress. This has led to significant savings and enabled a higher number of new ideas to be tested.
The Innovation Department’s projects have generated significant new learning and unexpected insights about customer needs and market opportunities, which are shared broadly across the organisation. A culture of innovation is emerging.
