Recent years have seen the role of Chief Innovation Officer emerge in many companies, observes Gina Colarelli O’Connor, who directs the Radical Innovation Research Program at Rensselaer Polytechnic Institute’s Lally School of Management. Prof. O’Connor finds this trend exciting for two reasons:
“First, it signals a recognition that innovation is distinct from other functions, including R&D, Corporate Strategy and Marketing. In other words, innovation is accepted as incorporating both invention and new business creation. Secondly, it shows there is a mandate for companies to build a strong capability for breakthrough innovation.”
However, research by O’Connor’s group shows this is only the hope and not yet the reality. “In several companies we have studied of late, the turnover in the role is high, and the role title is modified frequently. Some tell us that there is ‘baggage’ associated with the title, left over from its previous holder’s failure to make things happen, or that resentment is building in the organization among those not incorporated into the ‘innovation’ function.”
What then is the reality for innovation leaders today? Here’s how O’Connor sees it.
Just as everyone in a company should be marketing-oriented, and quality- oriented, and cost-conscious, so should everyone be innovative. All company members need to be cognizant of the impact of their decisions and actions on all functions of the company, but everyone cannot be responsible for everything. If everyone owns it, no one owns it.
That’s the reality for breakthrough innovation. It requires its own management system: an identified organizational group with a specific mandate within the company, specific roles and responsibilities, metrics, processes, resources, and governance. Just like marketing or engineering.
We are learning that while innovation is multidisciplinary, it should be treated like any other business function if leadership desires innovation beyond incremental levels. There is a unique expertise associated with commercializing breakthrough innovations that differs from new product development, from R&D and from sales or any other business function. It’s an expertise in Strategic Entrepreneurship.
Meet the Orchestrator
What then is the real role of the Chief Innovation Officer (whom I like to abbreviate CNO)? The accompanying cartoon helps convey what, in our view, this person’s responsibilities entail: namely, orchestration.
My remarks here are informed by more than 15 years of research, over three phases, with a total of 30 companies, in five-year increments. Our team at RPI’s business school has, with the sponsorship of the Industrial Research Institute, studied breakthrough innovation projects as they were under development, the creation and implementation of management systems for portfolios of breakthrough innovation projects, and, our current focus, talent development and career management for those involved in the BI mandate of the firm (see ”Building a Talent Bench To Institutionalize Breakthrough Innovation,”IMR Fall 2011, pp.8-10).
Building Blocks for Breakthrough Innovation
We have identified three distinct building blocks for a BI capability that firms interested in consistent success with BI tend to develop and improve over time. These are Discovery, Incubation and Acceleration.
Discovery is a capability of exploration. It involves activities that help stimulate, create, identify, recognize, elaborate, socialize, and articulate business opportunities, either through technological discovery or engagement with experts. Its objective is to develop business concepts that challenge or fulfill the company’s strategic intent and capture the attention of leaders.
Incubation is a competency of experimentation. Its objective is to nurture opportunities identified in Discovery that have uncertain outcomes but immense possibilities for the market and the company. Incubation encompasses the work required to test hypotheses about the technology, market, and organizationally tolerable avenues for opportunities developed during Discovery. By “organizationally tolerable” we mean that options may appear for commercial pathways that take the company into directions not previously experienced, therefore requiring strategic choices.
Finally, Acceleration is the competency that escalates fledgling businesses to the point where they can stand on their own relative to other business platforms in the organization’s operating units. Whereas Incubation reduces market and technical uncertainty through experimentation and learning, Acceleration focuses on achieving predictability of the fledgling businesses’ sales and operations.
Acceleration entails building the necessary infrastructure, responding to market leads and opportunities, and fostering repeatable business processes such as manufacturing and order delivery, customer contact and support. It is the competency that institutionalizes organizational change and prevents it from being stamped out by predominant norms and operating routines.
These, we find, are the basic building blocks of a breakthrough innovation capability. They are displayed in my cartoon as interlocking because each block is required for a healthy BI pipeline, and because the BI portfolio is composed of projects that move back and forth through those competency domains.
The CNO’s Responsibilities
In brief, the CNO carries two major responsibilities in the company: 1) manage the innovation function, and 2) manage the interface of the innovation function with the rest of the organization.
Said another way, the CNO must be an orchestrator, orchestrating all the elements of the management system so that D, I and A are finely tuned, and orchestrating the relationship between the innovation management system and the company’s capacity to absorb it. It’s a balancing act that has to be constantly monitored and fine-tuned as well.
Managing the innovation function means overseeing the health and activity of the BI portfolio, and monitoring all of the elements of the management system for BI. By this we mean:
- Ensuring that the roles required to manage the portfolio are established and filled by people with the right skills and experiences.
- That they are rewarded appropriately given their work is of much more uncertain outcome than most other roles in the organization.
- That the processes used for project management are the right ones.
- That the balance of resources and activities across Discovery, Incubation and Acceleration is healthy for overall output.
Managing the interface with the rest of the organization means:
- Ensuring that innovation remains on the organizational agenda and is viewed as imperative.
- That its portfolio is linked to the strategic intent of the firm, and, in fact, is informing it.
- That adequate resources are allocated to it, even given the competition for resources with the immediate needs the organization is facing.
- That projects progressing through the innovation function will be successfully received into the operational functions of the firm when they are grown into sufficiently mature businesses.
This requires enrolling the commitment and participation of other organizational leaders, who have more immediate responsibilities, and being sensitive to changes in the organization’s capacity to support and absorb breakthroughs.
Fight for Investment
Innovation capacity changes with external and internal environmental changes, as indicated by the wavy boundary lines in my cartoon. A CNO can reduce or expand the innovation portfolio, stall its progress or speed it, in recognition of these realities, but the CNO must fight for some continuing level of investment rather than a complete shutdown on innovation investments when the environment changes.
Just as marketing budgets increase and shrink given economic realities, but are never stamped out completely, so, too, should be the treatment of the innovation function. It is the CNO’s job to ensure this happens.
Managing this interface is more difficult than for other organizational leaders (CMO, CFO or other Sr Vice Presidents), because the innovation function is focused primarily on the firm’s future, and must link those actions and investments to the firm’s present situation and ability to consider issues beyond the current.
It is precisely this challenge that organizations fail to meet in general, and the identification of a permanent role with that focus provides the opportunity and agenda for the firm to take care of its future health through growth and innovation initiatives. But if the innovation function cannot deliver results, it will become increasingly difficult for the company to support it. That is why developing the expertise associated with Discovery, Incubation and Acceleration and their system-level interaction is so crucial.
Innovation is, in our view, the next emerging business function. BI need no longer be solely dependent on mavericks in the company who are willing to break rules, risk their careers and sometimes, by sheer persistence coupled with serendipity, succeed. We know more about what it takes now than we ever have. CNOs are in an exciting position, and much hinges on their ability to quickly move down the learning curve so that they can bring BI expertise to their organizations.
Gina Colarelli O’Connor
Professor and Director, Radical Innovation Research Program,
Rensselaer Polytechnic Institute (firstname.lastname@example.org)
Founding Partner, Radical Innovation Group