Where should innovation reside in your organization?

A quick refresh

Recently, we started a mini-series on digital transformation, identifying seven major parts of digital transformation:

• Data and analytics
• Customer experience
• Innovation
• Tech Stack
• Upgraded systems/processes
• Up-skilling and reskilling
• Leadership and culture

In this post we’re going to discuss innovation.

Who should “own” innovation?

Ten years ago, if you were to present your business card to someone and it said “Chief Innovation Officer” or “Chief Ideation Officer,” you’d likely see an entire room of blank stares and be laughed out of the room... In today’s world, however,  titles like that (and entire departments reporting into said title) are becoming more and more normative.

CEOs have long said in polling that innovation is the most important factor for growth, which naturally leads to one question:

Where should it be housed?

There are several different options. What would work for your org?

1) Chief Innovation Officer

How It Works: This is a centralized department approach. There is a Chief of Innovation (just like there’s a Chief of Operations or Finance) and people report to him/her. Innovation is housed here, but ideally solicits input from the entire organization.

Pros: Creating an area with a sole focus for innovation -- or, at the very least, for managing the process of innovation -- reduces the work demands on placing it in an area with other responsibilities (i.e. HR, marketing). Having a clear hierarchy in place (along with a process for innovation management) will be the least confusing to the organization as a whole.

Cons: Possibility it could not be taken seriously without high levels of senior buy-in. Others who feel overworked day-to-day might ask, “What exactly does the innovation department do each day?” The process needs to be in place to gather input across the organization, or else it could come to be viewed as “the place you go if you want to have idea-generation opportunities” (which could negatively affect managers in other departments if their people try to flee for the Innovation department).

2) Operations

How It Works: The operations team, up through the COO, manages the innovation process -- idea submissions and price proposals. A section of the operations team then evaluates the proposals for operational effectiveness -- i.e. what exactly it would take to turn any proposal into reality.

Pros: No matter what type of idea is generated in an organization, eventually it needs to pass through Operations (typically) in terms of slotting it into long-term plans, making sure it’s functionally doable, and coming up with effective processes around it (this varies by organization, but typically ‘execution’ of a concept tends to tie back in some way to Ops). Operations can tend to be more practical and detail-driven than some other departments, which can lead to deeper vetting of innovation proposals.

Cons: Because of the focus on details, there’s a chance that very strong “big picture” ideas might get shot down early in the process. Operations also already has a good deal of their own work, so shuffling innovation work over to that department might not be ideal.

3) Human Resources

How It Works: Human Resources has responsibility for the people (and their career progression) of an organization, so they house the innovation idea collection and vetting procedures -- and potentially tie those into an employee engagement, recognition, or performance context.

Pros: One of the core challenges for HR in the past few years has been “gaining a seat at the table.” This allows them a hand in that process. It sends a message that people, and their input, truly matter to the overall organization -- and that because idea generation can ultimately tie back to an individual and their career path, HR deserves a chance to manage it.

Cons: HR professionals already have a broad range of responsibilities. From hiring to training to benefits, they may not have enough time to bring this area the focus it really needs. Finally, linking “innovation” and individual careers could send the message that only “idea people” will be getting advanced.

4) Marketing

How It Works: Marketing tends to externally tell the story of the organization. Most new ideas and innovative policies need a narrative attached in order to gain traction, so marketing can be the house of innovation towards that end.

Pros: The connection back to the “story” of an idea is tangible. If marketing evaluates an idea or proposal and attaches a 2-3 line “Why this is necessary” blurb (which could come easier for them than other departments), theoretically certain ideas move towards enactment much faster. Marketing departments tend to have different contextual roles -- copywriters, designers, website specialists -- so they could find a few different avenues to present ideas up the chain.

Cons: They have their own work, as with the other departments. Linking it with marketing could send the message that the blurb / elevator pitch of an idea is all that matters. And oftentimes, it’s best for an organization if your external and internal messaging doesn’t come from the same place.

5) Hybrid Approach

How It Works: Every department has some degree of ownership of the process. The organization as a whole uses a central idea repository and everything is routed up to a member of senior leadership (or multiple members).

Pros: With this approach, it doesn’t feel like one group controls it, giving the impression that ideas matter and can truly come from anywhere. With proper buy-in, process, and routing, could be an effective way to generate and evaluate new, revenue-facing ideas. Shared ownership seems the fairest approach on surface.

Cons: Shared ownership can also lead to confusion about roles/elements falling between the cracks. If everyone has a piece of the process, it can lead to “favorites” of senior leadership (ultimate evaluators) getting more wins (ideas through) than other departments/managers do. Can become a political situation.

What about developers being the owners of innovation?

With a DevOps methodology, it’s possible.

The primary philosophy of DevOps is essentially that development comes first. This allows for faster time-to-market through more frequent software releases that help boost both customer experience and satisfaction. (Read: more innovation.) You optimize speed and efficiency across all IT functions and tasks, and in the end, you get happier customers.

DevOps also allows for a corporate culture of innovation. Innovation is a main way to maintain and improve market competitiveness, and DevOps implementation gives you more time for that. It frees up, and fosters time for, a culture driven by innovation.

That’s why we root our client approach in DevOps.

In the next year or so, especially as businesses rebound from COVID-19 challenges and look for additional revenue streams, many companies will be looking for the best possible value out of DevOps teams and processes.

One example: product recognition and where AI and machine learning are helping businesses now. We’ve done that in the context of RedAI, a partner of ours. The app is an AI-driven neural network, essentially. A salesperson for a consumer goods brand can go to a store (POS) and scan the shelves (take photos), and RedAI will provide tremendous amounts of revenue intelligence. You can see your position on shelves, learn about competitors, and know how to make more money at the margin.

But how do you find software developers who can code well, but also understand how to prioritize innovative projects?

When you outsource software development work to a team of experts, on a team extension model where they blend into your team, then you get experts in both coding and innovation/new revenue streams.

We put together a checklist of items to look for when outsourcing software development teams for any project, be it digital transformation or something smaller. Access it below: