Did you miss Innov8rs Milan in June this year? No problem! Let me share my takeaways on corporate innovation from A to Z. In the high-stakes game of innovation, C-suite backing isn’t a luxury. A CIO reporting directly to the CEO isn’t just about hierarchy, it’s about embedding innovation into the very DNA of your leadership team. The role of the CIO (together with the CEO) to educate the senior management team is crucial. How can the importance of innovation otherwise be safeguarded and flow throughout the organization? The CIO is the boardroom imperative to ensure innovation permeates every level of the organization and fuels competitive advantage.
The role of CIO, CFO, and CHRO
The role of a successful Chief Innovation Officer (CIO) in the management team should show 50% innovation and 50% negotiation. And that’s already an optimistic view. The alignment of the management team and from there the integral, internal organization is a barrier to innovation.
A CIO should make sure that open innovation doesn’t go from ‘know-how’ to ‘know-where’. Open innovation should be organized in a way that has an ambidextrous focus on exploitation and exploration. It must have business validity and bring a return to the organization.
The CIO should be accompanied by an entrepreneurial Chief Financial Officer (CFO) so they can aim at big innovation returns, this starts with having a successful innovation program at an early stage. The CFO should endorse that there doesn’t always need to be a business case with a clear ROI in the early stage innovation setting, yet there needs to be enough means to enable that starting point.
The investment philosophy therefore has to contain stages with growing certainties depending on the place the program is at, with qualitative KPIs to be tracked and measured. Funding must be protected and secured for innovation programs. With a long-term view and investment philosophy, you acknowledge the fact that it’s about risk-taking and entrepreneurship and not about risk-free investments. Securing funding is based on the stage gate process accompanied by qualitative KPIs that are measured and tracked throughout the process. The plan of attack for this investment philosophy that needs to be implemented is quite extensive, so we only list some of the key takeaways:
- Only after an idea is validated, it can move to the P&L for growth and scaling of the business model.
- “Whatever leaders invest, innovation should not be integrated into the calculation of EBITDA for a business unit!”
We talked about the CFRR, but another key partner for the CIO is the Chief Human Resource Officer (CHRO). An entrepreneurial CHRO makes a hell of a difference when creating legitimacy for innovation as an integral part of the career path. The CHRO can support building systems and processes to incentivize innovation in learning, career paths and culture and will ensure bridges are built that allow for collaboration across functions.
Cross-functional collaboration
Let’s turn to the CIO task list. A key item on their to-do list should be cross-functional collaboration across teams, creating an environment where innovation is encouraged and people are rewarded for participating. This means giving them the room to explore this journey and allocating time to do this. It also offers a continuation path after the innovation journey is stopped, for example with the stage gate underway. Do they go back to their old teams, are they fit to continue growing the solution, where can their newly acquired skills be of support in the organization, …?
Cross-functional innovation should not be limited to inside teams, as in particular for adjacent or more transformative types of innovation, innovation happens and should be organized outside of the normal teams. These can have many different names and scopes: open innovation, corporate innovation, corporate venture, corporate entrepreneurship, incubators, and accelerators, … These cross-functional teams use a variety of tools and approaches for exploring new ideas or ventures.
For any CIO and its organization to be successful in their innovation strategy and management, they need to consider aspects such as:
- Giving direction (strategy, culture and leadership)
- Managing innovation (governance, organization, portfolio management and measurement)
- Enabling innovation (human resources, financial resources, ecosystem and tools)
- Running innovation processes
When performing a survey with our community, we found that the majority is already quite advanced on this topic, however, a big gap is clearly in the measurement throughout the innovation process, human resources, and leadership. This affirms the need to involve key stakeholders in the innovation process.
Our experiences
From our experiences in supporting and consulting organizations in their corporate innovation programs, we recognize the dissatisfaction with their innovation returns and new pathways for growth. Today, traditional R&D efforts are complemented by venturing teams (internal or external start-ups) to innovate on breakthroughs and disruptive topics, adjacent to their core offerings.
These venturing teams can only be oriented toward success when tailored programs and ecosystems are set up to ensure they’re kept away from known pitfalls. By utilizing tools and methods to anticipate challenges and implementing initiative measures, they can deliver repeatable and measurable results.
With thanks to the lectures of Alberto Onetti Chairman and President at Mind the Bridge, Marika Reis and Jacob Dutton Corporate Intrapreneur and Chief Innovation Officer | Co-Founder and CEO at Future Foundry and Lisa Kuttner Senior Innovation Manager at Raiffeisen Bank International for the inspiration, insights and impact they had.
To successfully foster innovation, organizations must navigate the delicate balance between structured guidance, unfettered creativity and risk-taking. And management should safeguard the understanding that emphasizing metrics and control can extinguish the spark it seeks to measure.
