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Organizations are designed to kill innovation

09/15/2022 Equipo South Summit

The “commitment gap” 

Are you working in an organization that is committed to driving innovation?

If the answer is yes, most chances are that you are still finding yourself struggling to promote innovative ideas, despite the eager commitment toward innovation.

If so – you are not alone! Research shows that although 94% of executives have innovation in their agenda, only 2 in 5 employees find it easy to innovate at work.

I call this paradox – “The commitment gap” – that is the gap between the (authentic) commitment in organizations to promote innovative solutions and the everyday processes and routines that stifle that same innovation!

Make no mistake about it – this is not a bug. It’s a feature.

That is the way organizations are designed – focused on efficiency and predictability. Govindarajan and Trimble (The other side of innovation”, 2010), describe this organizational design as a “performance engine – designed to ensure repeatable and predictable results”.  The more efficient and experienced the organizational “performance engine” is – the more challenging it is to innovate within it, as  innovation, by definition, is not repeatable nor predictable. If you stop and think about it,innovation stands in opposition to the organizational design that has proven itself to create value!

Where to start? 

The key to promoting sustainable innovation inside organizations is to start by developing an innovation systematic process and structure that can be easily and smoothly embedded within the organizational existing design.

There are a few strategies for organizational design, and in the past few years I have had the opportunity to study and practice one of the more efficient ones of them – designing internal “innovation networks”.

But before I deep dive into the building blocks of this particular design, you probably wonder: “why design innovation Network to begin with?!”

Why design innovation networks to begin with? 

Since the Ottoman Empire introduced the concept of bureaucracy to the world, organizations have been perceived, (graphically) presented and managed as hierarchical structures. This perception holds much truth but it mainly helps us simplify a much more complex reality. The fact of the matter is that organizations do not work in clear hierarchal structures where the different parts of the organization (units, departments, divisions etc.) are connected through formal routines and interactions. Organizations work more as networks – a multitude of internal connections between people. These connections can be formal or informal, professional or personal, political or business oriented etc. These connections are the “highways” in which organizations execute, make decisions, plan, learn and yes – also innovate.

Organizational networks are dynamic and extremely influential in the way organizations perform, adapt and evolve, so they can become an ideal “infrastructure” for innovation initiatives – inside the established organizational design.

Do my organization has an innovation network?

Every organization has its own innovation network – a “playing ground” where innovation is developed or adopted by the organizations. The strength of that network, its legitimacy and influence on the core of the organization – those can make all the difference between growth and stagnation. That is why innovation networks should be carefully designed with much intention and thought, connecting the different “building blocks” needed.

The “building blocks” of Innovation Networks

Designing organizational innovation networks start by connecting the many building blocks for innovation. Some of these building blocks are formal, others informal, but all have a crucial part in formulating, validating, developing and scaling innovative solutions. Here are a few examples for such building blocks:

  1. Intrapreneurs – it always starts with Intrapreneurs – internal entrepreneurs committed to drive innovation (despite the organizational design – and not because of it).
  2. Innovation units – units that their main goal is to develop and promote innovative solutions. You might know them as innovation labs, innovation centers or dedicated units inside R&D
  3. Key stakeholders – gatekeepers, business owners, sales, operations, engineering, IT, HR, legal, finance, professional experts and more. Many times they are the neglected partners that are “not invited to the innovation party” yet without them – there is no after party (just a hangover). The more ambitious the innovative solution, the more stakeholders are needed to make it happen (influencing the different parts of the organizational business model). Remember – they are not necessarily the source of innovation, but must be onboard to help it succeed.
  4. Customers – even without taking the design led” approach to innovation, customers are a crucial part of any innovation network, despite the fact that they are external to the organization (or perhaps because of it). A deep and empathic partnership with them is the only way for us to develop solutions that are not only viable and feasible but also desirable.
  5. External partners – a good innovation network should enable collaborations that break down the barriers separating the organization from the outside world. A great network should enable co-creation and joint exploration with partners (as opposed to the common “transactional” collaborations where “you want to sell me something that I want buy”).

Where the magic begins!

Each one of the building blocks described above can have a unique and crucial contribution to the innovation process. The problem is that most organizations are designed to separate these building blocks, creating internal silos and barriers between the organization from the outside world (customers, business partners, academia and more). Innovation Networks should act as a bridge – a way to enable joint projects and exploration process, a mutual language and shared goals.

Sounds easy? Not at all. The fact is that these building blocks can be intuitive as they are illusive, and as mentioned earlier – they are separated from each other by design. Connecting these building blocks into a productive network is the definition of complexity at its best! But when it comes to promoting innovation inside organizations – usually complexity is the way to go.