Designing a Department of Innovation

Somewhere in your company, or your set of consultants and advisors, are people who can reasonably frame arguments and decide on the best approach. Unfortunately these are usually not your executives, who have other, equally important skills. No problem, you say; just route the concern to your strategy department and they will tackle it. If you have a strategy department, that is. Or send it to the key expert or contributor for that particular subject? If they understand the whole context that bears on the issue. And what if the correct answer calls for innovation in your company? And which kind of innovation? Marketing innovation or product invention? An engineering breakthrough or a method to increase operational efficiency? Or, an approach to making your customers happy that actually works?

If you have a department of strategy and innovation already in place, this next might be familiar territory. Yet you might not have created such an internal organization. Perhaps, before now, you have outsourced this to industry associations who will give you the same answer given to all the other association members. It’s likely a good answer: but that by definition is not innovation.

Or you might be thinking about this right now. About 15% of respondents to the annual Pipeline Digital Transformation survey said they planned to create a Department of Innovation in 2016. So what is it, who should be in it, and how should it be used?

Between 1998 and 2002, I created and lead a team which much of our industry called a significant source of innovation in telecommunications. Among other things it successfully and strategically outsourced NGOSS development to the TM Forum. Internally, this team, and the vendors it lead, created micro service federations of autonomic switches and self-managing applications that provided hands off, real time integrated service and network management. This team began the creation of the Cloud with an inter-working association of collaborating services, hosted in an international grid of data centers, spread globally on the backbone of wide area network. Along the way it generated many core patents. The projects all functioned, sometimes better than expected, but we also ended with a mostly unspent 300 million dollar implementation budget. These revolutionary technologies had little internal impact on the success and continued existence of my company. I’ve thought about this, and some of these ideas might help you.

First, a department of innovation should be a directed enterprise. It needs to have defined business goals. It is not a think tank. It is not a research lab although it frequently does or directs research. Strategy and innovation must be linked.

Before this department is created a core group of high achievers needs to be collected. What we once called a tiger team. This catalyst group will include executives, marketers, and engineers. It will decide the goals of this new department. Some few of these individuals will go on to form the core of the new innovation team.

Many books and presentations have emphasized how such a group must have the support of the company’s senior management. Not necessarily. It does need a champion and it is better if the culture of the organization allows cross communication and specifically values innovation. It needs a reasonable budget that is secure against being cannibalized by competitive departments. Instead of unwavering attention and support, it needs a direct channel, a way of getting senior management’s attention when it has something significant to say. If what it has to say is significant enough, and the team can communicate this clearly, senior management will get behind that specific recommendation.

Second, I suggest this department should frame and answer four strategy questions. One, where can money be made? For example, their considered recommendation might be “IoT,” but it must also contain an analysis of the environment driving the choice, the logic behind the choice, and assessments of alternative course of actions. Two, where must money be spent? An answer here should be immediate, such as: security. Yet specific details are required. Which security approach? How to implement it? And how to identify and maintain diligence against changing risks? Question three: Who is the current, real threat facing your organization? In a series of Pipeline articles a decade ago, I pointed out the answer then was OTT companies. Today it might be specialty networks such as providers of IoT message traffic and control. Strategy question four, what native advantages does my company have? I can think of many: customer knowledge, location data, supply control, pipe control, unlimited bandwidth, and service protocol implementation. Many answers could be forthcoming and lead companies in different strategic directions. For example, how can telecom companies leverage their control of the network to integrate people, things, services, and computing?