Thinking Managers

Robert Heller of builds on the old Tom Peters idea of 'skunk works' to consider how innovative ideas can be turned into practical action and commercial success.

The Age of Innovation

Creativity and innovation have become the supposed guiding lights of 21st century business. Virtually all managers kneel at the altar of new ideas and new businesses. But very few companies are actually organised to achieve the requisite flow of inspiration. Nor is it only a question of ideas. By far the most important aspect of innovation is translating ideas into action – and that is still the fatal stumbling block in business after business.

The evangelistic Tom Peters long urged the use of 'skunk works'; innovative groups that operate outside of, and are physically remote from, the parent organisation. That's fine in the development phase. But the the skunks' achievements will wither on the vine without effective plans for creating a major business around the innovation.

When an organisation needs new processes and values in order to develop new capabilities, there are three ways managers can create a new organisational space for that purpose:

1) Start up a new division within the existing organisation.

2) Start up a new operation outside the existing organisation and give it real autonomy.

3) Buy a business that fits your needs and entrust the innovation to its management.

All three approaches can work. The conditioning factors are the fit with the existing processes and the fit with the existing values. If both fits are good, you can happily keep the innovation within the organisation. You'll still need a team, but it can be 'lightweight', which cuts across functions in its membership, but whose members are still controlled by their own managers.

That won't do if the fit with processes is poor – that is, you need to do important things that are new to the organisation. You can still keep the innovation inside, but only if the values fit is good: that is, this isn't a disruptive innovation, but a 'sustaining' one that improves on your existing technology for the benefit of your existing customers. Give that to a 'heavyweight' team. Its members spend all their time on the new project, work in the same place, and accept full responsibility for successful completion.

You risk failure, however, if you attempt disruptive innovation in-house. By definition it has a poor fit with the existing business values and will almost certainly require new processes. Spin it off, with a team in charge, another group of genuine heavyweights. If new processes are not required, the heavy fellows may stay in-house, but the authors warn that taking innovations to market in this way will almost always mean spinning them off.

As for acquisition, the rules are simple. If your target's strengths rest on its processes and values, absorbing the buy into your own organisation will kill it stone dead. A better strategy is to let the business stand alone and to infuse the parent's resources into the acquired company's processes and values.

Without fresh ideas on organisation and control, the old-liners will fail. With those new ideas in place, though, you can go on to tackle what truly matters. The Internet now demands innovation in areas that are by definition strange and new. Established companies have to think and act like genuine start-ups.

Do that, and you can have your creative cake and eat it, fusing the fruits of innovation into a continuing business that can expand securely into a richer future. The alternative is to have no cake.

About the author
Robert Heller is one of the world’s best selling authors on business management.

  Robert Heller