At our recent 2015 OPEN MINDS Executive Leadership Retreat, the focus of many sessions was on the need for change – and, specifically, for innovation. The big questions: How to create an organizational culture that is innovation-focused? How to create a leadership team that is able to manage rapid cycle innovation? And, not surprisingly, how to structure the organization so innovation is the routine – and not the exception.
In my closing plenary, What’s Your Leadership Strategy? The Challenges Of Leadership In A Time Of Innovation, the challenges of building an innovation-competent organization were discussed at length. One of the big issues is how to structure an organization for this competitive cultural shift – facilitating both evolutionary innovation to update current services and breakthrough innovation to develop entirely new service lines (see What To Do About The Innovation “Hiccup”). The question for most executive teams – can we innovate within our existing service line structures, or do we need a completely separate “skunk” works to make sure that innovation happens?
There is no “right” answer to that question. But, a recent article by the team at Deloitte, Product Innovation: Who Is Really In Charge? Managing Through Internal Power Struggles, outlined three organizational models for facilitating innovation – centralized, decentralized, and federated.
The centralized model – Adjacent and transformational innovation responsibilities are centralized in, and owned by, a dedicated group within an organization. This central team is responsible for vetting the ideas, the creation of service line concepts, the development of the new service lines, and the launch – while the business units (BU) own commercialization of those ideas.
The decentralized model – Innovation responsibilities are fully distributed. BUs own end-to-end innovation responsibilities, both evolutionary and breakthrough, from ideas through commercialization.
The federated model – Similar to a centralized model, except that key members of the central innovation team are embedded in the business units. This is a quasi-matrix management model. Innovation team members in the BUs are responsible for funneling the BU’s ideas to the central team, as well as for creating awareness and testing the concepts developed by the central team.
For many health and human service organizations, adopting any model that is dedicated specifically to innovation will be a practice in change management. Deloitte’s Vinod Devan, author of the article, advises that organizations ask three questions when choosing a model – is there disruption in your industry? Is there demand for new services in your industry? And how collaborative is your organizational culture? If the answer to these questions is “yes,” a centralized or federated model is probably the way to go. (For more on this model for facilitating innovation, see Product Innovation: Who is really in charge? Managing Through Internal Power Struggles.)
In the health and human service field, I think the answer to the first two questions is a resounding “yes” – but I’m not so convinced that “collaborative” is the best description for many of the organizational cultures I’ve worked with. Dedicated, yes. Collaborative, no. And changing that piece of organizational culture will be a high priority for any organization that wants to update its innovation processes with the kind of developmental model that can deliver the needed innovative services.
For more on innovative thinking in general, and new service line development specifically, check out these resources from the OPEN MINDS Industry Library:
- The Market Has Questions – Is Innovation The Answer?
- Will Your Market Be Disrupted By ‘Frugal Innovation’?
- Avoid Innovation Inbreeding
- Innovation – From Concept To Reality
- Making Innovation Your Secret Weapon
- Gaining Competitive Advantage with Innovation
- The Shark Tank Solution To Innovation Ideas
As you think about how to facilitate innovation in your organization, think of it as the antidote to being the prisoner of change. As English clergyman Willard Pollard said, “Without change there is no innovation, creativity, or incentive for improvement. Those who initiate change will have a better opportunity to manage the change that is inevitable.”