Innovation and Control

Most of what is done in business management today is about control. Most organisations have a military-style command and control structure showing hierarchy and reporting lines; although people in business don’t have to salute each other.

All this is done in the belief that we can control what happens, explicitly internally and implicitly for the external world. Many companies take the same attitude towards innovation.

There is a bit of a problem with this. Innovation is inherently unpredictable, given that by definition it is something new, even if a company may have done similar things in the past. Even incremental innovation can’t be guaranteed to work.

Which brings me to the recent R&D Innovation Excellence Summit in Amsterdam, where I moderated a panel discussion on “Innovation vs Controlling”.  It was a very interesting discussion and several key issues were raised.

Innovation, control and efficiency.

Is it possible to have an efficient R&D group if it isn’t subject to a high degree of control?  In this sense, “control” means both managerial and financial. Every company has limited resource, so efficiency is a must. However, it may get in the way of creativity, so if you’re not careful you may become very efficient at launching mediocre innovation.

Does decreasing control stimulate innovation?

It is important here to distinguish between different phases of innovation. Having strict control over the creative phase can inhibit the progression of novel, less familiar options.  Devolving decision making can actually be a good thing. Sometimes less experience can actually be an advantage, especially for innovation further from the core.

Shell’s Gamechanger programme, which has just celebrated its twentieth anniversary, has a principle that the Gamechanger scientists decide which projects to fund.  Not the managers.  Not the directors. And it’s been very successful.

This doesn’t mean that anarchy rules the day; or that every company should adopt the principles of Ricardo Semler, though some of Steve Denning’s principles may help.

Once the innovation target has been defined, it’s essential to control the implementation phase.  Here it’s all about getting to market as fast as possible, at the lowest cost and with the best performance.

How do innovators react to control?

It depends. If they are the maverick type, driven by vision and dreams and unbending in their views and principles; then badly. They may find it hard to survive in anybody else’s company but their own.

If the innovators are responsible, team-oriented creators and deliverers, then as long as they have some degree of autonomy to get on with what they do best, they will acknowledge the corporate need to stick to budgets and to stay informed about what is going on.

What degree of control is needed?

In order to enhance efficiency and predictability, sometimes very complicated predictive models are built, primarily to judge whether a certain level of investment is required.  These models can be very dangerous; sometimes they take on a life of their own and seamlessly transition from estimates to monumental engravings.

We also often believe too much in our innovation projects, assuming that the competitive advantage on which we started the project will remain in place until after launch.  We can be seduced by the different in the absence of the superior. It’s tough enough to control the internal environment let alone the external world.

The desire for control can lead to too many processes and reports; too many unnecessary metrics; too much detailed RACI (Responsible, Accountable, Consulted, Informed) replacing common sense; and time wasted both in terms of activity and with speed to market.

Is is possible to apply different levels of control?

The Ambidextrous Organisation is a model that uses separate groups to address explorative and exploitative innovation. There are clear advantages to this approach allowing different levels particularly of managerial control.

So what should be done to control innovation?

-       Set clear boundaries, especially financial.

-       Devolve responsibility to people who know what they’re doing, and trust them to know when to refer to a higher pay grade. If you can’t trust your people, you have even bigger problems.

-       Minimise process and bureaucracy; let people get on with work that adds real value.

-       Focus on metrics that really matter.

-       Encourage the creative phase with a light touch; drive the implementation hard and fast.

Innovation isn’t really an issue of control or not; it’s about the right kind of control. And remembering that most companies are not part of the military.

image credit: smu.edu

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Kevin McFarthing runs the Innovation Fixer consultancy, helping companies to improve the output and efficiency of their innovation, and to implement Open Innovation. He spent 17 years with Reckitt Benckiser in innovation leadership positions, and also has experience in life sciences.