Nov 27, 2012

Wrong innovation organization? You’re toast.b

November 27, 2012 - A recent McKinsey survey identified some pretty telling experiences made by companies worldwide…and the results confirm that half-hearted is FULLY doomed.

The main sound bites are:

  • The most important success factor is the extent to which innovation is integrated in corporate strategy and to which company leaders support and engage with innovation efforts. These separate functions are most likely to report directly to the CEO and to interact formally with C-level leaders
  • Younger functions are more focused on profit. More tenured ones have more of a cost centre nature – I am not sure if it is because innovation was only done by product companies who started long time ago with R&D (and hence bias the sample), or because when you build something new you want to demonstrate return, especially in a period of volatility where shareholders increasingly demand short term return. But my experience is that – yes, that is true.
  • The executives whose functions have more responsibility for their full value chains (idea to introduction and early market success) say their functions are more effective at meeting objectives; the functions responsible for ideas, proof of concept, launch, and scaling report more in-market successes, too.
  • The functions located near talent or target markets have more market success and meet objectives more effectively than others, though they are less likely than the functions at or near HQ to engage regularly with company leaders
  • Unsurprisingly, competition with the short-term priorities of the business and integrating strategic objectives with those of the core business as the most significant challenges their functions face

Innovation organizations have their work cut out. And the solution does start with their own organizational structure – not just with their great ideas.

About the author

Gianni Giacomelli

Gianni Giacomelli

Chief Innovation Leader

Gianni serves as Chief Innovation Leader where he drives and sponsors Genpact’s strategic initiatives aimed at sustaining clients’ transformation into digitally-enabled companies. He also co-leads the Massachusetts Institute of Technology (MIT) efforts to set up a Collective Intelligence Design Lab.