Building your Innovation System around your Organisation
Building your Innovation System around your Organisation
We discussed in our previous article an approach to Innovation system design that creates an effective pathway for democratisation of innovation across an organisation – simplifying how innovation challenges are created and the way that submitted ideas are measured and selected for further consideration. Using a consistent, easily understood framework, capability can be built across the organisation with the confidence that this new autonomy will lead to meaningful positive outcomes for the organisation.
Whilst being effective for the ‘Innovation Challenge’ use-case, our view is that an alternative, organisationally-aligned, approach is more suited to the other common use-case of an innovation system – that of Continuous Improvement (or Continuous Innovation, or CI which we’ll refer to in this article). Due to the often more broadly defined goals of each CI area, CI initiatives normally benefit from close alignment to the strategic priorities and KPIs for the part of the organisation within which the initiative is being undertaken.
In this article, we look at some of the thinking behind this approach and present our views on how an organisation can implement its own tightly aligned solution by taking careful consideration of the organisational hierarchy and strategic priorities.
A Question of Priorities
An organisation is the sum of many parts, each with its own goals, that function together to make the ‘whole’ achieve its goals – in effect creating an organisational eco-system that creates a healthy, prosperous business.
In the organisational setting, those parts are the people, teams, departments, divisions etc (collectively, the ‘business units’), along with their strategic objectives and associated KPIs. Sitting alongside these are the processes, procedures and governance frameworks that make the magic happen.
The objectives of the organisation are likely to change from year to year, leading to associated changes to the objectives and priorities that trickle down through its various business units, right down to the people whose own annual objectives will contribute to the overall target.
What does this mean for the design of an innovation system that is being considered to support continuous improvement?
In simple terms, to ensure alignment of innovation activities with business priorities, it is essential that the innovation system design reflects as closely as possible the priorities that have been agreed for each part of the organisational eco-system – if one business unit goes ‘rogue’ and does its own thing, it is likely to severely hinder the higher level mission.
Careful design of the innovation eco-system therefore creates a foundational structure that keeps the entire workforce focused on the generation of ideas that add value, using eco-system entities that:
- help business unit leaders reinforce organisation-wide and business unit values & KPIs across the workforce
- encourage improvement initiative sponsorship, ownership and management, through the use of an inherited governance framework that builds sponsor
- keep employees, wherever they are located, focused on what’s important to the business at any point in time, when contributing new ideas.
- simplify idea evaluation and selection processes through a consistent, pre-agreed approach that has strategic priorities alignment at its core.
Pursuing the Mission
So much for the theory, but what might this look like in practice?
Take an example of a local government organisation, responsible for delivering public services to its citizens. One might expect such an organisation to publish a mission that encompasses values and/or goals that look something like this:
- A Vibrant City
- A Healthier City
- Excellent and Inclusive Education
- A Sustainable and Low Carbon City
- Resilient and Empowered Neighbourhoods
- A Well Governed City that Listens and Responds
In a CI setting, to help the organisation pursue its stated goals, all ideas should contribute in some way to one of these areas.
A traditional means by which such ideas might be captured is the organisational ‘suggestion box’. In its most simple form, a physical or electronic repository into which employees can submit an idea whenever it comes into their head.
Individuals who have been tasked with evaluating submissions (the ‘Evaluation Team’) clearly need some guidance, over and above personal preference, on how to assess each submitted idea. Use of a pre-defined set of CI assessment measures that closely match the priorities of the organisation (listed above) create an obvious starting point for a consistent framework for the Evaluation Team to work to – guidance which is more important than ever in a distributed environment.
If an idea can demonstrate some alignment to at least one measure, it should be worthy of further consideration. Thus, a simple initial evaluation model in which the Evaluation Team is tasked with identifying alignment might look something like this:
In this example, the Evaluation Team has selected “Excellent & Inclusive Education” as the measure against which value is being demonstrated.
Whilst this approach helps simplify the initial idea vetting process for Evaluation Teams - using guidance from categorisation of how/where value is added - it doesn’t address a number of areas that organisations might be looking to improve, for example:
- For idea contributors
- With so few, very high level, measures it provides little guidance on what types of ideas will be welcomed within each of the business units at lower levels of the organisational hierarchy – each of these units is likely to have a more precisely specified set of goals that could better represent this.
- It creates the potential for lots of ‘innovation noise’ across the workforce. This ‘single bucket’ approach provides no scope for employees to ‘opt-out’ of areas that they have no interest in, and ‘opt-in’ to areas where they can genuinely add value.
- For Business Unit Managers
- Assignment of idea evaluation responsibility is a difficult problem to overcome; Who should be notified of the need for an evaluation to be carried out each time an idea is submitted? How does the organisation avoid placing too much of an evaluation burden on the same, small group of people? How does the organisation ensure that the appropriate domain experts are assigned to each idea?
- The central repository doesn’t support each business unit’s desire to have some level of autonomy over innovation activities in its own area; If a business unit wants ideas on a range of topics unique to that area, how does it go about facilitating this?
- For Business Owners/Leaders
- With such high-level measures, the organisation has very limited line-of-sight of where and how value is being created across the organisation.
- The central repository framework really only works with a central innovation team managing that repository, hindering the organisation’s goal to grow innovation capability across its workforce.
Each of these issues will be exacerbated by the challenges of supporting an increasingly dispersed workforce, which creates an environment in which employees will respond to, and benefit from, frequent, clear and consistent demonstration on how their efforts will create overall value.
A Hierarchy of Measures
Given these issues, a second approach might be to break the very high-level measures down into some more detail, to better demonstrate where benefit from each idea might be delivered and help focus the mind of would-be contributors on what is most important to the organisation.
This could be achieved by retaining the single, central repository of ideas, but building out a hierarchy of evaluation measures that align to more specific priorities of the organisation, as follows:
Here, the idea has been selected due to its potential to create value for the KPI of ‘Breaking cycles of poverty’, which is a sub-measure of ‘Improving Nursery Schools’, which itself is a sub-measure of a top-line goal of the origination to deliver ‘Excellent and Inclusive Education’.
Whilst this approach starts to address some of the concerns over identification of where in the organisation value is being created, and provides more detailed guidance to the idea Evaluation Team during initial vetting, it fails to address the other limitations and issues listed previously, notably around innovation noise, democratising of activities and organisational innovation capability.
In addition to this, the number of levels in the organisation’s hierarchy can quickly lead to an equivalent idea assessment measures hierarchy that is too complicated to both manage and use. Whist the example above presents a 3-level assessment measures hierarchy to help the Evaluation Team identify how an idea adds value, it is more than likely that 3 levels would be far too few to represent the goals and KPIs of even a moderately sized organisation.
Centrally Managed Repositories
A means of alleviating this issue might be to break the CI initiatives into separate, centrally managed idea repositories for each area of organisational priority, for example:
Using this method, idea contributors can be directed to the most appropriate place to submit their ideas, and their submissions can be guided by supplementary information (documents, videos, links etc) that is often specific to each area. As well as this, the idea submission process for each area can, if required, be tailored to support the collection of very specific information/data fields that are unique to that area.
Further, some ‘division of labour’ can be established – taking pressure off the organisation’s Central Innovation Team (if it has one) through assignment of appropriate Evaluation Teams who have the expertise and capability in each area.
Additionally, since there is no limit to the number of initiatives (and associated repositories) that are created, would-be contributors can start to choose where to focus their attention, limiting the innovation noise to an extent.
The (potentially unlimited) set of initiatives also alleviates the problem of a complex assessment measure hierarchy – a much more manageable set of measures (represented within a limited hierarchy if required) can be utilised that is specific to each initiative.
A number of problems remain, however.
First, with an ever-growing number of ‘published’ CI initiatives that become available to everyone, the workforce very quickly becomes swamped by areas competing for their attention, and by a confusing array of suggestion boxes into which their ideas might be posted.
More significantly, this approach doesn’t help an organisation achieve its objective of creating an environment that enables democratisation of CI initiatives. To mitigate against the risk of an ecosystem evolving that rapidly spirals out of control, administration of the entire eco-system normally remains with a central team under this approach. That team will normally assume overall responsibility for the creation of all new CI initiatives (using appropriate suggestion box repositories), and for establishing the idea management framework. This requires any would-be CI initiative sponsor to seek permission and ongoing support from that central team to get initiatives up and running - reducing agility and adversely affecting any momentum that might have been built.
The unfortunate consequence of this central management model is that CI capability across the business never gets the opportunity to gain a foothold, grow and flourish – a problem which is particularly relevant for a remote workforce in which everyone has less opportunity to learn from each other through day-to-day dealings and conversations.
The Organisational Design of Innovation
A different approach is therefore suggested, using an innovation eco-system that has been designed to closely align with the hierarchical structure of the organisation. This approach builds the priorities and KPIs of each unit of the hierarchy into the eco-system – effectively creating a governance model and process framework that optimises idea submission and idea evaluation, but at the same time encourages democratisation through business unit autonomy for CI initiatives.
This ‘organisationally-designed’ approach utilises Crowds that are aligned to the business units at each level of the organisation. Each Crowd brings appropriate communities of people together to achieve a common set of goals – in the case of CI, those goals are solving the problems and responding to the opportunities that face each business unit.
The Crowd therefore creates a channel in which CI initiatives can be published and communicated. It acts as the master container in which the configuration of many important business unit governance & framework parameters are set – from mission statements and initial vetting assessment measures to idea exploration workflows and idea implementation processes. As a result, all CI initiatives that are added to the Crowd immediately inherit and benefit from those pre-defined configurations - they should not need to be redefined each and every time a new initiative is added.
The example below depicts a 3-level Crowd hierarchy to illustrate how the example covered previously in this article might be modelled using an organisational-design approach. In any large organisation, more than 3 levels might be required but the principles remain the same.
To make sense of this, we can explore what’s happening at each level of this structure.
The top level of the hierarchy acts as a community for the whole workforce. Normally this is a place where all employees have mandatory membership, creating a channel into which the organisation can publish whole-organisation improvement initiatives that all employees have a realistic opportunity to contribute to.
In our example, a number of CI Improvement initiatives are presented (“Cost Saving Ideas”, “Citizen Services Ideas” etc). Notably, each of these has a much wider definition and scope than would normally be expected of a precisely defined Innovation Challenge (which we discuss further at the end of this article). A “General Ideas” repository is also presented, into which employees can deposit ideas that don’t immediately seem appropriate to the other published initiatives.
The sponsors of CI initiatives at this level are likely to be senior executives of the organisation – they set the mission and the tone of engagement for the initiative and identify the appropriate Evaluation Team to manage submitted ideas. In a perfect world the executives can easily launch new initiatives themselves without worrying about complex configuration matters, because the container Crowd structure provides a governance and framework inheritance model that all new initiatives immediately benefit from.
Initial assessment requires alignment to the top-level strategic priorities of the organisation – in the example above, an idea related to Schools & Learning would be aligned to “Excellent and Inclusive Education”. All ideas that are aligned merit at least some further consideration, and possible exploration.
At level 2, our example depicts the local government Service – for example “Schools & Learning”. The idea repositories at this level become more specific to each service (for example “Nursery School Improvement Ideas”) .
Membership of this Crowd includes the workforce in that Service – the expectation being that this group would be mandatory members, giving the leaders of each service confidence that the most invested people will always be served with the latest CI initiative announcements and updates.
Assuming there are no confidentiality issues, ideally the Crowd will be discoverable – meaning that any member of the wider workforce can browse and join this community if they feel they can add to any of its initiatives. By joining, a new channel of CI information and announcements is opened up to them. They can leave at their own discretion if time shows that they are not able to contribute as well as they thought.
The sponsors (and owners) of new initiatives are the leaders of each Service. Autonomy has been given to that Service to decide who can create and launch an initiative. Would-be initiative owners have the confidence to launch a new initiative because it benefits from inheritance of Service-specific configuration from its Crowd container.
Initial Assessment measures are now tailored to Schools & Learning, based on the strategic priorities of that Service (which themselves aggregate up to the top level). Again, crucially, these pre-configured assessment measures apply across all Schools & Learning initiatives that are launched.
At level 3 – the bottom in this example – the Crowd represents a Division within the Service, for example “Nursery Schools”, and the day to day issues and opportunities of each Division are addressed using CI initiatives appropriate to that Division (for example “Nursery Play Ideas”).
Initial Assessment at this bottom-most level utilises assessment measures that are uniquey specific to KPIs of Nursery School provision. If an idea is likely to have a positive benefit at this level, it will likely trickle a positive impact back up to level 2 and level 1 and should be in-play for the next stage of shortlisting.
Benefits of the Organisational Design Approach
What are the benefits of an Organisation Design approach to CI?
First, the approach creates hierarchical Crowds that act as innovation channels, providing a mechanism for the organisation to publish innovation initiatives, activity and announcements to the people who are most interested (people employed in that area), and not bombard others with too much innovation noise. In a remote working environment, focus is key. Use of mandatory and discoverable crowds further increases the opportunity for employees to select the level of information and involvement that best suits each person.
Second, each Crowd creates a container in which the organisation can reinforce with employees the strategic priorities and the guidelines that should be followed for ideas submitted into that part of the organisation. This is particularly important for remote workers who can start to feel detached from the mission of the organisation or their own business unit.
Further, with an inheritance approach that enables a consistent governance model for of the initiatives that are launched, each Crowd container provides a consistent and repeatable environment in which would-be initiative sponsors can add and publish new initiatives with the confidence that most of the hard work of ensuring alignment with strategic objectives, and devising a process framework that is effective, has already been tackled.
But likely the most significant benefit of this approach is its ability to enable an organisation to develop innovation capability across the organisation, rather than relying exclusively on the already overstretched central CI team. By democratising decision making – over which initiatives to launch, style of collaboration, audience selection, idea exploration areas etc – the management team of each business unit is able to put their own stamp on the proceedings, using local knowledge of what works best for their own unique part of the workforce.
What about Impact and Uncertainty?
In a previous article which focused on the use-case of the ‘Innovation Challenge’, we discussed 3 simple questions that should be asked during the initial screening phase of an innovation challenge.
- How well does the idea align with the stated Challenge mission?
- What level of positive impact will it deliver?
- How much uncertainty is involved in delivering it AND achieving the potential impact?
How does this approach work within a CI setting?
This can be answered by looking at each level of the hierarchy above. In our example, at Level 3, the hierarchy uses a simple set of assessment measures that best represents the strategic priorities of that part the organisation:
- Improving outcomes and children's quality of life through play
- More effective parent & child collaborations
- Services that meet the needs of children and families
- Putting quality at the heart of service delivery
- Breaking cycles of poverty, inequality and poor outcomes
- Helping children, families and communities to secure outcomes for themselves
Any of these single level assessment measures, then, are the equivalent of the first question that we suggest should be posed in an innovation challenge:
- How well does it align with the stated Challenge mission?
This then paves the way for the remaining 2 questions (Impact and Uncertainty) to be posed to complement any of the selected options, creating a consistent approach with that which was suggested for the Innovation Challenge use-case, represented below.
A consistent method that determines how much impact an idea has the potential to deliver (how exciting is it going to be to the leadership team), and how much uncertainty is involved (how hard is it going to be to deliver, and therefore how “new” it is likely to be), therefore creates a repeatable process that supports the organisation’s objective of incrementally growing innovation capability across the workforce, and removing reliance on the central innovation or CI team.
Separating the Use-Cases
Most of this article has focused on CI – exploring how an innovation eco-system design that aligns CI initiatives to organisational structure 1) increases the likelihood of receiving ideas that create value for each business unit; and 2) creates a consistent framework for idea evaluation irrespective of who in the organisation is carrying out that task. By enabling a consistent framework, a pathway for innovation capability growth across a business can more easily be established.
How, then, can this organisationally designed eco-system help with the Innovation Challenge use-case?
Happily, the Innovation Challenge can slot directly into the same structure – the general principles that make this an effective approach all still apply - but with one important caveat: due to the inevitable differences in downstream workflow processes that stem from a time-boxed (Challenge) versus no-deadline (CI) approach to initiatives, use-case separation is suggested within the model to ensure clarity for initiative owners, idea contributors, and evaluation teams alike.
Use-case separation is illustrated below, in which 2 arms of the hierarchy are utilised – one in which CI initiatives are managed, and the other in which Innovation Challenges are managed. The hierarchy in both cases is the same, and Crowd membership in both cases will largely be the same, however the governance parameters that are set within both hierarchies will differ to reflect the differences in framework and process between use-cases.
This same principle of use-case separation similarly applies to other, different use-cases that might be incorporated within an organisation’s improvement and innovation eco-system.
This article has focused on a design for innovation and CI that creates an effective framework and governance model for both the remote and office-based workforce, based around pre-existing structures of the organisation. However often the power of innovation comes from cross functional initiatives - bringing people together from different business units, and external stakeholders such as suppliers, partners and customers.
In the final article in this section (coming soon), we will look at Cross Functional innovation initiatives, and how an extension to the design suggested in this article can be put in place to support cross functional working across both internal and distributed teams.