What’s the Right Relationship Between Innovation and Business Units?

October 19, 2013

A long-time product development and innovation executive in the consumer electronics industry sent in this RFI (request for input) anonymously:

What is the optimal relationship between an innovation/team group and the lines of business? Is there a ‘golden rule’ for how close or how far away it should be? Too close seems to create conflict, but too far away means it can be hard to execute anything the innovation team comes up with. I’m also interested in whether innovation teams should have line-of-business employees, like salespeople or engineers, on them.

We got many great responses from innovation executives, CEOs, investors, and academics. You can still add your thoughts in the comments below, or cast your vote… But here are a few highlights from the answers.

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Former Motorola Vice President Elizabeth Altman, Co-Author of the Book “The Innovator’s Guide to Growth
While the core of the [innovation] team might have full-time members who consistently work on the innovation team, take a few members who have been in the core business and move them to the innovation team for a particular project. A rotation in the innovation team will provide the high potential employees with a new experience and encourage them to learn about emerging market opportunities. The innovation team will benefit by having members who understand the challenges of executing solutions.

Andy Miller, Director of Innovation at Constant Contact
[We implemented] a dual operating system within the innovation team. All ideas are initially managed and vetted by the innovation team. Evolutionary ideas are brought to the appropriate business unit and the innovation team acts as an internal consultancy, helping the BU clarify the idea, create a minimum viable concept and a develop the minimum viable product. This also helps us drive a cultural shift in how we attack new ideas within a BU. If the innovation team deems an idea to be revolutionary, it owns the idea from concept through MVP and manages to a conclusion with the desired outcome being a validated MVP that is ready to be scaled by the business. This process empowers the innovation team to quickly validate the concept and quantify value create outside of the BU.

Venture Capitalist Amiel Kornel
When it is integrated tightly with business units, innovation becomes truly outside-in, informed by an intimate knowledge of customers and competitors. The exception to this rule arises when the innovation team’s mandate is focused on incubating entirely new lines of business. In this case, a healthy distance from the mothership helps foster an entrepreneurial approach and mitigate fear of disruptors.

Israel Ganot, CEO of Gazelle and a Former eBay/PayPal Executive
We approach innovation in two different ways. For what’s been referenced below as “incremental innovation” we rely on every member of the team to come up with ideas for both their own areas of responsibility as well as other functions within the company *and* breakthrough, out-of-the-box ideas. Incremental innovation is critical to us as a small but rapidly growing business. We are still innovating on our core service offering and look for ways to improve our customer experience and operations and take the business to the next level. For more dramatic innovation, we typically rely on a smaller group of people to spend some time coming up with ideas, doing some basic research and analysis, and then giving the team some time and space to think through the ideas, debate them in a collaborative environment, and help prioritize.