Centralized vs. Embedded Innovation: Which is Right for Your Organization?


Jennifer Kirby, Formerly Managing Director of Strategic Innovation & Growth Initiatives at Hyatt Hotels

I’ve seen multiple models for corporate innovation over the past six years, and I’ve found that there isn’t a one-size-fits-all answer when it comes to the key question of where innovation should sit. Do you need a centralized group, or should innovation activities be embedded within teams or business units?

What works well in one organization may fail miserably in another organization. It comes down to company culture, structure, and talent. Below is a list of considerations to take into account if you’re just starting to design a new innovation initiative — or thinking about revamping how innovation is approached.

The Benefits of a Centralized Innovation Team

  • Create focus. Clearly define the area of focus for the centralized team’s innovation efforts, and define what success looks like so that the team has a north star to guide their work.
  • Align the focus with company strategy. Build and maintain alignment between executive team members regarding the centralized innovation team’s focus area, and how their work relates to the core business.
  • Keep innovation connected. Educate the organization and build awareness of the centralized innovation team’s objectives, and how their work fits into the broader organization’s goals.
  • Bring colleagues along for the ride. Engage members of the core business throughout the innovation lifecycle to build alignment and streamline the hand-off process for commercialization / scaling.
  • Avoid throwing things over the wall. Create a process for transitioning concepts out of the centralized innovation team for implementation, including organizational goal alignment and prioritization, business case validation, budgeting, and resource allocation.

The Benefits of Innovation Skills Embedded within Teams

  • Make innovation repeatable. Customize and adopt an innovation framework, behaviors, and toolset in order to empower individual business teams to own innovation locally.
  • Continue education beyond initial training. Assign someone to be the “owner” of the company’s innovation framework so that it evolves as needed, and increases the effectiveness of individuals tasked with innovation initiatives by providing them with ongoing training and templates.
  • Manage differently. Innovation activities differ from day-to-day operational activities, and require individuals to be comfortable with ambiguity, iteration, and failure. Staff and manage innovation initiatives with these differences in mind.
  • Separate innovation goals from mature product goals. Measurement of innovation activity success will also be different from that of mature products. Be sure to set appropriate goals for those individuals working on innovation initiatives in order to incentivize the desired behaviors and outcomes.
  • Continuously evolve. Innovation is an iterative process. Consider creating an informal innovation champions network to encourage sharing of lessons learned and best practices across teams.

Jennifer Kirby is a Contributing Columnist and Former Managing Director of Strategic Innovation & Growth Initiatives at Hyatt Hotels.