When an innovation team is created by an organisation, everything is exciting and rosy at the start. Filled with hope for the future, sponsors attach themselves to their new silver bullet which will solve all their problems and wait for exciting results to arrive. In the first few months after they are created, the team can get away with practically anything.
But sooner or later, they’ll be called to account. Previously excited stakeholders will start to ask what they are getting for all the money they are committing. They will start to wonder whether they might have gotten better outcomes by investing in, for example, a Lean initiative.
Invariably, this will happen within the first 18 months, and budgets will be called into question. Whilst everyone will likely agree that the team has done “valuable work”, the only justification which anyone really considers valid will be any financial returns the team has generated.
Ultimately, if there are other opportunities for investment that were able to justify themselves financially, and the innovation team has failed to do so, it is obvious where any rational business manager will seek to direct funding in the future. This is especially the case during a downturn, or at any other time an organisation is under stress.
So innovators need to pay their own way, if their programmes are to exist in the long term.
Of course, it is always the case that some innovations that might be considered don’t actually have financial returns. For example, productivity improvements resulting from information technology innovations are regularly key candidates for an innovation team. These will often add significant capabilities which make employees work better or with greater speeds, but may not result in direct financial consequences that can be measured. Obviously, there is value in doing such innovation, regardless of the chance they’ll pay.
With that in mind, then, how does an innovation team reconcile a non-financial innovation with its core driver to produce decent financial results?
The answer is that it must have a portfolio of innovations, some of which pay, and some which don’t. Generally speaking, there will need to be more of the former, of course, and the obvious implication is the innovation team would naturally de-prioritise those innovations without decent financial returns until it has paid the bills.