Book Review: Innovation Governance: How Top Management Organizes and Mobilizes for Innovation

    By: Elizabeth Conner on Feb 16, 2016

    Innovation Governance:  How Top Management Organizes and Mobilizes for InnovationDeschamps, Jean-Philippe and Beebe Nelson.  San Francisco, CA:  Jossey-Bass (2014).  361+xvi pages.  US$34.50.

    Book Review by Jerry Mulenburg

    innov 2.pngThis book emphasizes the two most important requirements that drive innovation success in creating value:  leadership and governance. Governance is often portrayed as directing and controlling, but innovation governance (as proposed in this book) is much more and is also much more important. Authored by experienced innovation practitioners, Deschamps and Nelson go beyond a prescriptive approach and provide a “holistic and systemic” view of innovation governance. As shown by the book’s subtitle, the target audience is top management, from the board of directors on down. However, the emphasis is for all levels of management to understand innovation governance and its application within their organization. To accomplish this seemingly daunting task requires leadership taking responsibility for building an innovative vision and strategy, discovering opportunities for innovation, steering project execution toward these opportunities, and developing capabilities to achieve those projects that get innovations to market in a timely manner. An innovation policy is therefore one that gets everyone in the organization focused on recognizing innovative opportunities. 

    Key elements in the book define the practice of innovation governance including how broad it should be with clear guidance for the board of director’s role as well as that of the rest of management: “Promoting innovation and ensuring that management addresses it appropriately should … be a key duty of the board” (pg. 32). And, “… the board’s involvement in innovation is critically important if the company is to articulate and pursue an innovation strategy that reflects the considered judgment of the board and top management” (pg. 31). The authors therefore lay responsibility for innovation success squarely on the highest levels of the organization and conversely the primary cause for the failure of innovation in many companies: “Our ultimate objective is to stimulate members of the C-suite to go deeper than they otherwise might in identifying and allocating the levers of innovation under their direct guidance” (pg. xxiv). Innovation governance does, the authors say, provide direction, but it also maintains a focus on the ownership and direct involvement by the organization’s top echelons to meet the challenges involved with being innovative.  “Companies need to embed innovation into a comprehensive corporate governance system” (pg. xviii).This requires leadership to define the values and expectations involved, the processes to be used, key responsibilities involved, balancing of priorities, clear communication and decision-making avenues, budgeting and allocation of resources, and how to measure progress. According to Deschamps and Nelson, innovation fails if even one of these elements is missing. The authors therefore emphasize the importance of auditing management’s innovation performance. They also warn, however, that there is no simple formula to follow and much depends on an organization’s competitiveness, it size and its homogeneity.

    A governance system requires an overall framework to clarify the vision or mission for innovation, how to determine sources of value and how to create and capture that value. They cover from beginning to end what innovation governance means, the imperative for developing an effective system, and how to align organizational leadership for best advantage. “Setting up a formal innovation management system requires proactive, personal engagement by the top team” (pg. 50, emphasis in original). Their research into innovation and analysis of their findings show the efficacy of different in-use models in major organizations and why and how they work. They describe the challenges faced, choices of innovation models, and how to create your own governance system. Their analysis of innovating structures clearly shows that no one model fits all organizations, and even within a single company more than one model may be needed.

     As just one example, in the last section of the book, Designing Your Own Governance Structure and Making It Work, the authors outline Michelin’s path to “a new innovation ecosystem,” saying that, “the path Michelin has followed … should inspire many companies and show them one way to go” (pg. 271). Over its history, Michelin has deployed many different approaches to innovation. Some decades they were focused largely on radical or disruptive technologies, some on “Exploiting Opportunities in the Digital Era” (pg. 276), which led to their focus on maps and GPS systems. The company’s commitment to environmental issues led them to develop “innovations [that] have been recognized as industry transformers” (pg. 275).  In the early 2000s, with Michel Rollier as CEO, Michelin refocused on “incremental innovation, emerging markets, an profitability (pg. 277), linking “the company’s creative research group with the market,” as well as building “manufacturing capacity in … emerging markets” and improving “cost competitiveness and profitability” (pg. 277). The last chapter in this story demonstrates how a new CEO, Jean-Dominique Senard, repurposed Michelin’s many strengths and built new avenues for management and leadership. This shows how the impact of a corporation’s history, the need to nurture a strong culture of innovation, and the variety of aspects of a corporation that must be included for innovation to be successful.

     Whatever the chosen innovation strategy, it must explicitly address the level of acceptable risk, both internal (within the company) and external (related to competitors and markets). This may require a paradigm change in innovation governance to audit innovation effectiveness.  “The challenge,” the authors say, “is to select only a small number of relevant indicators … and to make sure those indicators … are regularly changed in line with … progress” (pg. 42). One example of what might be audited is the provision of adequate resources to achieve the innovation:  “… it is startling to discover how often management ‘approves’ a project but fails to resource it” (pg. 41). They also stress the importance of providing a clear process that delineates desired innovation targets, rules for why these targets were selected, and how to resolve conflicts among different parts of the organization regarding the innovation goals, objectives, and governance.  “Governing innovation means making sure that innovators have as smooth a path as possible...” (pg. 82).

    Any organization seeking to create, advance, or simply improve their innovation capability, will find in this book a cogent description of innovation governance including a wealth of ideas, methods, processes, and real world examples to apply and test the veracity of this in their environment.  Essential for any organization wanting to be innovative or improve its innovation success, this book offers much to all levels of management.

    Jerry Mulenburg

    Retired, NASA (National Aeronautics and Space Administration)

     

    Released: February 16, 2016, 3:23 pm | Updated: March 2, 2016, 5:21 pm
    Keywords: PDMA Blog


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