Who Should Lead a Company's Innovation Process?
Who should be the innovation champion in a company? How can senior managers use their roles to facilitate innovation in their businesses? Should the chief executive officer (CEO) lead the innovation journey? Or should the chief technology officer (CTO) lead the cultural transformation, while the chief operating officer (COO) runs the innovation machine, and have a chief innovation officer with overall responsibilities?
A consultant once approached a large company’s CEO about implementing systematic innovation practices; his response was, “Let me ask my staff who is interested in discussing innovation.” The company had an extensive C-suite, in which any of the C-level executives could lead an innovation initiative. The CEO did not have time to understand what innovation could do for him, the corporation or the bottom line, however –discussions did not go further. In this case, the CEO’s staff reported that there was not enough interest in learning more about innovation. To improve the bottom-line, corporations are taking the “easy” option of cutting costs; they have poor incentives to improve the bottom-line by growing the top-line – by institutionalizing innovation.
Innovation Leadership Requirements
Looking at the requirements for institutionalizing innovation in an organization in the information age, the key input is information. The innovation leader must be familiar with the following areas:
- Human relations, behavior, psychology and change management
- Information technology for managing employee ideas
- Information for extracting analysis, business intelligence and knowledge management
- Business performance and strategy for aligning innovation with business objectives
There are a number of potential leadership roles for innovation based on the above requirements:
Chief Executive Officer (CEO)
The CEO ensures business is achieving its objective of profitable growth. CEOs are involved with public relations, boards of directors, stakeholders, large customers, the executive team and more. A CEO does not have much time to look intoall of the business in detail. Even though a CEO may not be directly responsible for deploying innovation, he must demonstrate his intent and interest in innovation, and thus remain engaged in the innovation process.
Chief Operating Officer (COO)
The COO continually focuses on ensuring a company’s ability to meet demand, driving improvement to improve the profit margin beyond the rate of inflation while maintaining customer demand for lower prices. The COO’s objective is to reduce cost through discipline, constraints and avoiding risks. The more stable the operation, the more comfortable a COO should feel. Conversely, innovation requires thinking that can be contrary to stability and cutting costs. Innovation requires flexibility, investment, freedom, creativity and risk taking. In order for a COO to head the innovation activities, she must have the ability to frequently shift perspectives. Some COOs can handle the full spectrum from consistency to creativity, while others like to focus on operations only. The potential for COOs to head innovation initiatives is limited.
Chief Technology Officer (CTO)
The CTO normally leads the development of new products or solutions. Each CTO has achieved this position based on her proven technical leadership contributions. By default, a CTO is focused on a specific technology domain, and leads technical experts in that domain. Knowing that the success rate of research and development (R&D) driven innovation in introducing new products has only been about five percent, there is a perceived bias toward the rate of change, pace of development and speed of innovation. Such experiences are hard to overcome. Additionally, with R&D staff recognized as technology experts in a domain, it is difficult to ask that they be open to new directions.
It has been suggested that most technology groups lack diversity in thinking due to the expertise of group members. Thinking outside their domains of expertise is a challenge. While domain expertise is a critical element for innovation, in today’s globally-competitive environment, innovation occurs far beyond technology – in all aspects of business, i.e., product, process, function, business model and strategy. An innovation leader must create a culture of innovation in all functions beyond the technical.
Chief Information Officer (CIO)
The CIO usually leads a function that influences the entire organization, but is considered a cost center instead of a value center. With the availability of outsourcing choices, IT departments are under constant pressure to provide IT support more cost-effectively with the constant threat of outsourcing. There is, thus, a motivation to position departments as adding value through innovation, not simply the cost of doing business. Information is a key input for innovation. Innovation requires information for knowledge management and information technology for knowledge dissemination, idea management, collaboration, and knowledge creation.The IT department offers these vital components for creating the culture of innovation beyond the IT department. A CIO can play a key role in leading innovation efforts organization-wide.
Vice President of Human Resources (VP HR)
A vice president of human resources deals with the most important aspect of innovation – people – who think and generate ideas. In order to institutionalize innovation, to engage employees intellectually, to create intellectual property, and to accelerate innovation, employees must be inspired, motivated and managed. One of the fundamental changes in the conventional HR department is that HR must be thought of human relations instead of human resources. HR has the potential to not only take care of staff needs, but to listen to their ideas, seek their support and facilitate their growth.An HR leader with training in information technology may also be able to institutionalize innovation.
A combination of strategic leadership, care for human relations and information technology are critical components required for leading innovation initiatives in an organization. There is a growth opportunity for IT departments to be the catalyst for accelerating innovation throughout a corporation. Studies also show that IT leadership is becoming the champion of innovation. So be it – let the chief information officer become the chief innovation officer!
Praveen Gupta is the lead author of Business Innovation in the 21st Century that organizes various aspects of innovation from concept to commercialization. He is the president of Accelper Consulting, which provides training and consulting services in innovation and teaches business innovation at Illinois Institute of Technology, Chicago. Contact Praveen Gupta at praveen (at) accelper.com or visit http://www.accelper.com.